Pet insurance pays the veterinary costs if one's pet becomes ill or is injured in an accident. Some policies will also pay out when the pet dies, or if it's lost or stolen.
The purpose of pet insurance is to mitigate the risk of incurring significant expense to treat ill or injured pets. As veterinary medicine is increasingly employing expensive medical techniques and drugs, and owners have higher expectations for their pets' health care and standard of living than previously, the market for pet insurance has increased.
History
The first pet insurance policy was written in 1890 by Claes Virgin. Virgin was the founder of Länsförsäkrings Alliance, at that time he focused on horses and livestock. In 1947 the first pet insurance policy was sold in Britain. As of 2009, Britain has the second-highest level of pet insurance in the world (23%), behind only Sweden.
How policies work
Many pet owners believe pet insurance is a variation of human health insurance; however, pet insurance is actually a form of property insurance. As such, pet insurance reimburses the owner after the pet has received care and the owner submits a claim to the insurance company.
UK Policies usually pay 100% of vets fees, but this is certainly not always the case. It is typically more common to find UK pet insurance companies discounting their policies by offering their customers the chance to pay an excess fee, just like with motor insurance. Excess fees can range from £40 to £100. The excess is usually fixed by the insurer dependant on the amount of discount they are giving the buyer. In the future more flexible excess levels will probably play an important part of how much one pays for a pet insurance policy.
Policies in the USA and Canada usually offer to pay 80-90% of the costs minus a deductible depending on the company and the specific policy. The owner will usually pay the amount due to the Vet, and then send in the claim form and receive reimbursement, which some companies and policies limit according to their own schedule of necessary and usual charges. In the event of a very high bill, some veterinarians will allow the owner to put off payment until the insurance claim is processed. Some insurers pay veterinarians directly on behalf of customers. Most U.S. and Canadian policies require the pet owner to submit a request for fees incurred.
Traditionally, most pet insurance plans did not pay for preventative care (such as vaccinations) or elective procedures (such as neutering). Recently however, some companies in the UK, US and Canada are offering routine care coverage, or some times called comprehensive coverage. Dental care and alternative treatments such as physiotherapy and acupuncture are also covered by some providers.
There are two categories of insurance policies for pets, non-lifetime and lifetime. The first covers buyers for most conditions suffered by their pet during the course of a policy year but on renewal in a following year a condition that has been claimed for will be excluded. If that condition needs further treatment the pet owner will have to pay for that himself. The second category covers a pet for ongoing conditions for the pet’s lifetime so that if a condition is claimed for in the first year it will not be excluded in the second of subsequent years. However, even lifetime policies do have limits. Some have limits “per condition”, others have limits “per condition, per year” and others have limits “per year”. They all have different implications for a pet owner whose pet needs treatment year after year so it is wise to be clear which type of lifetime policy you are considering.
In addition, companies often limit coverage for pre-existing conditions in order to eliminate fraudulent consumers, thus giving owners an incentive to insure even very young animals who are not expected to incur high veterinary costs while they are still healthy. There is usually a short period after you buy a pet insurance policy when you will be unable to claim for sickness, often no more than 14 days from inception. This is to cover situations where an illness has been contracted before your pet went on cover but where it only manifests itself after the insurance cover has started.
Some insurers offer options not directly related to pet health, including covering boarding costs for animals whose owners are hospitalized, or costs (such as rewards or posters) associated with retrieving lost animals. Some policies also include travel cancellation coverage if owners must remain with pets who need urgent treatment or are dying.
Some UK policies for dogs also include third party liability insurance. Thus, for example, if a dog causes a car accident that damages a vehicle, the insurer will pay to rectify the damage for which the owner is responsible under the Animals Act 1971.
The difference between companies
Many pet insurance companies are beginning to offer the pet owner more of an ability to customize their coverage by allowing them to choose their own level of deductible or co-insurance. This allows the pet owner to control their monthly premium and choose the level of coverage that suits them the best.
The smart consumer will always check the details before signing up for a policy which may not cover your animal's condition. Some companies will use a benefit schedule covering only what they think a given procedure is worth. Other companies will not cover hereditary conditions. Finally, some companies will not renew your policy at the end of a given term or will consider a condition pre-existing after renewing your yearly contract and then refuse to cover the illness. Despite these set-backs, pet insurance can provide financial support enabling the dedicated pet owner to not factor in economic considerations while life-saving care is needed.
Glossary
- 'Benefit schedule' – a document created by a pet insurance company that lists allowances paid for a given diagnosis and treatment.
- 'Deductible' - an amount that must be paid by the policy holder in a pet insurance policy for covered veterinary services. Higher deductibles usually translate to lower policy premiums.
- 'Exclusion' - a condition that is excluded, or not covered under a pet insurance policy.
- 'Policy Limits' - there can be several types of policy limits applied to a pet insurance policy. When a policy limit is reached the policy will normally no longer pay applicable claims. Typical policy limits are lifetime, annual and per-incident.
- 'Pre-certification' – when a pet owner to submits a requested treatment to their pet insurance company to see if the treatment will be covered, and at what benefit level.
- 'Pre-existing condition' - an injury or illness that occurred before the pet insurance policy became effective. Some pre-existing conditions are eligible for coverage after being cured and a specified period of time elapses. Other conditions cannot ever be covered regardless of time elapsed.
- 'Coinsurance' - the percentage of your claim for which you are liable before any applicable deductible is applied.
References
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