How Does Pet Insurance Work?

Pet insurance is designed to provide financial protection for the cost of unexpected veterinary bills. This ensures that the cost of care never stands in the way of your pet receiving the medical attention they need whenever they are sick or injured.

Below, we’ll go over how pet insurance works, including what it covers, when you can use your policy, and how to find the right plan for you and your four-legged companion.

What does pet insurance cover?

Pet insurance typically covers a wide range of medical expenses related to unexpected accidents and illnesses. While coverage can vary depending on the policy, many pet insurance plans include the following:

Accidents: Coverage for injuries sustained from unexpected accidents, such as broken bones, lacerations, or swallowed objects.
Illnesses: Coverage for acute illnesses and chronic conditions like ear infections, UTIs, cancer, diabetes, and allergies.
Diagnostic tests: Coverage for laboratory tests, X-rays, MRI scans, and other diagnostic procedures.
Surgeries: Coverage for planned procedures and emergency surgeries.
Medications: Coverage for prescription medications, including ongoing medications for chronic conditions.
Hospitalization: Coverage for overnight stays at the veterinary hospital and intensive care.
Hereditary and congenital (present from birth) conditions: Coverage for breed-specific or genetic conditions that may require medical attention.

Some companies may also offer additional coverage for preventive care, wellness visits, dental procedures, behavioral therapy, and alternative therapies like acupuncture or chiropractic treatments. It's important to carefully review the policy details to understand what is covered and what may be excluded (see How Do I Choose The Right Pet Insurance?).

How do I use pet insurance?

Pet insurance typically works on a reimbursement basis, where you pay the veterinary bills upfront and then submit a claim to the insurance company for reimbursement. Here's a step-by-step breakdown of how pet insurance typically works:

Step 1: Go to the vet (find an AAHA-accredited veterinarian) and pay your bill at the time of service, unless your insurance company offers the ability to pay vets directly. Keep copies of all invoices, receipts, and medical records for future reference. Know that once you sign up for pet insurance, vet bills are only eligible for reimbursement after a mandatory waiting period has passed.

Step 2: Submit a claim to the insurance company, typically through an app, online portal, or by mail. Include all relevant documents, such as itemized invoices, receipts, and medical records.

Step 3: Once the claim is approved, the insurance company will reimburse you for the eligible expenses, either by check or direct deposit, depending on the company's payment process.

What limitations should I be aware of?

There are a few limitations that impact how you can use a pet insurance policy. Here are some key considerations to keep in mind when selecting a plan:

Waiting periods: All pet insurance companies have mandatory waiting periods before your policy becomes effective, after which time your pet will be covered and you are eligible for claim reimbursement.
Deductibles: Consider your policy’s deductible amount, which is how much you need to spend on covered vet bills out-of-pocket before the insurance kicks in. Typically, the lower the deductible, the higher the insurance premium will be.
Reimbursement rate: Once your insurance coverage kicks in (and your deductible is met), you’ll be eligible to receive reimbursements for covered costs outlined within the policy at a rate specified at the time of enrollment. Most policies reimburse between 60% and 100% of the cost of eligible expenses.
Payout limits: You can customize the limit on how much your insurance plan will pay. Some plan limits are per condition while others are per year, and some offer unlimited payouts.
Coverage exclusions: Pet insurance works for future medical expenses but does not cover past vet bills or health issues that existed before the pet was insured, known as pre-existing conditions. There may also be exclusions on bi-lateral conditions and hereditary conditions that may apply to your pet

Choosing the right pet insurance policy can be overwhelming with the many options available. Pet owners can use a free resource like Pawlicy Advisor (recommended by AAHA to its members) to get a personalized recommendation on the best plan for your specific pet, with the ability to compare top companies side-by-side in terms that are easy to understand.