Insights on pet insurance in 2025: Costs, adoption, and more 

The snapshot of data for 2025 highlights mostly what pet owners can expect to see in prices, but it’s important to remember that everything from pet age to breed can impact that total cost. So, what does the changing pet insurance landscape mean for veterinarians?  

The state of pet insurance  

One of the large misconceptions in 2025 around pet insurance is how that insurance actually works. Where many would assume it’s like human health insurance, it’s more similar to car insurance, Ricky Walther, the Chief Medical Officer and Director of Operations for Pawlicy Advisor, noted while talking about the new data.  

“It’s a way to hedge risk,” he adds. “But it’s also not car insurance because your pet has an emotional value to owners, so we are using a product that is property and casual insurance to cover risk and mitigation for pets that we care about.” 

The 2025 data highlight the current average cost for pet insurance, which is $62.44 a month for dogs and $32.21 a month for cats. Meanwhile, in the past decade, the average cost of a vet bill has increased by over 60%.  

Walther mentioned that right now, there’s still a low adoption rate of pet insurance in the U.S. among pet owners. As of now a little below 4% of pet owners have pet insurance, but that’s changing quickly—estimates show anywhere from 20-29% year over year growth in adopting pet insurance.  

“I would say low overall national adoption but rapidly growing,” he added. “And I would say consumer awareness around pet insurance is definitely steadily increasing year over year, which is leading to the slow growth in the overall national adoption numbers.” 

Walther notes that it’s clear that insurance prices across the board are shifting – specifically in the veterinary space, where inflation numbers are outpacing general inflation in other categories. Although pet insurance can serve as a buffer against the cost of veterinary care, the industry is not immune to the impact of the overall economy. 

The increase in costs: What does it mean? 

Inflation and economic strain are impacting all areas of the veterinary field—including pet insurance. If you look back on the cost of pet insurance over the last five years, you’ll notice an increase in the cost.  

“I think one of the things that’s important for everyone to understand is that insurance is a regulated product. So, the way that it works is that these companies must file for rate increases on insurance,” Walther said. 

Usually that is on an annual basis, he noted, but due to the pandemic, many of these companies did not have their rate filings approved, so over the last few years, there have been multiple years’ worth of approvals all passed at around the same time.  

“Meaning what we saw is a decent increase in premium costs in pet insurance, especially like if you’re looking at a particular policy like for a particular pet and a particular zip code, if you look and see the increases over the last few years, they’ve been higher than most people would expect,” he added.  

So, in a way, it’s twofold, as those rates caught up-post pandemic, and that overall cost of care increases; insurance companies adapted. But consumers will still have to deal with them to an extent. 

Adapting to the market

“What that means is that paying for care that people used to be able to pay out of pocket is going to become more and more challenging,” he added. “Veterinary care in general is paid out of discretionary income.” 

That discretionary income is diminishing for pet owners across the U.S. as we see financial stress continue to impact the workforce. Walther notes that financial restraints will continue to impact the client-veterinarian relationship.  

“I want the veterinary community to understand that it’s going to continue to strain that pet parent veterinary relationship,” he said. “Finances are going to be center a centerpiece in every conversation for the rest of this year, at a minimum, if not longer.” 

Disclaimer: Pawlicy Advisor, a pet insurance marketplace, is an AAHA sponsor. 

Photo Credit: PeopleImages via iStock/Getty Images 

Disclaimer: Trends content is meant to inform, educate, and inspire by providing an array of diverse viewpoints. Any content published should not be viewed as an official stance, position, or endorsement by the American Animal Hospital Association (AAHA) or its Board of Directors.