Facts About Pet Insurance You Probably Didn’t Know

About 180 million pets have cost their owners about $60 billion a year, an estimate released by the North American pet Health Insurance Association. This includes about $15 billion spent on veterinary care, which is the third highest in terms of pet health expenditure.

Most Americans certainly have practical knowledge of the high cost of vet care, which compares unfavorably with the costs associated with getting pet insurance policies for 1 million pets at a cost of $595 million, or an average of $595 per pet annually.

It might seem a lot to spend on your pet, but it might be well worth it. The first pet insurance health policy issued was in 1982 to television star Lassie, so it is quite a new option as far as insurance goes. However, by 2009 the number of policies issued per year has risen by an average of 13.2%, so there is clearly a demand for them.

For many pet owners, the trick is finding the pet insurance that will give them the most bang for their buck.  While there are some top contenders, the best one for a particular pet will really depend on specific situations and the most likely scenarios in which insurance would be a viable option. This article will deal with what you need to know about pet insurance.

Don’t think of it as health insurance for people

Just because your pet is eerily human in many respects and you consider him or her as part of your family, this doesn’t mean the insurance company will as well. For insurers, your pets are property, and an insurance policy for them will read much like property insurance. This is not necessarily a bad thing, as property insurance policies, and by extension pet health insurance policies, are much easier to understand than your own health insurance policy.

Additionally, the following conditions are typical in pet insurance policies:

  • You can choose any vet you like as long as the vet has a valid license. There is no such thing as in-network vets, so you can go to any vet without having to worry about paying out-of-pocket expenses.
  • You can choose to cover accidents and illnesses, only accidents, or extended conditions.
  • You pay just a monthly average premium of $14 for barebones (no pun intended) plans up to $98 for plans with the most coverage for dogs, and this is even lower for cats. The premiums can vary slightly depending on a few factors including the breed and age of your pet, you location, and any add-ons you choose for the policy.

If you are familiar with basic insurance terms, it can be relatively easy to understand your pet insurance policy. In most cases,  you pay a premium and you pay a deductible before coverage kicks in. The deductible is usually between $100 and $250 annually, meaning your insurance coverage kicks in when you exceed the deductible at any time during a calendar year.

In some cases, you might have a fixed out-of-pocket amount or co-pay, which with pet insurance means you have to pay a certain percentage of the total cost per service or visit, and the maximum for a co pay is 30%. For example, if your vet charges you $100, you pay $30 at most and the insurer pays $70.

What is a bit annoying about pet insurance is that you have to pay for the service first, and then file a claim with your insurer for reimbursement. Your vet will not do that for you, and some will even have signs telling you to pay them at the time of service. On the other hand, some vets will allow regular clients to “run a tab,” essentially, giving the pet owner time to collect from the insurance company before getting payment.

You can insure pets other than a dog or cat

While you can get insurance to cover the health of your pet bird or reptile, the choices are few. The biggest one is the Veterinarian Pet Insurance division of Nationwide, so there’s that. You might be able to find a couple more, but mostly they focus on dogs and cats, which represent 90% and 10% of policies issued.

You need to consider a few things

The first thing you need to consider is if your pet has a pre-existing condition. Chances are the pet insurance policy will not cover this. For instance, if your pet has frequent abdominal pains, the insurer might restrict coverage for any condition where abdominal pain is a symptom.  You should have a vet give your pet a complete physical checkup before getting insurance so you are aware of what might constitute as a pre-existing condition.

Make sure that you discuss the topic of pre-existing conditions and its effects on your coverage with your insurer before signing up. The medical records of your pet may include something you consider minor, but could have big consequences when filing a claim in the future.

The next thing you need to consider that insurers typically have a holding period before an insurance coverage kicks in. For instance, if you get insurance because you found out that your pet would need an expensive procedure soon, you will probably not be able to use it. There is typically a wait period of 14 days up to one year for illness, depending on the specific condition, and between 24 and 48 hours for injuries resulting from an accident. The wait period might be different for each state, however, so find out what applies in your location.

You should also find out the maximum payouts for a policy. Depending on the insurer, it might be the maximum for a specific illness, for the year, or over the policy’s lifetime. The payout conditions will have a big impact on the premiums and efficacy of the policy.

The last thing to consider is the insurer’s policies for increasing premium rates. Some increase due to inflation, age of the insured, or the medical condition of your pet.  Some insurers do not make it a practice to increase premiums for any circumstances when renewing a policy for a specific pet, but you cannot assume that. . However, some companies do not. Ask about rate increases before signing the policy.

You probably don’t need it

This whole article is about pet insurance, and that includes discussing reasons why you probably don’t need it because it is not cost-effective. In a study looking at the top three insurers handling 90% of pet insurance policies revealed that the cost of insuring a relatively healthy pet exceeds the actual costs of maintaining the health of that pet over 10 years.

Of course, the picture can change when you mix in some serious illnesses such as heart disease or cancer. In such cases, the premiums were much less than the medical costs. Here are also unforeseen circumstances such as accidents when insurance coverage will certainly come in handy.

However, that is not true if you are getting insurance for routine healthcare. The overall cost of wellness care is not enough to justify the outlay of taking out pet health insurance. You would be better off paying the vet yourself from the money you saved from not getting pet insurance.

The report also found that pet insurance for wellness care isn’t worth the cost. According to the report, it’s probably better to pay for routine vet care out of pocket.

Conclusion

The best way to think of pet insurance is the same way you consider your own health insurance. You hope you don’t need it, but you want to make sure you have it when you do. If you do choose to get insurance because you anticipate that serious medical care might be necessary, get highest deductible policy you can afford.

However, if your pet is relatively young and healthy, you might want to save the money you would have paid to an insurer into an emergency fund, just in case.

Tags: , ,

Dog Owner Insurance: What You Need to Know

It might seem like a bad time to think about insurance for your dog with COVID and everything else going on. However, you really should, especially if some people consider the breed as dangerous.

As a dog owner, you are responsible for what your dog does, including dog bite injuries. While you might think your dog wouldn’t hurt a fly, you could be wrong. If you are, that could open up a world of hurt for you and your pocket if your dog injures someone and you don’t have dog bite insurance. 

At the very least, you should be shopping around for a policy at an affordable rate. You would then be ready when things go back to normal and BEFORE you start walking your dog again.  Here is what you need to know.

The numbers

As of 2016, about two-thirds of households in the US have pets, and of those, 78 million are dogs.  That can be worrisome, as the Centers for Disease Control estimates that 4.5 million people are victims of dog bites every year, and about 20% (900,000) of those injuries require medical attention.

The problem is serious enough for insurance agencies to stand up and take notice. About 15,000 dog owners in the US filed claims against their home liability insurance for dog-related injuries in 2015, and this is actually the lowest number of files claimed every year since 2007!

Even then, claims made in 2015 have led to insurers paying out about $570 million at an average of $37,000 per claim, which was about 33% of all payouts made for that year.  Some reasons for these high payouts are high medical costs and bigger settlements given by juries to plaintiffs.

Dog breed bias

Some dog breeds have certain characteristics that make them more likely or less likely to injure people. As a result, most insurance companies will have dog breed bias when it comes to covering certain breeds of dogs. Some have restrictions, while some outright refuse or even cancel existing homeowner’s insurance coverage for people who own specific dog breeds.

In some cases, the insurer will require homeowners to agree to waive any liabilities of the insurer for any injuries resulting from dog bites. In others, they will raise the premiums when a dog they cover is involved in injuring someone.

Among the breeds that come under this bias are:

  • Akita
  • Alaskan Malamute
  • Chow Chow
  • Doberman Pinscher
  • German Shepherd
  • Pit Bull
  • Rottweiler
  • Siberian Husky
  • Wolf Hybrid
  • Canary

As a dog owner of one of these breeds, you might feel outraged by this bias, but it is nothing personal. Insurance companies make money by not paying out money for claims, so they have to weigh the risks of covering certain dogs. If a dog breed is large and/or aggressive, the risks of an injury claim are much higher.

Having a dog of the high-risk breed in your home is not going to result automatically in a denial or restriction of coverage. However, it would warrant more review.

The breed is not the only consideration. Some insurers also look at the training received, personality, vaccination, and history of the dog in question. The insurer will also consider dogs used in therapy or as a service animal.

Pushback

Despite the practical reasons stated by insurers behind dog breed bias, there has been some pushback on this. Some insurers disagree that refusing or restricting coverage based on breed alone is not a good determination of risk. Even a dog that bites occasionally does not mean it is dangerous as dogs typically do so when they are afraid.

The Massachusetts Society for the Prevention of Cruelty to Animals-Angell Animal Medical Center supports this with research, and criticizes insurers that subscribe to dog breed bias because it discriminates against owners that display responsibility by training and socializing their dogs properly. 

Dog breed bias has also resulted in people avoiding owning and adopting dogs of these “blacklisted” breeds because it might keep them from getting homeowners’ liability insurance.  This attitude also affects dogs of mixed breeds, as the determination could go against them if the dog appears to have qualities of a blacklisted breed.

Additionally, some breeds might simply be more popular than others are. This would skew the incidence of dog bites and lead to the false conclusion that some breeds are more likely to bite.  A more accurate prediction of risk is to consider the behavior of the dog owner and the training of the individual dog.  For example, dogs trained to be guard dogs, no matter the breed, are more likely to bite than dogs treated as part of a family.

Instead of penalizing owners for having certain dog breeds, insurers should motivate them to train and socialize their dogs properly. They also have the power to make dog owners more aware of their responsibilities towards their dogs and society as a whole, and thus reduce the incidence of bite claims and risk of payouts.

Insurers that will

Fortunately, some insurers in the US have a more inclusive policy when it comes to dog breeds. They will cover “blacklisted” dog breeds without equivocation.

  • USAA
  • State Farm
  • Nationwide
  • Fireman’s
  • Chubb
  • Amica

They will not refuse or restrict coverage solely on breed. However, they will look at the history for aggression and bites of a dog before deciding to grant homeowners liability coverage to the dog owner. They might ask for certification from your veterinarian or obedience schools or have someone visit your home to meet the dog before making a final determination.

Some interesting facts

  • Insurance companies in Michigan and Pennsylvania cannot legally exercise dog breed bias or “breed profiling” when writing homeowners policies.  Other states do not have these legal restrictions.
  • Some cities , counties, and states have a “one bite” statute that protect dog owners from liability for injuries resulting from a dog bite if it was the first time it happened. This implies that the dog owner had no knowledge of the potential of their dog for dangerous behavior.
  • 36 states have a statutory strict liability for dog-related injuries and attacks, which means the dog owner is liable to the victims.
  • Standard homeowners’ policies cover spouses and dependents under 21 years of age, but will not be able to file a claim if they are the victims of an attack. They also cover unpaid dog sitters and dog walkers if the dog bites them while in their care. 

Conclusion

When buying dog owner insurance, you might come against dog breed bias or high premiums or both. In any case, it is important to shop around before finally deciding on the best coverage you can get in your state.  You should ask many questions, including purchasing any riders for dog bite liability in case your existing insurance company does not cover certain dog breeds. If all else fails,  call your state insurance commissioner’s office for help.

Tags: , , ,