Consumer advocates say pet owners should bring a healthy skepticism when shopping for insurance.
Americans are increasingly treating their pets as members of the family, feeding them gourmet food, paying for day care and throwing them birthday parties. Family sleepwear sets sold on PajamaGram.com even include matching jammies for the dog.
So it’s not surprising that an increasing number of “pet parents,” as they are known in the pet care industry, are seeking sophisticated medical treatments for their animals.
Enter pet health insurance, marketed as a way to help defray rising veterinary expenses and avoid “economic euthanasia” — the necessity of putting a pet down because the owner can’t afford treatment. More than 2 million pets in the United States and Canada (most of them in the United States) were insured at the end of 2017, up about 17 percent from the year before, according to the North American Pet Health Insurance Association.
But consumer advocates say that pet owners should make sure they understand how the policies work before buying them.
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More than two-thirds of U.S. households own a pet, according to the American Pet Products Association. Americans spent about $70 billion on pets in 2017, including purchases of animals, food, veterinary care, medicines and other services.
“People are much more inclined to think of their animals like children, and treat them accordingly,” said James Serpell, a professor of ethics and animal welfare at the University of Pennsylvania’s School of Veterinary Medicine.
J. Robert Hunter, director of insurance with the Consumer Federation of America, said pet owners should bring a healthy skepticism when shopping for pet insurance. Purchase of the product is “often motivated by a combination of love and fear,” he said. “So the buyer may be particularly vulnerable.”
Details vary by insurer and policy, but premiums for pet insurance typically depend on factors like the cost of veterinary care where you live and the age and breed of the pet. The average annual premium for “accident and illness” coverage was $516 per pet in 2017, while the average claim paid was $278, according to the pet health insurance association.
Jeff Blyskal, a senior writer with Consumers’ Checkbook, a nonprofit group that rates services in major urban markets, said pet owners should compare policies with a critical eye. When years of payments are taken into account, he said, buying insurance could end up being more expensive for some pet owners than going without it, if their animal doesn’t require much care.
Pet policies typically don’t cover pre-existing conditions, Blyskal said, so premiums are generally lower when your pet is young and healthy. Even if you start early, though, you may end up paying more over time, he said, because some policies raise premiums as pets get older. This can increase costs substantially, he said, and cause owners to drop their policies as the animals get older — just when they are more likely to need the coverage. Industrywide, the average pet policy is maintained for three years or less, according to an insurer regulatory filing in 2016 in Washington state.
The expenses tied to pet health coverage usually include not only a regular premium but also other out-of-pocket costs, like a deductible — an amount that you must pay before insurance begins paying. Insurance may cover less than 100 percent of costs after the deductible, so you’ll still have to pay for part of the treatment. Some policies may cap payments, so ask if there’s a limit.
Rob Jackson, chief executive of Healthy Paws Pet Insurance, said insurance could protect against budget-busting events costing thousands of dollars. (Healthy Paws said a pet’s age affects premiums at initial enrollment, and also as the pet ages.) The Healthy Paws website cites examples like Fridgey the Bengal cat, who had a $4,600 hip replacement, and Lupa the German shepherd, who needed $52,000 in treatment for tetanus exposure.
One way to pay lower premiums, and possibly get broader coverage, is to buy pet insurance through your employer. Eleven percent of U.S. employers offer pet health insurance benefits, according to a 2018 survey by the Society for Human Resource Management, up from 6 percent in 2014. Typically, companies offer pet insurance as a “voluntary” benefit. It’s uncommon for employers to contribute to the cost of premiums, as they do with human health insurance. But insurers may give employees a break on premiums, or offer better coverage, because their marketing costs are lower.
Employees at Ollie, a specialty dog food company, receive a 15 percent discount on premiums from the insurer Healthy Paws, said Gabby Slome, a co-founder of Ollie. (Ollie also offers workers benefits like “pawternity” leave when they take a new dog home.)
“We had a strong belief that pets are a part of one’s family,” she said.
Scott Liles, president and chief pet insurance officer with Nationwide, said half of Fortune 500 companies offer their employees pet insurance from his company. Nationwide’s employer-based plans now underwrite by species — canines vs. felines — but not by age or breed, Liles said. That means, he said, you won’t pay a higher premium if your pet is older, or if its breed is prone to certain illnesses, unlike policies sold in the open market.
Here are some questions and answers about pet health insurance:
Q: Do some animals cost more to insure than others?
A: Cats are generally less expensive to insure than dogs. The average accident and illness premium in 2017 was about $45 a month for dogs and $28 a month for cats, according to the pet health insurance association. Because some purebred animals are prone to certain health problems, some insurers may charge higher premiums for them.
Most, but not all, insurers limit coverage to common household pets. Nationwide, Liles said, offers coverage for birds, hamsters and more exotic pets, including tarantulas and even hedgehogs.
Q: What if I can’t afford pet insurance?
A: Local animal shelters may offer basic services, like rabies vaccinations or spaying and neutering operations, at a discounted rate. The Humane Society of the United States lists groups that can help owners who can’t afford medical care for their pets.
Another option is to put money away each month — perhaps the amount of the premium you would pay — into a dedicated savings account so you will have some funds available for pet care if you need it.
Q: What if I’m unhappy with my pet insurance policy?
A: Insurance products are generally regulated by state governments, so you may want to contact your state insurance commissioner about your concern. The National Association of Insurance Commissioners offers information about pet insurance and links to regulators in each state.