How to choose the right pet health insurance

Credit envy — or just the anxiety that comes from being at an emergency animal hospital — but when you overhear a fellow pet owner requesting a copy of a bill for insurance purposes, the merits of pet health coverage suddenly become clear.

“From 1994 to 2003, expenditures for veterinary services rose 76 percent,” says Carol McConnell, manager of veterinary education and services for Veterinary Pet Insurance, in Brea, Calif.

That rise may correlate with higher disposable incomes and the elevation of pets to "family member" status, along with longer animal life expectancies. But McConnell also notes that owners of ailing pets now have more options as veterinarians have added many diagnostic and treatment capabilities borrowed from human medicine.  Taking advantage of those new options can quickly run vet bills up into the thousands of dollars, making insurance premiums of a few hundred dollars a year a good investment for some pet owners.

Pet insurance is not new. European pet owners have been buying it since the 1940s. According a 2005 report from Packaged Facts, a market research company, about 25 percent of British pet owners have the coverage. In Sweden, nearly 50 percent carry it. But in the United States, where it has only been available since the early 1980s, less than 3 percent of pet owners carry insurance. Many are unaware it even exists, says Molly Pavolino, a spokesperson for PetProtect, an insurer in Naples, Fla.

Pet health insurance is not only far cheaper than the human variety, it also lacks the administrative complexity. Instead, pet insurance functions on a reimbursement basis with policyholders choosing their own course of care and providers and then submitting claims after the fact.

Because pets are technically a form of property, the insurance is structured more like a homeowner’s or auto policy.

“With a car, you have a fender bender and look to insurance to cover the repairs after meeting the deductible. As crude as it sounds, this is how pet insurance works," said McConnell. "The point of treatment remains getting the pet ‘back on the road,’ so to speak.” The main purpose of pet insurance, like auto insurance, is to manage the risk of a potentially costly event.

Four major insurers
Evaluating carriers is relatively straightforward, as only four offer coverage throughout the United States. But the policies vary significantly in terms of coverage. Premiums range from about  $10 to $71 a month per cat or dog, with discounts for multiple pets.

Veterinary Pet Insurance is the oldest and largest pet insurer with 70 percent of the market.  In addition to cats and dogs, coverage for birds, fish, snakes, rabbits, guinea pigs and other exotics is also available. Policies include standard accident, illness and emergency coverage, with additional coverage available for routine and preventive care. Coverage also includes FDA-approved medicines along with increasingly popular alternative care therapies like acupuncture and massage therapy.

Pethealth is a Canadian company that offers dog and cat insurance in the U.S. under a variety of names, including PETCO, ShelterCare and UnionPlus. A policy for older dogs has no upper age limit.

Hartville Group, which underwrites PetsHealth Care Plan, also covers dogs and cats. Most of its policies include routine care coverage for annual vaccinations. But it excludes any alternative therapy coverage. It also boasts an annual deductible rather than a per incidence deductible that characterizes the other policies. 

A variation in policy structure can be found with PetProtect, which, according to Pavolino, is structured more like a European policy. With only two policies to choose between, it limits coverage to accidents, illnesses and diseases. The higher-priced policy addresses the expense of finding a missing pet and recovery of the original purchase price of a lost pet. After a $40 deductible per incident, claims are covered 100 percent. Dollar limits per illness apply, which could be exhausted by a chronic condition.

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