Pet insurance, explained: Everything to know now

Veterinary services can be expensive. In fact, the cost of veterinary services rose faster than inflation last year, according to the American Veterinary Medical Association (AVMA). 

Pet insurance can help defray some of those costs. Just as health insurance covers some of the costs of your own medical services, pet insurance can do the same for your cat, dog, and, in some cases, exotic animals.

About 7.6 million pets are currently insured in North America, according to the North American Pet Health Insurance Association (NAPHIA). Is this an insurance type that's worth securing your pet, however? Below, we'll detail what you need to know about pet insurance, how it works, what it covers, and what you can expect to pay for it.

Learn more about your pet insurance coverage options here.

What is pet insurance and how does it work?

Pet insurance covers some or all of the costs of certain veterinary services for animals — things like diagnostics, X-rays, illness treatments, prescriptions, and more – depending on the provider and the policy.

Generally, it works on a reimbursement basis, meaning you pay for services up front (out of pocket), and the insurer pays you back at a later date. These policies also typically have deductibles and maximum payout limits, much like human health insurance plans do. That said, you're typically free to see any veterinarian you want, unlike the restrictions that apply to health insurances for humans. 

What pet insurance covers

The exact services pet insurance covers depend on the provider and plan you choose. Often, you can choose between accident-only coverage, accident-plus-illness coverage, and wellness coverage. Some insurers may let you build and customize your own plan.

Here's what's typically covered with each type of coverage:

There also may be add-on coverages you can choose from. These can include items  like physical rehabilitation, acupuncture, chiropractic services, or coverage for exam fees, depending on the provider.

Compare your pet insurance options and find the right fit today.

What pet insurance doesn't cover

Most pet insurance policies have exclusions. This can include items like:

• Bilateral conditions

• Dental care (if it's not related to an accident or injury)

• Behavioral modification/training

• Parasites

• Elective/cosmetic procedures

• Preventative care (without a wellness plan or add-on)

• Special food

• Breeding services

• Alternative/holistic treatments 

• Boarding

• Grooming

Many will also exclude pre-existing conditions, depending on whether they are curable (or controllable). Most also have waiting periods that will need to be completed before any insurance protections become available.

How much does pet insurance cost?

The cost of pet insurance can vary based on the type of animal you have, its breed and size, your location, the deductible and plan you choose, and the insurer you buy your policy from. You may pay your premium monthly or annually, depending on how your plan works. These are the average annual pet insurance premium for dogs and cats, according to NAPHIA:  

Is pet insurance worth it?

Pet insurance may be worth it for some pet owners, but it depends on your finances, the cost of veterinary services in your area, your pet and its overall health. If your pet is particularly prone to accidents or illness, or you would not have the funds to cover veterinary bills should an accident occur, then pet insurance could be a worthwhile investment. 

The AVMA also recommends speaking with your pet's veterinarian to determine if pet insurance is a good fit for your situation. If your vet does recommend it, be sure to shop around for your plan, as coverages and costs can vary widely between providers.