What Is Pet Insurance And How Does It Work?

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Updated: 08 May 2024
Written by
Lacey Jackson-Matsushima
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In this article, we will discuss what pet insurance is and how it works. By carefully selecting an appropriate policy for your furry family members, you can avoid unexpected medical bills that cost thousands of dollars.

Over the last 20 years, my family has had at least three pets at any given time, all of which have dealt with a prohibitively expensive and unexpected accident or injury. After losing thousands of dollars on these unexpected costs, we quickly learned the importance of investing in insurance, and you should too.

Key Takeaways

  • Pet insurance is an insurance plan for furry family members that provides reimbursements for accidents and/or injuries.

  • It covers the upfront costs of pet care, and your insurer reimburses you for qualifying costs.

  • Some companies also offer coverage for regular care at an average of $4 more per month.

  • You can find companies offering lines of credit for the upfront costs and companies specializing in fast turnaround times for reimbursements.

What Is Pet Insurance?

Pet insurance is a form of health insurance for pets which can be applied to accidents, illnesses, and/or general wellness. There are three main types for each, and many companies will let you add additional coverage (called riders) if you want special insurance for things like dental care, mental health, or holistic care that isn’t already covered.

Pet ownership has increased over the last few decades, with nearly 70% of American households including a family pet.

According to NAIC, consumer spending on all pet medical care has been consistently rising since 2001. 

The cost of pet ownership has increased steadily during that time frame to include, as of 2023, a total of $143.6 billion dollars spent on:

  1. Pet food and treats, including food purchased at the Vet, Costco, or online;
  2. Pet supplies and over-the-counter medicine;
  3. Vet care, including surgery and prescription medication;
  4. Other services include pet sitting, pet walking, pet insurance, grooming, boarding, and training.

It is a way to offset unexpected vet bills for your furry family members. Pet insurance is surprisingly affordable and provides protection against high costs for accidents or injuries.

How Does Pet Insurance Work?

Pet insurance works much the same as your health insurance, your car insurance, or your homeowner’s insurance:

You can choose the type of policy you want based on what things are covered and the monthly cost. You can make adjustments for things like riders, deductibles, or annual coverage limits.

If your policy covers an unexpected accident or illness, you pay for it out of pocket up front, then submit a claim after the fact for reimbursement.  According to Forbes, four out of five pets will experience an unexpected emergency.

Process For Submitting A Claim

The process for submitting a claim is fairly simple, depending on the insurance provider you have. In most cases, you can log into your account and submit invoices or receipts online, after which they get processed, approved, or denied, and if approved, reimbursed according to your coverage limits, deductibles, and reimbursement limits.

Coverage Limits

All pet policies come with annual coverage limits. This might also be called a reimbursement limit.

Either way, it refers to the maximum amount of money your insurance company will reimburse you in any given year for covered services. You can choose the coverage limit you want.

Important: Higher coverage limits equate to higher monthly premiums.


Deductibles are the minimum amount you have to pay out of pocket before any coverage is reimbursed.

Tip: Your deductible has the biggest impact on your monthly premium. Raising your annual deductible by a few hundred dollars can offer a high coverage limit and reimbursement percentage without a significantly higher premium.

Reimbursements Limits

Your reimbursement limit is annotated as a percentage. Insurance companies provide policies with reimbursement limits between 70% and 90%.

Let’s look at an example:

Let’s say you own a five-year-old male Border Collie. You choose an Accident and Illness policy with the following:

  • An annual coverage limit of $15,000
  • A reimbursement limit of 80%
  • An annual deductible of $500
  • Your monthly premium is $44.87

You’ve been paying for pet insurance for about two years. So you’ve spent about $1076 in premiums since getting coverage.

Then your dog eats a toy, and you have to pay $4300 for the vet bill. With your annual deductible, you’ll have to pay $500 upfront and 20% of the remaining balance.

$4300 – $500 = $3800 (this is the $500 deductible you have to pay)

$3800 x .20 = $760 (this is the 20% you won’t get reimbursed)

$500 (deductible) + $760 (20% you have to pay) + $1076 (premiums for the last two years = $2336

The result?

Even when considering the monthly premiums you have paid for several years, you save $1,964 on a single pet emergency. The 2023-2024 APPA National Pet Owners survey found that pet owners spend an annual $37 billion on vet care.

What Does Pet Insurance Cover?

You have a surprising amount of control over what is covered under your pet insurance policy, so long as you work with a company that offers riders or additional coverage for things like annual vet appointments and other wellness costs.

Note: Things that are covered will vary based on the policy you choose.

Accidents And Illnesses

Generally, policies will cover accidents and illnesses such as:

  • Bite wounds
  • Broken bones
  • Lacerations
  • ACL ruptures
  • Allergies
  • Seizures
  • Digestive issues
  • Skin conditions
  • Eye disorders
  • Hip or elbow dysplasia
  • Blood disorders

Testing And Diagnostics

Pet insurance covers testing and diagnostics for qualifying accidents and/or injuries, such as:

  • Blood tests
  • Ultrasounds
  • X-rays
  • MRI’s
  • CT scans


General policies extend to procedures for the same qualifying situations, such as:

  • Nursing care
  • Hospitalizations
  • Endoscopies
  • Surgeries
  • Chemotherapy


Some policies will cover the cost of prescriptions if those prescriptions are prescribed by a veterinarian for qualifying accidents or injuries. If your current policy does not include prescription medications, you might be able to add additional coverage for them.

Holistic Care

Many policies will cover holistic care or alternative procedures for qualifying accidents and injuries, including chiropractic care, laser therapy, or acupuncture.


If you add Wellness coverage, general preventative care costs are typically included, such as:

  • Routine wellness exams (like your annual doctor visits)
  • Flea and tick prevention
  • Heartworm medication
  • Vaccines
  • Spaying or neutering

What Does Pet Insurance Not Cover?

The most common exclusions from pet policies are things that your pet doesn’t need, but you might want.

Breeding Costs

Firstly, pet insurance generally does not extend to breeding costs, even if you invest in additional coverage. Costs can include:

  • Basic breeding tests such as X-rays and thyroid tests
  • Heart tests
  • Health certifications
  • Stud fees
  • Transportation costs
  • Shipping or implantation costs

Cosmetic Procedures

Generally, policies will not extend to cosmetic procedures like prostheses, tail docking, or ear cropping.


Most policies do not cover grooming costs such as nail care, hair care, or bathing.

Pre-existing Conditions

Basic pet insurance policies do not typically extend to pre-existing conditions, but you can search for specific policies designed to cover the costs of pre-existing conditions.

Types Of Pet Insurance Plans

There are three basic types of pet insurance plans from which to choose.

Accident Only

Accident-only coverage is the least expensive, and it doesn’t typically come with options for additional Wellness coverage. Accident-only coverage applies to procedures, testing, diagnostics, and care for qualifying accidents.

Note: Older animals may only qualify for accident coverage once they pass an age threshold. For cats, it is 15 years or older. 

Accident & Illness

Accident and illness coverage covers procedures, testing, diagnostics, and treatment for qualifying accidents and illnesses. Many providers require this plan if you want to add additional coverage.

2022 industry data from the NAPHIA found the average Accident & Illness coverage premiums to be $53.34 for dogs and $32.25 for cats.


Wellness plans extend coverage to annual treatment costs. These are not sold individually. They have to be added to a qualifying accident and illness plan.

The table below gives an idea of what each plan type covers:

Accident Only Plan Accident and Illness Plan Wellness Plan (Add-on)
Accidents and injuries Yes Yes No
Illnesses (common illnesses, serious conditions, hereditary conditions) No Yes, depending on your plan No
Preventative care (vaccinations, flea and heartworm medication, checkups) No No Yes
Tests (blood tests, CT scans, ultrasounds) Yes, for accident-related incidents Yes, for qualifying accidents or illnesses No
Prescriptions Yes, for accident-related incidents Yes, for qualifying accidents or illnesses No
Procedures (surgeries, endoscopies) Yes, for accident-related incidents Yes, for qualifying accidents or illnesses No
Holistic care (acupuncture or chiropractic adjustments) Yes Yes No


How Much Does Pet Insurance Cost?

The cost of your pet policy is based on many factors, including the age and breed of your pet, whether they have pre-existing conditions, what your deductible will be, what your annual limit will be, and what your reimbursement percentage is. In addition, pet insurance costs can slightly vary in cost by state, for example, our experts found that the average cost of pet insurance for dogs in Ohio is $40.17, in Michigan it’s $36.79, in Indiana you can insure your dog for $36.77, whereas dog insurance in Colorado will cost you $47.56.

The NAPHIA’s industry report for 2023 found that the average premium is $32 per month.

Age And Breed

For all pets, age will be a significant factor in the cost. The older a pet is, the more likely they are to face accidents or illnesses, so they cost more.

The breed also plays a determining factor, but more so for dogs than for cats because dog breeds can influence the size of an animal and any hereditary conditions to which they might be at risk.

For example, golden retrievers are highly susceptible to hip and elbow dysplasia as they get older, while pugs are susceptible to brachycephalic obstructive airway syndrome.

  • Let’s say you have a brand new, one-year-old female cat. The average cost per month is $23.77.
  • Now let’s say you have an older cat, 14 years old. The average monthly cost for pet insurance is $38.28.
  • If you have a new puppy, a male, 1-year-old Australian shepherd, you can expect an average cost of $58.31 per month for pet insurance.
  • The average monthly cost for a 14-year-old Australian Shepherd male is $152.13.

Deductible/Annual Limits/Reimbursement Percentage

The deductible, annual coverage limit, and reimbursement percentage you choose will affect your monthly premium. However, out of all of these, the deductible has the biggest impact. Adjusting your deductible from $100 to $250 can result in significant savings for your monthly cost.

  • A cat with a $100 deductible might cost $30 per month, but a $250 deductible will cost only $20 per month. This means a $150 difference in terms of what has to be paid out of pocket when an accident or illness occurs. It also means a difference of $120 saved annually.
  • A dog with a $100 deductible might cost $77 per month, but a $250 deductible would only cost $40. This means a difference of $37 each month. Using this example, it would only take you 7 months to save up the $250 deductible from the difference in monthly premiums, after which you would continue saving $37 each month.

Tip: Choosing a slightly higher deductible and putting aside the difference in your monthly premiums could save you hundreds of dollars over the years.

However, your annual limit and reimbursement percentage also play a role. Using the example of the 1-year-old cat, the table below breaks down these different monthly costs based on fluctuating coverage limits, deductibles, and reimbursement percentages:

Monthly Cost Coverage Limit Deductible Reimbursement %
$18.53 $15,000 $500 90%
$30.87 $15,000 $100 90%
$24.70 $15,000 $100 70%
$19.02 $15,000 $250 70%

Now let’s look at those same breakdowns, but for a 14 year old cat:

Monthly Cost Coverage Limit Deductible Reimbursement %
$46.20 $15,000 $500 90%
$77.00 $15,000 $100 90%
$61.60 $15,000 $100 70%
$47.43 $15,000 $250 70%

Let’s look at the same parameters but for the puppy:

Monthly Cost Coverage Limit Deductible Reimbursement %
$56.79 $15,000 $500 90%
$94.65 $15,000 $100 90%
$75.72 $15,000 $100 70%
$58.31 $15,000 $250 70%

Now, for the older dog:

Monthly Cost Coverage Limit Deductible Reimbursement %
$148.18 $15,000 $500 90%
$246.96 $15,000 $100 90%
$197.57 $15,000 $100 70%
$152.12 $15,000 $250 70%

Most Common Pet Insurance Claims

According to a report regarding Embrace Pet Insurance, one of the top ten pet insurers listed by Forbes, the top five insurance claims were for the following:

Claims Likely Conditions Average Cost to Treat
Gastrointestinal Issues (including symptoms like diarrhea or vomiting)
  • Pets eating things they weren’t supposed to
  • Pancreatitis
  • Parasites
  • Bacterial infections
  • Viruses
$500-$1,000 for diagnostics

$860 for dogs and $670 for cats to treat, depending on cause

Ear Infections
  • Bacteria infections
  • Allergies
  • Mites
  • Rashes
  • Cancer
Between $100 and $5,000 depending on the cause
  • Bacterial infections
  • Diabetes
  • Cushing’s disease
  • Chronic kidney disease
$525 for dogs and $625 for cats
  • Epilepsy
  • Brain injury
  • Heatstroke
  • Ingesting toxins
Between $200 and $5,000 for annual medications


How To Find The Best Pet Insurance

Finding the best pet policy will be a personalized process because you’ll have to consider your pet’s current health and breed, any pre-existing conditions, what you can afford for monthly premiums versus deductibles, and what forms of alternative or holistic medicine might be a priority in your home.

Get Quotes

The easiest way to find the best pet insurance is to get quotes online. Online quotes give you an idea of the cost based on the type of pet you have, their breed, age, and health.

You can easily change parameters when reviewing different quotes so as to produce a side-by-side comparison of the same animal but with different coverage limits, reimbursement percentages, and deductibles.

Look At Coverage

Once you have your quotes, you need to look at things like:

  1. What’s covered in the policy, especially if your pet breed has a high risk of specific conditions
  2. The waiting period for reimbursement
  3. What riders are available, and at what cost
  4. Whether alternative medicine is covered
  5. What mental health treatment is included, such as separation anxiety
  6. Whether dental care costs are included

Tip: According to Forbes, it is essential to consider pet insurance in 2023 but to make sure your coverage is a good fit for your pet type, breed, and age.

If, for example, your pet has a pre-existing condition, the best pet insurance companies might be more limited. If you have multiple pets, you might be interested in coverage options that provide multi-pet discounts.

The table below shows some unique features and coverage options for a handful of top companies:

Company Unique Features Covered Not Covered
Paw Protect They provide a $5,000 line of credit to customers to cover the cost of emergency pet care. Then customers submit their claim as usual and repay that line of credit. This is a great option for customers who need an extra level of financial protection.
  • Vet exam fees for accidents and injuries
  • Diagnosis and treatment for covered accidents and/or injuries
  • 24/7 Telehealth line
  • Routine care, though this can be added as a rider
  • Microchip costs
Embrace They offer a diminishing deductible for each year you go without filing a claim.
  • Diagnosis and treatment for Accidents and injuries
  • 24/7 Telehealth line
  • Routine care, though this can be added as a wellness rider
  • Microchip costs
Spot They offer lower maximum coverage limits and deductible choices, so the premiums are lower.
  • Diagnosis, tests, and treatment for covered accidents and injuries
  • Microchip costs
  • 24/7 Telehealth line
  • Routine care, though this can be added as a wellness rider
  • Breeding costs
ManyPets They have unlimited annual coverage for all their plans
  • Vet exam fees for accidents and injuries
  • Diagnosis and treatment for covered accidents and/or injury
  • Routine care, though this can be added as a wellness rider
  • Microchip costs
  • Breeding costs
Figo They provide 100% reimbursement options
  • Diagnosis and treatment for covered accidents and/or injury
  • 24/7 Telehealth line
  • Upgrades for vacation, pet loss, or lost pet costs
  • Routine care, though this can be added as a wellness rider
  • Dental illnesses
  • Prescription food, though this can be added as a rider
  • Microchip costs

Talk To Your Vet And Pet Owners

Don’t be afraid to talk to your vet and ask which companies they prefer working with or which companies other clients recommend. All vets take pet insurance but each may have preferred options.

If you know people who are pet owners, speak to them about the companies with whom they’ve had the most success, especially if their pets share similar concerns, pre-existing conditions, or risk factors.

Is It Worth It?

Pet insurance is a great idea for anyone who likes to keep tabs on their spending and avoid painful and unexpected medical bills.

According to the 2023-2024 APPA National Pet Owners Survey, pet ownership is almost evenly spread across each generation, indicating that insurance savings could help every age group.

Accidents, injuries, and illnesses happen unexpectedly, but the bill will be a lot more unexpected if you don’t have pet insurance.

Two years ago, my family had a pet emergency. We didn’t have pet insurance even though we had four pets. This emergency coincided with a continuing gut feeling that we should consider looking into pet insurance soon.

Below is a breakdown of our initial pet emergency invoice:

X-ray $200
Ultrasound $380
Surgery $1850
Medicine $200
Total: $2630

If you’re like me, bad luck doesn’t strike just once in the family; it strikes thrice.

The next bill was for the bulldog. She swallowed something she wasn’t supposed to. The cost of removing the wad of deftly defied “drop-its” and “spit-it-out” was $5000!

(So much for that upcoming vacation)

So in two months, we had to pay $7,630 out of pocket for pet emergencies and illnesses.

Thankfully we invested in pet insurance that same month, so when bad luck struck us the third time, it only cost us our premium for the first month, $180.

Pet insurance can help you avoid missing your upcoming vacation because of a vet surgical bill.


What Does Pet Insurance Protect?

Pet insurance protects against unexpected costs for accidents and injuries, including bites, hereditary conditions, broken bones, X-rays, blood tests, allergies, and more. Many companies let you add Wellness riders which cover the cost of regular vet appointments, routine checkups, and medicine like flea and tick prevention.

Does Pet Insurance Really Exist? If So, What Does It Cover?

Yes, pet insurance really exists. Policies can cover the costs of diagnostics, tests, and treatment for things like accidents and injuries, including holistic procedures, behavioral therapy, prescriptions, surgeries, and hospitalization.

How Does Pet Insurance Work?

Pet insurance reimburses pet owners for unexpected costs. You’ll be responsible for the upfront costs if you have to take your pet to the vet for an accident or injury. Then you submit all of your invoices to the insurance company, and they will reimburse you for all covered costs.

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