Fido and Felix could cost you thousands: The costliest pet insurance claims

Whether pet insurance is a good investment is debatable. If your pet is healthy, you'll pay your premiums without ever seeing your policy pay off. Yet according to data from pet insurance provider Veterinary Pet Insurance Co. (VPI), vet bills can pile up quickly.

The company, which insures 485,000 pets nationwide, received more than 14,000 claims in 2010 that averaged about $1,000, according to a June 2011 news release. Here are some of the most common -- and most expensive claims:

• The most common pricey condition was torn knee ligaments and cartilage. This condition generated nearly 7,000 claims and cost an average of $1,500 per claim.
• The next two most common were foreign objects in the stomach or intestines. They cost between $1,500 and $2,000 per claim on average and, together, made up nearly 2,000 claims.
• Intervertebral disc disease (common in dachshunds) cost an average of $3,200 per claim and led to nearly 900 claims in 2010.
• Other conditions that rounded out the top 10 expensive claims included stomach torsion (bloating), broken leg, laryngeal paralysis (which causes breathing problems), throat tumors, ear canal surgery and ruptured bile ducts. They accounted for more than 1,100 claims altogether and cost between $1,500 and $2,500 per claim.

The lesson, according to VPI, is that pet owners should be aware that it's quite possible for vet bills to reach thousands of dollars. That, according to the company, is where pet insurance comes in. But what exactly is pet insurance, and what does it cover?

Essentially, pet insurance is similar to human health insurance. According to the Insurance Information Institute, pet insurance often includes premiums, deductibles, co-pays and caps. The cost of coverage is based on the animal's age and health, and the level of care the owner chooses to buy. Generally, premiums increase with the animal's age. Some companies may exclude pre-existing conditions, and some will deny coverage to certain breeds that are prone to hereditary conditions.
 
One pet insurance company, Trupanion, pays for about 90 percent of veterinary charges for testing, surgery, treatment and medications, minus the examination fee. The company does not, however, cover preventive care like dental polishing, parasite control and exams. Other companies do provide this kind of "pet well care" protection to cover things like vaccinations and physical exams, according to the Insurance Information Institute.

While not technically insurance, discount plans may offer some savings. According to the Insurance Information Institute, veterinarians and pet vendors often provide such programs, which offer savings on veterinary services and pet supplies.Will pet insurance always pay off? Not necessarily. As with any insurance product, the economics are hard to predict. But if you can afford the premiums and want peace of mind, pet insurance may help take the bite out of sky-high vet bills.