If you're thinking about getting pet insurance, you're far from alone. According to the North American Pet Health Insurance Association (NAPHIA), coverage rates have increased by an average of 22.6% per year since 2020, and over 5.6 million cats and dogs in the U.S. are now insured.¹ But what exactly does pet insurance cover and how can it help you? From financial protection to customizable coverage, here are the key benefits you should know.

Financial protection against unexpected vet bills

From time to time throughout their lives, most pets end up needing vet care due to illness or injury. For example, your cat may get into a fight and need a wound treatment, or your dog may need medication for an ear infection. The problem is, as you can see below, veterinary treatments can get expensive.

Here's how pet insurance typically works:

• Monthly premiums: To maintain pet insurance coverage, you pay a monthly premium — on average, about $56 per month for dogs and $32 per month for cats, according to NAPHIA.⁸
• Vet visits: If your pet gets hurt in an accident or develops a new illness, you take them to the vet and pay the bill as usual.
• Claims: After the visit, you file a claim and submit the bill to your insurer.
• Reimbursements: If your claim is approved, the insurer deducts your policy's deductible from the total bill and reimburses you for the covered amount based on your reimbursement rate, up to your policy's annual limit.

For example, Lily has a five-year-old Australian terrier⁹ named Charlie. When Charlie turned three, Lily purchased a pet insurance policy with a $10,000 annual limit, $200 deductible, and 90% reimbursement rate. For two years, she paid a $40 monthly premium as Charlie stayed healthy and didn't need any care. But, once he turned five, he began losing weight and needed to go potty more frequently.¹⁰

Lily took Charlie to the vet and discovered he had diabetes, which was going to cost $2,500¹¹ to treat initially. She paid the bill upfront and filed a claim with her insurer. Once approved, the insurer deducted her $200 deductible and reimbursed 90% of the remaining costs. Lily's net treatment cost ended at just $430 — a $2,070 savings.

Here's the cost breakdown with and without insurance:

Coverage for chronic conditions

Pet insurance also covers chronic conditions like arthritis and cancer. These unfortunate conditions aren't one-time events you can just pay for and move on from. Instead, you'll face ongoing costs that require regular space in your budget. For example, here's a look at the average costs of arthritis treatments for dogs¹²:

• Physical therapy: $50 to $75 per session¹³
• Hydrotherapy: $30 to $50 per session¹⁴
• Nutritional supplements: $10 to $70+
• Pain medications: $10 to $100 per month
• Alternative treatments: $25 to $50 per laser treatment¹⁵, $2,500 for stem cell therapy¹⁶
• Hip replacement surgery: $3,500 to $7,000+ per hip¹⁷

Without coverage, you could be looking at hundreds of dollars per month in care expenses and thousands in one-off treatments. However, pet insurance can help to reduce the costs and will often pay for itself many times over in these cases

Tip: While not all conditions are predictable, you can research whether your pet's breed is predisposed to certain health issues. Doing so can help you plan and prepare more effectively.

Preventive care and wellness options

Along with helping you cover accidents and illnesses, many pet insurance companies offer preventative care packages. These include coverage for routine care services, like those listed below, up to specified limits. As a result, you can save on preventative care and stay proactive about your pet's health, potentially reducing problems down the road.

For example, Michelle and her family recently got a Dalmatian puppy named Lola who needed various preventative care services, such as spaying, microchipping, biannual vet visits, and multiple vaccinations. To help with the costs, Michelle purchased an accident and illness pet insurance policy for $55 per month and added preventative coverage for $15 per month. Thanks to the extra coverage, she was reimbursed for most of her wellness expenses and saved over $200 overall in the first year.

Peace of mind for pet owners

Pet insurance can also bring peace of mind. When your pet faces a serious health issue, the last thing you want is to be torn between doing what's best for them and the cost. Insurance can help to ensure your pet can receive the care they need in many situations without the added financial strain.

Take John and his family, for example. They adore their 2-year-old Persian cat, Annie, but one day she swallowed a small toy and started vomiting incessantly. Panicked, John rushed her to the vet, only to learn she needed immediate surgery that would cost $2,000. John didn't have the funds to cover it so started brainstorming with his wife and researching options online. In the end, he decided to take out a personal loan. While Annie made a full recovery, the financial strain from repaying the loan, plus interest, lasted for over a year.

That experience was a wake-up call for John. To avoid stress and uncertainty in the future, he decided to invest in pet insurance. The coverage gave him and his family peace of mind that Annie would have access to the care she needed going forward without affecting their financial situation.

Important plan details

Pet insurance offers multiple plan options, such as accident-and-illness, accident-only, and optional preventative. Additionally, you can often customize various elements within your plan, including:

• Reimbursement rates: The percentage of covered costs your insurer will reimburse (e.g. 70% to 90%).
• Annual limits: The maximum amount your insurer will pay each policy year.
• Annual deductibles: The amount you pay before your coverage will start paying.

The best configuration for you will depend on your pet and situation. For example, if your pet is young and not prone to accidents, you could potentially save by opting for a lower premium, higher deductible, and lower coverage limits. However, if your pet is older and high-risk, you'd likely be better off with a higher premium, lower deductible, and higher coverage limits.

Flexibility in choosing care providers

Lastly, pet insurance offers flexibility. Unlike traditional health insurance for which often requires you to use provider networks, pet insurance companies typically allow you to see any licensed veterinarian or specialist in the United States. You don't have to worry about finding in-network vets or paying out-of-network fees. You simply find the pet insurance plan that works best for your situation and can see any licensed veterinary care provider you want, including specialists and emergency care facilities.

What pet insurance typically doesn't cover²¹

Pet insurance covers a broad range of expenses, but won't cover everything. One of the key exclusions is pre-existing conditions — any health issue your pet had before the policy start date.

For example, suppose you take your cat to the vet for a checkup and the vet finds a lump in his stomach. If you get pet insurance afterward and your cat is then diagnosed with stomach cancer, your policy typically won't cover the cancer-related vet bills because the symptoms were present before you got coverage.

Tip: Some insurers cover certain “curable” pre-existing conditions when they've been cured for a minimum amount of time, such as at least six months or a year.

Other common exclusions on accident and illness pet insurance policies include:

• Preventative care (unless you add the option to your plan)
• Accidents and illnesses that appear during waiting periods
• Treatment of hereditary disorders (e.g. hip dysplasia, cataracts)
• Dental issues not caused by accidents or illnesses
• Cosmetic surgery like declawing or tail docking
• Breeding-related issues
• Treatment of behavioral problems
• Expenses not directly related to veterinary services
• Grooming

Be sure to check a policy's exclusions before signing up so you're not blindsided by a claim denial down the road.

Is pet insurance right for you?

Deciding whether pet insurance is right for you will depend on factors like your pet, risk tolerance, and financial situation. For many pet owners, coverage offers a way to avoid the stress of unexpected vet bills and ensure their pets can get the care they need. However, some may prefer to risk it or use other financial resources to cover surprise vet bills.

Want to weigh the risks and benefits for your pet? Follow these steps:

• Assess your pet's risk: Look into any health conditions your pet's breed may be predisposed to and consider how your pet's personality, environment, and lifestyle impact its risk.
• Consult your vet: Request a pricing list for common treatments to understand what expenses might look like in your area without coverage.
• Review past costs: Review how much you've spent on veterinary care in previous years to gauge your typical expenses.
• Compare insurance quotes: Gather quotes from pet insurance providers to estimate how much coverage would cost for your pet.
• Assess your financial plan: Think about how you would handle unexpected, expensive vet bills without coverage and whether it would lead to additional financial strain.

Still have questions? You can speak to an InsureMe Advisor about the ins and outs of pet insurance and your unique situation. They will walk you through the costs and benefits to help you make an informed decision.