Pet Insurance: The basics

With advances in veterinary treatment, illnesses and injuries that were once fatal to pets are now treatable. But with increased care options, there are also increased costs. Pet insurance can help pet owners defray the costs of potentially expensive pet care, and prevent them from having to make painful decisions regarding the well-being of their pets based on financial considerations. While pet insurance may sound like a new innovation, it's actually been around for quite some time.

The very first pet insurance policy was issued in the late 19th century to owners of horses and livestock. Pet insurance came to Britain in the 1940s and in 1982 the first American pet insurance policy was issued to a canine actor playing Lassie. Pet insurance may seem like a frivolous expense to some, but when considering the investment pet owners put into their animals, it's actually a pretty sound investment.

Treatment for life-threatening illnesses such as cancer can cost thousands of dollars. Having a pet insurance policy in place can greatly help to mitigate the costs of this treatment. In the U.S., nearly $34.4 billion was spent on pets in 2004, which is double what was spent a decade before then. Of that $34.4 billion, nearly $1.6 billion was spent on the purchase of pets, $14.2 was spent on food and nearly $16 billion was spent on medical care, including medicine. Today, pet insurance is common in some countries. In Britain nearly 23 percent of pet owners have insurance on their animals. Dogs are the most commonly insured animals, followed closely by felines.

How it works

Pet health insurance operates much like property insurance. The insurer reimburses the owner for costs after the pet has received veterinary care. The owner submits a claim to the insurer in order to obtain reimbursement. In general, there are two types of pet insurance policies, lifetime policies and non-lifetime policies.

Non -lifetime policies will offer coverage for treatment during a set period, but after that period some conditions may be excluded. Lifetime coverage will cover all specified conditions for the lifetime of the pet. Lifetime policies may have per condition, per year exclusions, which will deny coverage for some conditions if they occur more than a set number of times per year.

Most policies offer coverage for routine visits and emergency visits, medications, lab tests and x-rays and vaccinations. Like health insurance, many pet insurance policies work with a network of vets that the owner must choose from. Using a vet outside the network may result in a lower reimbursement or non-payment of a claim. Pet health insurance offers a variety of policies and coverages to pet owners. Owners can purchase coverage for certain treatments, like surgical coverage, or can purchase other options such as nationwide coverage if the owner travels a lot with his or her pet.

Often pet insurance policies will have discounts if multiple pets are being covered. A common discount is a 5 to 10 percent cut if the owner registers two or more animals. Just like human health insurance, pet insurers may require the pet to undergo a medical examination before offering coverage. This is why it's a good idea to obtain coverage for a pet while he or she is young, before the animal has the opportunity to develop significant health problems.

Average costs

On average, pet insurance costs between $10 and $50 per month, depending on the insurer the owner uses and how comprehensive the policy he or she buys is. Accident coverage, which covers injuries as a result of being hit by a car or other accidents for about $10 per month, while accident and illness coverage will cost between $20 and $30 per month. Many employers are beginning to offer workplace benefits that provide pet insurance at discount prices.

Third-party liability insurance

In addition to pet health insurance, many insurers also offer third-party liability insurance coverage for pets. This insurance basically covers any damage your pet may cause to others or their property. For pet owners, pet health insurance can be a wise investment that will offset the costs of extensive and expensive treatment your animal may need. Pet owners should read over all policy documents and ensure that they understand all language in a policy before signing up for coverage.