Pet insurance pros and cons

Pet owners are buying pet insurance in increasing numbers as veterinary care becomes more and more sophisticated and owners are more loath to euthanize their pets. While pet insurance can offset costs enough to help pet owners avoid the very difficult choice of economic euthanasia, policies don't cover everything and are not always a good investment. Like any other insurance policy or financial service, pet insurance had benefits and disadvantages buyers should consider before purchasing a policy.

What is pet insurance?

Pet insurance is essentially coverage for the costs of veterinary care for pets that arise from sickness or injury. Last year, Americans spent nearly $250 million on pet insurance, and nearly $10 billion was spent in the U.S. on veterinary care. Pet insurance is a form of property coverage, meaning that it works on a claims made basis, in which the insurer reimburses the policyholder for bills submitted after treatment. Pet insurance policies have existed in some form since the late 19th century but only became widespread in America after the 1980s.

Most pet insurance policies offer coverage for veterinary costs that arise from sicknesses and illnesses. Others offer coverage for theft and death. Most policies also contain exclusions barring coverage of illnesses and injuries arising from certain circumstances and barring certain treatments from coverage. What are the benefits of pet insurance? For pet owners, purchasing a pet insurance policy can have a number of benefits. In the event of a major accident or illness, pet insurance can come in handy in avoiding big medical costs. If your pet is struck by a car, the cost of treating broken bones can be very expensive. Many pet owners are forced to choose euthanasia because of economic concerns.

Having a pet insurance policy can spare a pet owner this difficult choice by making emergency care affordable. Pet insurance is very affordable, with most policies costing between $10 and $50 per month, depending on what type of pet you're insuring and the level of coverage provided. It may be best to purchase a low-cost policy that only covers the big accidents or illnesses and pay for routine care on your own. Many pet insurance policies offer discounts on coverage for multiple pets. Most of the time these discounts range from 5 to 10 percent. Some breeds of dogs and cats have problems that are common to the breed, such as hip problems with German Shepherds. Fixing these problems can be expensive, so purchasing a policy while the animal is young is a good investment.

What are the disadvantages?

Pet insurance often bars coverage for pre-existing conditions -- ones you know about and ones you don't know about. So, if you purchase coverage for your pet and later it's discovered that he has a long-standing health condition, coverage for treatment of this ailment may not be covered by your pet insurance policy. Pet insurance policies often have caps on how much treatment they'll pay for, and in some cases these caps can be rather low.

The average pet insurance policy will pay for between $2,000 and $14,000 in care per year, but some cases the cost of care may exceed this amount. Routine treatment, the most common veterinary treatment, is not covered by most standard pet insurance policies. If you want coverage for vaccinations, wellness check-ups and other routine care, you'll have to purchase an add-on to your pet insurance policy.

Pet insurance policies often have limits on how many treatments or tests of a specific sort can be covered each year. For example, some policies will limit how many x-rays they'll cover each year. Like any form of insurance, your pet policy is a bet. If your pet never gets injured or sick, you've basically given the insurer money each year for nothing. However, if an illness or injury occurs, having pet insurance may turn out to be a good investment.

When considering purchasing pet insurance, pet owners should shop around and find the policy that best fits their individual circumstances. You may also want to see if you can buy pet coverage through your company, as now about 5 percent of companies offer some form of pet coverage as a benefit to employees. For owners of some pets, no policy will be a good deal and those owners may instead want to set aside savings each month as a fund to pay for emergency pet care. Evaluate your options carefully before making a choice.