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Feb 1, 2018

Is Pet Health Insurance A Good Investment?

by Gail Bebee

Gail BebeeIf your pet suffered an accident or fell ill, the vet bills for the required treatment could be very high. The price tag to treat our neighbour’s dog, Milo, after he was hit by a car was over $8,000. My friend Jack’s Labrador retriever developed Addison’s disease in middle age and required a costly injection every three weeks for the rest of her life. Over the dog’s lifetime, the vet bill topped $30,000.

Pet care bills are unpredictable, and potentially a great stressor for the family budget. One way to manage these costs is to buy pet health insurance, also known as pet medical insurance. This insurance helps pay for veterinary bills due to unexpected illnesses or injuries. Coverage is available for dogs and cats.

Similar to buying any type of insurance, it is important to research your options and comparison shop before you sign up.

To start your search, talk to fellow pet owners about their experience with pet insurance, ask your veterinarian for advice, read the reviews at consumer websites such as


and check out the websites of several pet insurance companies.

Based on your research, pick out a few insurers for further consideration. You will want to investigate the following areas.

1. What Is Covered?

Most pet insurance companies offer three or four plans ranging from basic to premium. The specific health issues and pet health care expenses covered vary by plan.

The basic plan often covers accidents only (the cheapest option). Given the high cost of treating unexpected illnesses such as cancer, a policy that covers both circumstances is likely your best choice.

Check the policy wording to confirm that the coverage includes the illnesses and treatment expenses you want insured.

2. What Is Excluded?

Every pet insurance policy has its own set of exclusions. Read the wording of this section of the policy carefully to ensure that what you need covered is not excluded.

Pre-existing conditions are never covered, but definitions vary by company, with some being more restrictive than others. This exclusion is a good reason to start insurance coverage while your pet is young and health condition-free.

Other exclusions could include:

  • Some breeds, and some health conditions e.g. hip dysplasia.
  • Certain treatments such as alternative therapies or flea and parasite control.
  • Administrative expenses and sales taxes.
  • Vet examination fees.
  • Dental work.

3. What Are The Limitations?

Some premium pet insurance plans offer unlimited coverage, but most plans have dollar limits on coverage such as total claims per lifetime, per year, or per incident.

The amount of coverage you buy should be sufficient to pay the cost to treat common types of accidents, and any health conditions associated with your pet’s breed. Ask your vet for guidance on the coverage level she recommends for your particular pet.

Other possible policy limitations include:

  • A waiting period after sign up before the insurance coverage begins.
  • Restrictions on policy renewal if your pet develops a chronic condition.
  • Reduction in payout if claims are frequent.
  • Pet age limit for enrollment.

4. What Special Features And Optional Coverage Are Available?

Some insurers offer special features. For example, a premium discount may be available if you insure multiple pets, or buy the insurance online.

Coverage for routine and preventive care (wellness) and other expenses and conditions which are excluded from standard policies e.g., pregnancy, may be available for an additional fee.

5. How Much Will The Insurance Pay?

Pet insurance is designed to pay a certain percentage of a claim, with the policy holder paying the remainder. This co-payment typically ranges from 10% to 30%.

A policy will specify an annual deductible i.e., the amount of eligible claims the policy holder must pay every year before the insurance company begins to pay. The deductible could range from zero to $1000 or more. Some companies increase the deductible as your pet ages.

6. How Good Is The Customer Service?

These attributes are indicative of good customer service:

  • Claims are not routinely rejected for questionable reasons.
  • The claims filing process is easy and claims are paid promptly.
  • The time limit for submitting claims is reasonable.
  • Customer support is available when you need it.

7. What Are Your Obligations?

All pet insurance policies set out obligations for the pet owner. Typically, the owner must provide proper maintenance and preventive care for his pet, such as taking the pet to the vet for an annual check-up and ensuring vaccinations are up-to-date.

Unless you fulfill the specified pet owner obligations on an ongoing basis, your claims will likely be denied.

8. What Will The Insurance Cost?

Pet insurance premiums are based on pet breed and age, the cost of veterinary care where you live, and the policy features and benefits. Premiums vary widely and increase with pet age. You must request a quote from each insurance company to ascertain the premium for your pet.

To provide some pricing context, here are two recent quotes from a major pet insurance company. The monthly premium for a mid-level policy ($15,000 annual coverage, $250 annual deductible, 20% co-payment) for Max, a one-year-old black Labrador retriever living in Toronto, is $82 ($72.14 plus taxes). A similar policy for Alice, a one-year-old mixed breed cat, costs $36 ($32.17 plus tax).

If you think pet health insurance has too many caveats and/or is too pricy, there is an alternative: self-insure by setting up and contributing regularly to a dedicated pet health care account. You can use the funds to pay all emergency vet bills, not just those that meet insurance policy definitions, and there are no claims forms to complete.

If Max’s owner saved $82 per month in a pet care savings account earning 2%, it would hold $5,200 after 5 years, and $10,900 after 10 years. If the amount saved increased comparable to the expected annual increase for insurance, the dollars available to pay vet bills would be even larger. In the above example, if the savings rate increased by 10% annually, there would be $6,300 in the account after 5 years and $17,100 after 10 years. Use this calculator to crunch your own numbers.

Vet bills for your pet’s unexpected accidents and illnesses can be expensive. Pet insurance can help cover these costs. However, do your homework before buying this insurance because it is not suitable or cost effective in all cases.


Gail Bebee is the author of No Hype-The Straight Goods on Investing Your Money. Visit