Many pet owners are familiar with the surprise costly vet bill. The first such vet bill I was solely responsible for came when I was not very far out of college. I had recently adopted my cat Minnie and after her first trip to the vet it turned out she needed extensive dental work. Trying to be a good pet owner, I scheduled the procedure and prepared for the sticker shock. I wasn’t ready. The vet called me at work and told me the cost, I nearly passed out. While I told her to go ahead and do what was needed, that bill hurt, and it made me wonder, would pet insurance be a worthwhile cost?
Pet insurance works like human insurance, in that you can choose different levels of coverage, deductibles, etc. Some plans will not cover pre-existing conditions, and only a few will cover congenital or hereditary conditions. On the whole it is better to begin a pet insurance plan while the animal is young and in good health, much as with people. There are generally not co-pays for pet insurance, you pay the full amount at the time of care and then submit for reimbursement, so even with pet insurance you would need to be able to pay out of pocket initially for a serious animal medical expense.
As with other insurance options the risk is that you will pay the premium for the pet’s lifetime and never utilize the policy. With this in mind, Consumer Reports conducted a study evaluating the cost vs. payout of 9 polices for a healthy 10 year old beagle. They found that with each policy the total premiums paid were theoretically higher than what the dog’s actual medical bills had been up to that point. Consumer Report’s take away was that if you have a healthy animal, the insurance is not worth the premiums. Their recommendation is to create an emergency fund specifically for serious pet health issues.
According to the American Veterinary Medical Association, pet insurance companies want vets to help promote the purchase of insurance. The insurance companies’ argument for this is that those with a policy in place visit the vet more often and spend more, creating a symbiotic relationship. Interestingly, the North America Pet Health Insurance Association found that for pets with health insurance, the mean annual vet bills for a dog were $324 and for a cat, $264, while the costs for an uninsured dog and cat were $251 and $146 respectively. Nationwide found that insured animals made an average of 2.1 trips to the vet a year while those without insurance only went 1.4 times.
It is hard not to draw spurious conclusions from this information. Do pet owners with insurance take their animals to the vet more, and spend more due to the ability to pay with insurance? Or are these animals less healthy, and therefore their owners sought insurance, and they would be at the vet’s office either way. Research appears to still be out, with pet insurer Trupanion conducting further studies to try to determine which predicates the other.
On the whole it seems that an emergency fund for your animal’s health care might be the best option. That way there are no “wasted” premiums. Another benefit of this method is that the fund can be used for any animal, if you have a multi-pet household, with insurance you would need separate policies. No one wants to be at the emergency vet in the middle of the night having to make hard decisions about their pet’s health, proper planning can help.