When the puppies from my first litter went to their new homes, I recommended pet insurance to their owners. I did this knowing only the generalities of insurance programs and not the details. I hoped having the insurance would reassure me that the new owners would have the necessary resources to provide for the puppies in case of unforeseen and unexpected veterinary expenses. For example, insurance statistics list gastric torsion or bloat ($1,955), foreign body ingestion ($1,629-$4,280), cancer treatment ($3,577), and hip dysplasia costs ($2,395) among the most expensive medical conditions. I quickly learned, however, that pet insurance programs are complex, requiring difficult decisions such as whether to buy insurance, which company to choose, and what level of coverage to purchase.
Although in its infancy, pet insurance is a growing business with a recent proliferation of companies. Pet insurance has been in the United Kingdom since 1976 and is purchased for 25 percent of the pet population. In Sweden 50 percent of pets are covered. Veterinary Pet Insurance (VPI) started selling insurance in the United States in 1982. In 2005, VPI had 392,000 policies while PetCare had 153,000 policies. Currently only between one and five percent of pets in the United States are insured.
The obvious, compelling argument for purchasing pet insurance, often called companion insurance, is the opportunity to choose treatment options based on what is right for the animal, not what an owner can afford. Many pet owners consider their dog a family member and as such are willing to spend anything for the welfare of that pet. However, the choice becomes more difficult when an owner is at the veterinarian’s office and actually faced with the prospect of a multi-thousand dollar bill to treat his dog for any variety of conditions. Perhaps the dog has just torn its anterior cruciate ligament (ACL). The office wants an initial $1,500 deposit just to start treatment and is not sure what the final costs might be. They also advise the owner that the dog might be facing an additional surgical repair on the other leg in the future. The family loves their dog, but this is truly an impossible financial stretch for them. As an option, the office manager advises euthanasia for $100. The owners do not want to see their beloved pet suffer any more, but they cannot afford its health care.
This dilemma is experienced by many pet owners every day. Perhaps they choose euthanasia. Or, if the dog is fortunate, they elect to surrender the dog to a breed rescue. Unfortunately, some of the dogs that come into rescue have health problems that the owners could not afford to treat. Perhaps if insurance had been a resource, the pet could have been treated and remained a part of their family. As veterinary care becomes more sophisticated and more expensive, insurance can give the pet owner some peace of mind knowing that catastrophic expenses may be covered.
However, now another dilemma appears: premiums can be expensive depending on the level of coverage purchased, and some feel that the plans do not offer enough value for their high costs. For example, premiums can cost from $15 to $65 per month for a basic combined accident and illness plan and may cost over $6,000 during the pet’s lifetime. Some are of the opinion that self-insuring with a savings account or dedicated credit card is a sound way to budget for these expenses. However, if an owner keeps a large balance on his credit card, it may cost more in the long run if it is necessary to stretch out payments and pay interest charges.
The American Veterinary Medical Association endorses the concept of companion health insurance and feels it is helpful in providing high quality veterinary care. The 10 veterinarians with whom I spoke have limited experience with pet insurance, and, depending on the area, less than one to five percent of their clients have insurance. In these practices, clients are still responsible for payment to the veterinarian at the time services are rendered. The veterinary practice helps fill out the forms, which the client submits for personal reimbursement. Several of these veterinarians display VPI insurance pamphlets
in their waiting rooms.
I spoke with a dozen breeders, none of whom has pet insurance. They feel it is not a worthwhile investment for them and would not be cost effective to insure a large number of dogs. In addition, breeding costs and health conditions related to it are not covered with most policies. However, some breeders encourage their puppy buyers to explore this option, and a few actively recommend insurance and discuss it in their puppy purchase contracts.
The main types of policies cover accidents, illness, wellness, or a combination of these and/or long term care. Accident insurance alone is the least costly. Illness coverage usually bases its reimbursement (benefit schedule) on national standards, but some may use local guidelines instead. Petplan Insurance uses the latest edition of the American Animal Hospital Association Veterinary Fee Reference Guide to help define reasonable cost. Reimbursement may not cover all veterinary costs if the costs are deemed higher than the benefit schedule or what is considered reasonable or customary for the area. Wellness coverage can add considerable cost to a policy but will frequently include coverage for routine care such as veterinary visits, vaccinations, heartworm and flea medications, and spaying/neutering.
Higher deductibles translate into lower monthly premiums. Co-pays (called coinsurance by several plans) can vary from zero to 30 percent. Generally, the more the pet owner is willing to pay of the actual veterinary bill, the less the premium will cost. Policies have limits on the amount they will pay per illness, per body system, and/or per incident, and even lifetime limits. Riders may be available for long-term treatment of diseases such as cancer, but they must be bought before the diagnosis is made.
Exclusions vary from one company and/or one policy to another. Frequently these exclusions are for pre-existing conditions. Therefore, it would seem prudent to enroll a dog in an insurance program at the earliest age possible. In addition, be aware that some policies will increase rates at specific age benchmarks. Insurance is a business, and its purpose is to make money. Companies that do not make money, do not survive. If an owner is forced to seek coverage from a new company because the original insurance company has failed, his pet’s existing medical history and pre-existing diseases could be
Other common exclusions are for breeding and pregnancy related procedures or illnesses, spaying and neutering, and breed specific conditions such as hip and elbow dysplasia. Some policies list all these exclusions. The American Society for the Prevention of Cruelty to Animals (ASPCA) insurance program references two books as guidelines to help determine hereditary and congenital diseases: Breed Predispositions to Disease in Dogs and Cats by Alex Gough & Alison Thomas and The Genetic Connection by Lowell Ackerman. Hereditary and other diseases found in Newfoundlands that are expensive to treat are often excluded from policies. Since this is precisely why Newfoundland owners seek coverage, this possible exclusion should impact the owner’s choice. It is generally recommended that owners buy a plan that is as inclusive as possible.
Policy coverage varies, and there are significant differences between them. Be sure to read the fine print in the contract, since not all of the information is listed on the websites. Some policies might include a mandatory annual veterinary checkup. Some require vaccinations for specific diseases and the use of heartworm and flea protection. Usually there is a surcharge for monthly payments rather than annual payments and a waiting period before the policy takes effect. Most policies cover accidents within a few days, but illness coverage generally starts after 30 days. Several policies will cover cruciates only if the injury occurs after a six-month to one-year waiting period.
At renewal time, be aware that some companies will consider last year’s illness as a pre-existing condition and not cover it the next year. Premium costs may also increase at renewal as the pet ages or if the company believes you have excessive claims. On the plus side, some companies offer multiple pet discounts of from five to 10 percent, and some offer a discount for microchipped pets.
A comparison of insurance coverage can be found in the table accompanying this article. Since there are so many policies on the market, I could not investigate each one. Therefore, the plans I have chosen are VPI, the largest, oldest and most frequently written plan in the United States; PetCare, the second largest insurance company, which has teamed with Petco to provide pet insurance; AKC-Pet Partners, which offers a 60 day free insurance trial to puppy owners when they register their dog with the AKC; the ASPCA insurance, which offers modestly priced policies; and Petplan, the largest pet insurance company in the United Kingdom, which was recently introduced in this country, and which has the highest customer satisfaction rating at www.petinsurancereview.com. I obtained information from websites, company representatives, and written materials provided by the companies. In an effort to make meaningful comparisons, I have chosen to use a basic combination accident and illness plan from these five companies for a 12-week-old female puppy in Pittsburgh, Pennsylvania.
This information should be used as a guideline only since coverage and rates can quickly change. Each company offers multiple types of policies with so many variables and options that they are difficult to compare. If purchasing insurance, ask to see an actual copy of the policy to understand the cost, deductions, and exclusions. It is important to look at the benefit schedule that some companies publish and learn how much they will cover for each procedure. Costs may also vary slightly from one region to another.
Managed care is also coming to the pet insurance industry. Pet Assure has a plan that offers a 25 percent discount for most veterinary care at participating veterinarians. Union Plus, besides selling regular pet insurance, is also offering a plan with 25 percent discounts at approved veterinarians. The Pethealth Company plans to establish a network of veterinarians that offer negotiated rates to a subscriber. Many companies such as AT&T, Home Depot, Comcast and Walt Disney now offer managed care as an employee benefit since they can negotiate low rates but do not have to pay the premium. As with any of these managed care plans, the number and proximity of participating veterinarians varies dramatically from region to region. In addition veterinarians that have participated in the past can withdraw at any time, leaving pet owners with limited choices. CareCredit offers another option. It offers a credit card with a variety of payment plans specifically for veterinary care at participating veterinarians.
Combined accident and illness pet insurance is similar to any other insurance that is bought with the hope that it will never be needed. To help the pet owner decide, information on the basics of buying pet insurance can be found at www.petinsurancereview.com. It provides links to insurance companies and comparison prices for many pet insurance plans. In addition, it provides reviews from a limited number of customers. These customer comments give insight into the problems that typically plague the insured, such as rate increases, long wait time to reach customer service by phone, delayed reimbursements, the need to resubmit paperwork multiple times to receive payment, and denial of claims. Another reference source that discusses the pros and cons of pet insurance is a brief article on page 8 in the Consumer Reports magazine, July 2007 issue.
Petplan’s website states that “insured pet owners visit their veterinary clinic 30% more often than uninsured owners. In addition, insured clients will spend 51% more on core veterinary treatment and 33% more on routine treatments.” Insurance is a way to help defray the cost of expensive and unexpected occurrences and to make decisions that are not based on financial ability. However, pet or companion insurance can cost more than it saves, especially if wellness programs are included. Ultimately, the pet owner is a consumer who must make a choice based on the balance between costs and benefits.
By the way, three of my seven puppy buyers bought insurance and have since renewed it. Pet insurance can help pet owners with unforeseen and possibly catastrophic expenses.