Pet Insurance

The other day there was an article in the Wall Street Journal about pet insurance. The writer enrolled pets in a variety of plans and tested the coverage and service. The conclusion was that the plans were of little real value.

I can't say that I'm surprised. I have long thought that pet insurance was an exercise in dollar swapping - similar to dental insurance. Premiums tend to be more than the benefits paid and the protection from catastrophic loss is minimal. Most policies limit the payout for a particular illness or accident.

Health insurance for pets is a relatively new product in the world of personal insurance. Insurers tend to be specialists. Coverage is offered through the Internet and through pet stores. Most insurance agents don't yet offer pet insurance to their customers.

Pet Insurance Advice -

-Most pet insurance policies have a limit of coverage of about $3,000 for a sickness or injury. Premiums run about $400 to $500 per year for true insurance (see below regarding the difference between discount programs and insurance). So, you're going to pay $3,000 to $5,000 for coverage over the life of your pet. How many catastrophic injuries will one pet have?

-What's the coverage limit? Look at the schedule of insurance. What's the maximum coverage for a sickness or an injury? What types of illnesses are covered by the policy?

-What's the deductible? How much will you pay of a claim?

-Is there a co-payment? Do you share the claim with the insurance company? Do they pay 70% and you pay 30%, for example?

-Does the co-payment increase with your pet's age? Some policies increase the co-payments or reduce the amount of coverage as your pet grows old - effectively reducing the insurance you have when you may need it the most.

-What's the claim process? Do you pay the vet then wait for the insurance company to reimburse you, or does the insurance company pay the vet directly?

-What discounts are available? Some insurers offer reduced rates for service animals (seeing eye dogs), pets that are tattooed for identification, etc. Do you qualify for any of the discounts?

-Is it an insurance plan or a discount plan? There are many plans that are not insurance but provide a discount when you are a "member" and use certain veterinarians. The fee for such programs (memberships) is lower than the insurance plans. The discount plans may also offer savings in other areas of pet care besides injury or illness.

-Does the plan require that your veterinarian be a part of a special insurance network or can you use any vet? Some pet insurance policies require that you use their network of veterinarians. Check the list of participants before you buy the policy.

-Is there a waiting period for coverage to start? Some policies have a time where there is no coverage once the application is submitted. This is the equivalent of a pre-existing conditions clause. Such waiting periods prevent you from buying coverage when your pet is already sick.