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How Does Pet Insurance Work?

By: Dr. Debra Primovic

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How Does Pet Insurance Work?

Have you ever wondered "How does pet insurance work?" If you have been confused by pet insurance, you're not alone. There are at least 14 companies in North America which offer pet insurance and all differ slightly from one another. Plans vary within each company with different levels of coverage, deductibles, and premiums.

There are 4 main parts of an insurance policy.

Depending on the company you can choose some or all of them. They are:

  • Premium: the amount you pay to the insurance company each month to insure your pet
  • Deductible: the amount of vet bill you must pay before insurance benefits start or "kick in"; typically applies over a yearlong period
  • Maximum coverage limit per problem: how much money an insurance company will pay out per health issue
  • Reimbursement: the percentage of a bill, after deductible, an insurance company will pay

    For example, consider a plan with a $500 deductible and 80% reimbursement. If your dog were to require hip surgery that cost $2,500, you would pay the $500 deductible and be reimbursed for 80% of the remaining $2000 (which would be $1600). In essence, you would pay $900 for a surgery that cost $2,500.

    Some people carry a lower deductible with 100% reimbursement so they receive all of their money back. These plans come with a higher premium but don't require paying a sum of money in case of an accident. A great balance is a 80 or 90% deductible where the pet insurance pays the 80% or 90% and you pay the balance of either 20% or 10% depending on your policy.

    Most of the companies interviewed and researched for this article require that you pay your veterinarian, submit the claim paperwork to them (which varies based on the company) and wait for the company to reimburse the claim and give you your money back. This method still requires that you pay your vet up front before care can be given.

    I hope this article has helped you understand how pet insurance works and whether pet insurance is worth the money.



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