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How Does Pet Insurance Work?

Pet health insurance works a lot like human health insurance in that after you buy a policy, you pay monthly premiums, seek treatment when necessary, and deal with deductibles. However, pet insurance utilizes a reimbursement-based model and generally you can bring your pet to any licensed veterinarian.

1. Choose a Pet Insurance Deductible

Your pet insurance deductible is the money you must pay toward medical bills before your insurance company starts picking up the tab. Your deductible might be per year or per incident. Generally, the most common annual pet insurance deductibles are $100, $200, and $500.

After you pay your deductible, your pet insurance kicks in with the reimbursement (see below).

>>MORE: What does Pet Insurance Cover?

2. Select the Reimbursement or Co-Pay Percentage

Nearly all pet insurance plans follow a reimbursement-based model

After you’ve paid your deductible, your insurance company will reimburse you for a percentage of your pet’s medical bill. Again, this is a reimbursement, meaning you’ll pay the bill out of pocket, file a claim with the insurer, and be reimbursed.

Using a $200 deductible and an 80% reimbursement percentage, here’s a quick breakdown of how the two work together:

  • Total Medical Costs: $1,000
  • Deductible You Pay: $200
  • Reimbursement Percentage: 80%
  • Total Reimbursed: $800 (Insurers don’t reimburse deductibles; only out-of-pocket medical costs)
  • Your Total Out-of-Pocket: $400 (Your deductible ($200) plus the percentage the insurer doesn’t reimburse (20%, or $200)

>>MORE: Pet Insurance that Cover Preventative Care

3. Make Regular Pet Insurance Premium Payments

This one’s pretty easy. All insurance policies have premiums, right? Depending on your insurance company, you might pay your premium monthly, twice a year, or annually. 

As with all types of insurance (think auto, health, and life), various factors affect the cost your pet insurance premiums.

For example, your pet’s species, breed, and age affect the premiums, as does your location.

Additionally:

  • Your premium might be higher if you want to pay less per incident.
  • A low deductible with a high reimbursement percentage gives you a higher premium with lower final out-of-pocket costs.
  • Your premium will be higher if you purchase policy riders or add-on coverage. 

Also, your policy will probably have an annual maximum. This is the max amount of money your pet insurance company will pay per year; after that, you’re responsible for all costs. Some pet insurance companies offer unlimited benefits. Of course, if you choose unlimited benefits plan, the premium will be higher.

>>MORE: Finding the Best Pet Dental Insurance

4. Bring Your Pet to a Licensed Veterinarian

Most pet health insurance companies allow you to visit any licensed veterinarian*; in other words, typically there isn’t a “network” of vets you must visit.

Once your pet receives treatment and you receive a bill, you’ll pay for the care out of pocket and file a claim with your insurance company for reimbursement.

* Be sure to ask about emergency animal clinics and specialist veterinarians.

>>MORE: The Best Pet Insurance that Covers Pre-Existing Conditions

5. File a Pet Insurance Claim and Get Reimbursed

After you pay your pet’s medical bills, it’s time to file a claim for reimbursement.

How you file a claim depends on the insurance company. Some use an online system for submitting claims; some accept email, fax, and even snail mail. 

Generally, you’ll need to provide information about:

  • You and your pet, including your pet’s insurance account number.
  • Your pet’s veterinarian.
  • Your pet’s symptoms/diagnosis.
  • Treatment costs.
  • Payment preferences.

Get confirmation the company has received your claim, and follow up with the status.

Final Thoughts

That’s how pet health insurance works, in a nutshell.

For some, pet insurance isn’t more affordable than risking it. Many pets go their entire lives without getting injured or incredibly ill, so their owners only pay out-of-pocket costs for annual check ups and the occasional prescription medication. However, for others, it’s just not worth the risk — especially if they can get an affordable deductible and low premiums.

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