How Does Pet Insurance Work? Our Full Breakdown

Pet insurance plans are a financial safety net designed to give you peace of mind regarding your pet’s care. These plans cover a portion of urgent or chronic care needs your dog or cat may have, potentially saving you thousands of dollars in the process.

Pet insurance plans might not be suitable for every pet parent, though. Here’s a look at what these plans offer, how much they cost, and what you can expect to save if your pet needs medical care.

In this guide:

What is pet insurance?
How does pet insurance work?
What is and isn’t covered by a policy?
How is my reimbursement calculated?
How do I submit a claim?
How is the cost of a policy determined?
How long does it take to enroll?
How to find a policy

What is pet insurance?

If you or your loved ones were to get sick, break a bone, or be diagnosed with a disease, you would probably use your health insurance plan to cover some of the costs. This coverage would help you pay for exams, diagnostic tests, prescription drugs and treatments, and even surgeries. In the end, a good health insurance plan could save you thousands of dollars or more.

But what if your four-legged loved ones were to experience injuries and illnesses? How would you pay for the necessary treatment?

According to Care Credit, a financing company that helps people pay for medical treatments and procedures, the average emergency vet visit costs between $800 and $1,500. And that’s just for the visit and diagnostic tests. If your pet needs chemotherapy for cancer or a life-saving surgical procedure, you could be a vet bill in the thousands, if not tens of thousands, of dollars in treatment costs.

This is where pet insurance comes in. Like human health insurance, pet insurance plans offer a safety net for dog or cat owners in exchange for a monthly premium. Though the specifics of each plan vary, they typically cover a portion of the costs of your pet’s injuries, illnesses, and diseases.

Pet insurance plans are not meant for routine care — though some plans do offer this as add-on coverage — and generally don’t cover pre-existing conditions. They also differ from human health insurance policies in that most pet insurance plans reimburse owners for expenses. This means that participating pet owners will need to initially front payment for their pet’s care.

How does pet insurance work?

It’s important to note that each pet insurance plan differs.

Some require you to see in-network veterinarians, while others allow you to take your pet to any licensed provider or animal hospital you choose. Some policies allow you to add coverage for routine visits and procedures, while others strictly pay for urgent and emergency care.

In general, though, here’s a rundown of how pet insurance works and what you can expect.

Visit any licensed veterinarian or pet facility
Receive treatment for your pet (and pay the bill)
Submit a claim
Get reimbursed

1. Visit any licensed veterinarian or pet facility

Most pet insurance providers don’t have in- or out-of-network restrictions (like human health insurance). This means that you can visit any veterinarian or animal hospital in the United States. Some providers even allow you to see a vet in other countries like Canada or Puerto Rico.

2. Receive treatment for your pet (and pay the bill)

If your pet is ill or injured, you can take them to the veterinarian or hospital of your choice and receive care immediately. Since there isn’t typically a network involved, you don’t have to worry about things like referrals. This is especially important if you’re facing a time-sensitive pet emergency.

Once you’ve received treatment, you’ll be expected to pay the bill upfront, as agreed with the care provider. Since the vet’s office won’t be working directly with your insurance company — the way your auto or health insurance company would — the checkout cost falls on you alone.

3. Submit a claim

After your pet has received care and you’ve paid the bill, it’s time to file for reimbursement.

You submit a claim to your pet insurance provider through whichever method they offer. Some carriers allow you to submit a claim through a mobile app or email. Others might require you to fax a copy of your invoice and receipt or send hard copies through the mail.

Be sure to ask your provider how they accept claims and what documentation is necessary for you to be reimbursed promptly.

Tip

Most companies provide this information on their FAQ page.

4. Get reimbursed

Now comes the good part: once your pet insurance company has verified all qualifying expenses, you’ll be reimbursed for those that are covered. Some carriers will deposit your reimbursement directly into your bank account, while others may mail you a check instead.

Each pet insurance plan covers treatments and services a bit differently. One company may cover emergency surgical costs at a 90% reimbursement, while another may offer to reimburse you for 100% of the costs up to an annual maximum. Some may have a per-condition deductible, while others may have one simple yearly deductible.

Each plan allows for a variety of treatments. It’s important to read your policy thoroughly to see what is covered and how much you can expect to be reimbursed afterward. For an idea of what pet insurance typically covers, though, keep reading on!

What is and isn’t covered by a policy?

The details will vary, but typically, you can expect a pet insurance policy to cover most injuries, illnesses, and diseases that aren’t pre-existing. Treatment costs are often included as long as they aren’t a form of preventive care and aren’t the result of neglect, abuse, or an intentional act (like breeding).

Here’s a look at some of the most common veterinary care costs that are and are not covered by pet insurance plans.

What’s is covered	What isn’t covered
Sick exams and specialist visits	Routine visits
Disease treatments (e.g., parvo, Lyme disease, parasites)	Vaccines
Diagnostic tests (e.g., X-rays, CT scans, MRIs)	Annual blood work and fecal testing
Dental emergencies (e.g., extractions, root canals, etc.)	Dental cleanings
Surgery and rehabilitation	Spaying and neutering
Cancer treatment	Cosmetic procedures
Chronic and genetic disease treatment	Pregnancy or breeding care
Prescription medications	Flea and tick treatment

You can often choose to add a wellness plan to your policy to get coverage for several of the items in the “What isn’t covered” column of the table.

Some plans also exclude certain breed-specific and hereditary or congenital conditions. Be sure to read the fine print before purchasing a policy.

To learn more about what is typically included with a pet insurance plan, check out our comprehensive guide on what pet insurance covers.

How is my reimbursement calculated?

Three primary factors determine how much you’re reimbursed for a qualifying veterinary bill:

Your deductible
Your reimbursement rate
Your benefit limit

In many cases, you’ll be able to select your terms from a list of options when you receive a quote. The options available differ by provider, but the more options you have, the more control you have over the cost of your policy.

We’ll explain the role each term has within your policy below.

Deductible

The deductible is the portion of your pet’s veterinary bills that you’re expected to pay out of pocket. The deductible must be met before your pet insurance provider will start covering its share of veterinary expenses.

Pet insurance deductibles are typically applied annually or per incident.

Annual deductible

An annual deductible is the most common option offered by pet insurance companies. This type of deductible only needs to be met once per year. After that, all covered expenses from veterinary care will be reimbursed, minus your copay, until the following year.

Here’s an example of how a $250 annual deductible would be handled for a pet that requires veterinary care three times over one policy year:

	Claim 1	Claim 2	Claim 3
Treatment for	Ear infection	Vomiting	Laceration
Veterinary bill	$347.26	$184.92	$268.05
Annual deductible ($250)	$250	$0	$0
Copay (10%)	$9.73	$18.49	$26.81
Out-of-pocket cost	$259.73	$18.49	$26.81
Reimbursed amount	$87.53	$166.43	$241.24

In this example, the annual deductible was paid fully during the first claim, meaning all claims for the remainder of the year were reimbursed off of the full veterinary bill. The total reimbursement for the year was $495.20.

Per-incident deductible

A per-incident deductible, sometimes known as a per-condition deductible, is applied each time your pet requires veterinary care for a new condition. So, if your pet requires medical attention for vomiting and an ear infection, you’ll need to pay your deductible before being reimbursed for both bills.

Here’s an example of how a $150 per-incident deductible would be handled for a pet that requires veterinary care three times over one policy year:

	Claim 1	Claim 2	Claim 3	Claim 4
Treatment for	Ear infection	Vomiting	Vomiting	Laceration
Veterinary bill	$347.26	$184.92	$210.39	$268.05
Per-incident deductible ($150)	$150	$150	$0	$150
Copay (10%)	$9.73	$3.49	$21.04	$11.81
Out-of-pocket cost	$159.73	$153.49	$21.04	$161.81
Reimbursed amount	$87.53	$31.43	$189.35	$106.24

In this example, the per-incident deductible was paid on all three claims since each claim was for a different condition. The total reimbursement for the year was $225.20.

How your deductible affects your premium

Your deductible has an impact on the premium you’ll be charged each month. A higher deductible will lead to a lower premium, while a lower deductible will lead to a higher premium.

Thankfully, nearly all pet insurance companies allow you to select your deductible amount from a list of options. So, be sure to find an option that fits your budget.

Reimbursement rate

A reimbursement rate is the percentage of your pet’s qualifying care expenses that your pet insurance company will pay.

Most companies offer a single reimbursement rate, regardless of which treatments are necessary. For example, if your reimbursement rate is 90%, your policy will cover 90% of all covered veterinary care after your deductible has been met. You’ll be responsible for the other 10% as your copay.

How your reimbursement rate affects your premium

Your reimbursement rate impacts the premium charged for your policy. A higher rate will lead to a higher premium and vice-versa.

Like your deductible, many companies allow you to choose your reimbursement rate. However, some companies only offer one option, typically 90%.

Benefit limit

Here’s where your benefit limit comes in.

Your benefit limit is the amount of money your policy will reimburse you for the year. Most companies set an annual benefit limit that includes all covered care. So, for example, if your benefit limit is $10,000, your policy will cover its share of veterinary expenses up to $10,000 each year.

In some cases, there may be limits set per care category. One example of this could be that while your policy has an annual benefit limit of $10,000, dental treatment has its own limit of $1,000 per year.

Certain companies may also impose lifetime limits. These limits can be applied to all care or specific conditions, like cancer treatment.

How your benefit limit affects your premium

Just like your deductible and reimbursement rate, the benefit limit you choose will factor into your monthly premium. If you select a higher benefit limit, your premium will increase and vice-versa.

Here are 2 examples of how the terms discussed above affect the amount you’re reimbursed

Let’s take a look at Max, a golden retriever with a penchant for chewing on tennis balls. Max accidentally swallows one of his tennis balls, which requires a trip to the local animal hospital and, unfortunately, surgery.

Max’s parents bought a pet insurance plan with a $150 deductible and 90% reimbursement rate. This plan has no maximum benefit limit.

At the vet’s office, Max needs an after-hours exam, ultrasound, and x-ray. He then has surgery to remove the tennis ball and is boarded at the vet’s office for two nights while he recovers.

	Breakdown of Max’s insurance claim
Treatment for	Ingested foreign body removal
Veterinary bill	$4,356.27
Annual deductible	$250
Copay	$410.63 (($4,356.27 – $250) x 10%)
Out-of-pocket cost	$390.63 ($250 + $410.63)
Reimbursed amount	$3,695.64 (($4,356.27 – $250) x 90%)

Without a pet insurance plan, Max’s parents would have paid $4,356.27 in emergency vet bills. Because of their policy, they were only responsible for $410.63, which included a $250 deductible and 10% copay.

Let’s say that Max’s parents had instead chosen a plan that offered a $250 deductible and 90% reimbursement but had a $2,500 benefit limit. In this case, they would have paid a lot more out of pocket for Max’s tennis ball mishap.

	Breakdown of Max’s insurance claim
Treatment for	Ingested foreign body removal
Veterinary bill	$4,356.27
Annual deductible	$250
Copay	$410.63 (($4,356.27 – $250) x 10%)
Amount over benefit limit	$1,195.64 ((($4,356.27 – $250) x 90%) – $2,500)
Out-of-pocket cost	$1,856.27 ($250 + $410.63 + $1,195.64)
Reimbursed amount	$2,500

In this case, Max’s mom and dad would have paid $1,856.27 out of their own pockets, even with a 90% reimbursement rate. Once the plan’s deductible had been paid and the benefit limit had been reached, they were on the hook for all remaining expenses, including any additional charges for the rest of the year.

How do I submit a claim?

The exact process for submitting claims depends on the individual pet insurance company. Each carrier has its own system and requirements. In general, though, it looks like this:

Submit invoices to the provider via mobile app, email, fax, or mail
Provide any supporting documentation needed (such as a doctor’s report)
Track the claim through the carrier’s app or web platform
Once approved, receive reimbursement via ACH payment, paper check, etc.

Embrace, for instance, requires the diagnosis or reason for the visit and a paid, itemized invoice to file a claim. Claims can be filed online or through the company’s mobile app and can be tracked through reimbursement.

How is the cost of a policy determined?

Many factors affect the cost of a pet insurance policy.

First, it matters what kind of pet you have. Most pet insurance policies only cover dogs or cats. Pet insurance for dogs is often more expensive than pet insurance for cats. The breed matters, too, as some dogs and cats are more prone to genetic illnesses and conditions.

Tip

Check out our guide to the best horse insurance companies.

You may also pay more for a policy if you have an older pet or don’t enroll your new pet before they reach a certain age. Factors like location can play into premiums, too.

Then there are the details of your policy; this is where you can directly influence the cost of your premiums. A higher deductible will usually result in lower premiums, for instance, compared with a lower deductible policy. The higher your plan’s reimbursement rate and benefit limit (if one exists), the more likely you are to pay for coverage.

Essentially, the more your carrier is likely to pay if your pet does have a qualifying illness or injury, the more you’ll probably pay in premiums.

How long does it take to enroll?

Getting enrolled in a pet insurance plan can take time, so be sure to plan ahead.

Most carriers will request medical records from your veterinarian’s office when approving you for coverage. This is to identify any possible pre-existing conditions and get to know your pet a bit better.

There may also be a waiting period involved. This is the period after your policy is approved but before you can use the coverage. Waiting periods are often 14 days long. However, some carriers will offer shorter waiting periods for injuries (since those aren’t predictable) than illnesses.

Additionally, some plans may impose waiting limits on specific conditions and procedures. For example, with Embrace dog insurance policies, there is a six-month waiting period before any orthopedic-related treatments to be covered.

Depending on how quickly your new carrier can receive vet records and what sort of waiting periods are required, you may be able to have pet insurance coverage in about two weeks, from application to protection.

How to find a policy

The right pet insurance policy for you depends on a variety of factors. Make sure to shop around with some of the best pet insurance companies to see which policy options are available. Be sure to consider your pet’s age, breed, and current health, as your options could be limited.

Different carriers offer different plans and coverages. Most companies let you choose your deductible, reimbursement rate, and benefit limit to suit your needs and your budget; how you choose to build your new pet insurance plan will determine the final premium you’ll pay each month (and how much will be covered if your pet is ill or injured).

Shopping around can help you find the right plan and save you some money in the process! And remember: like any insurance, it’s often best to buy coverage that covers catastrophic events which you can’t afford rather than routine sickness. A higher deductible combined with a higher benefit limit can be a good way to protect your four-legged family member, while keeping your premium at an affordable level.