Gracie chasing a car.Credit: W. Turner

Spending almost $400 a year for insurance when you don't know if you'll ever need it for your furry friend isn’t always an easy expense to bear.  In my case, though, after only two years I’d more than recouped my premium payments and saved several thousand dollars in veterinary costs for my dog Gracie.  Below, I’ll discuss a few of my considerations that you can take into account yourself before making a purchase.  I'll also show you how it helped me pay for surgery to repair both of Gracie's hind legs.

The Business of Insuring Pets

You probably know already that the pet industry is big, but just how big it is might surprise you: in 2013 alone, owners in the United States spent approximately $55.5 billion dollars on their pets' needs.  That's up from $52.9 billion in 2012, and $50.9 billion in 2011, with growth expected to continue for years to come (Source: American Pet Products Association).

As the pet industry has grown, so has the market for insuring them, particularly dogs and cats.  This is understandable, given that in 2012 there were over 83 million household dogs and over 95 million cats.  By way of comparison, there were less than 74 million children in the U.S. that same year.  The North American Pet Health Insurance Association calculates that over 1 million pets are insured with policy premiums totaling approximately $500 million a year, and that industry is expected to continue growing by an average of 13% per year.

Owners will spend, on average, about $400 per year in veterinary surgery bills over the life of an individual canine, while the surgical cost of cats’ nine lives averages $425.  Routine vet visits cost dog owners about $248 a year and cat owners $220.  At the time of this writing, a mid-tier pet insurance plan has a premium of ‘ruff’ly $40 per year.  Add to that an annual deductible of up to $200 and veterinary copayments of up to 20%, and pet insurance might not sound like a very good deal for most owners.

But wait!  Your dog is anything but average, right?  And that curious kitty is always getting into something.  So, while industry averages are a good place to start, a prudent owner should take other factors into consideration.

Types of Plans

Pet insurance plans fall into 3 broad categories:

  • Accident Only
  • Accident & Illness
  • Comprehensive (Accident & Illness and Embedded Wellness)

Accident Only provides protection for events like being hit by a car, breaking a leg in a gopher hole, or falling out of a tree.  Typically, things like swallowing a chicken bone and getting into an altercation with another animal will be covered as well.  Diseases and illnesses such as treatments for worms, rabies or cancer will not be covered under a plan of this type.

Accident & Illness plans cover everything above, but add in sicknesses.  Most insurers would not consider doggy dysentery an injury (even if it leads to an accident on the carpet!), but under an Accident & Illness plan, vet visit(s) and prescription medicine(s) for a pup’s upset tummy would be partially paid.

Comprehensive plans are just that.  Accidents, illnesses, and regular checkups (including immunizations and often even teeth cleaning and gland squeezing) are all covered and have costs partially defrayed.

Cost of Plans

As you might expect, the more a plan covers, the more it costs with premiums rising 25% or more from one level of coverage to the next.  Each level of coverage usually offers multiple pricing tiers; those with lowest monthly premium come with higher deductibles and copayments and offer the lowest cap on per-incident benefits.  Conversely, the most expensive tiers will include lower deductibles and copayments, as well as a sky’s-the-limit per-incident cap, in exchange for charging a substantially higher monthly premium.

So how do you pick a plan, let alone decide if you even need one?

Know Your Pet

Let sleeping dogs lie?Choosing pet insurance coverage isn't an exact science.  Insurance actuaries have calculated premiums, deductibles and copayments based on industry-average numbers (often refining numbers based on species, breed and gender) with the intent of keeping their companies profitable.  But, as mentioned earlier, your dog and cat aren't average.   So, just how not-average are your fur kids?

The first thing to look at is your pet's activity level, and what kind of activities it tends towards.  Does your cat constantly climb trees to raid bird nests?  Is your dog determined to chase squirrels over any terrain and across any street, no matter how much traffic?  Will your pet be outdoors as often as not, or even more often than not?  Or, is Fido a couch potato, and Fluffy an indoor-only cat?

Active and/or outdoor animals are, predictably, more likely to endure an injury than their lazy and/or indoor counterparts.  A dog hiking regularly with its owner has a significantly higher chance of an accident (sprain, snake bite, cut paw pad, etc.) than does a cat who lounges on its owner's lap while she watches a reality TV marathon.

For active pets, the sort of activity and location in which it takes place will affect the likelihood of injury, as well.  For example, a dog that loves to roughhouse with others off-leash at the beach is at higher risk of suffering an expensive cruciate injury than does an equally active dog which burns its energy running on-leash along a designated jogging path.  Sporting dogs, charging through underbrush on uneven terrain, likewise have a greater chance of traumatic injury than retrievers fetching tennis balls in the pool.

Dogs or cats new to a household, and particularly puppies or kittens, may be difficult to gauge.  Owners don't always know exactly how an animal's temperament will develop.  Prior experience with pets, your own activity level, the plans you have for your dog or cat and even its breeding can help guide you, but you may want to wait several months to get a feel for the animal's tendencies before making a decision.

Some breeds of dog and cat are quite naturally more active than others.  English Bulldogs are excellent at keeping a rug from moving; Border Collies excel at keeping sheep on the move!  Beyond activity level, various breeds of animal are predisposed to certain health problems.  If you own a dog breed prone to hip dysplasia and plan on that dog being active, an Accident & Illness plan could very well save you even more money than an Accident Only plan, which would not cover any chronic, genetic joint issues.  On the other hand, an indoor, declawed cat of indeterminate, mixed breeding is far less likely to have a serious accident or suffer a breed-specific, genetic illness and might not be a good candidate for any coverage at all.

The "What If" Factor

This is what insurance companies like to call peace-of-mind.  What if something happens?  For all of our educated estimations regarding activity level, breed disposition, chance of genetic disease and so on, there is always going to be a question of "what if?"  Answering that may come down to what you can afford month-to-month as a premium versus what you can't afford for a single incident.  Alternatively, it may come down to a mere gut feeling.  For many people, pet insurance really is as much—or more—about making themselves feel like they've done the right thing rather than having a pressing for coverage, and that's perfectly acceptable.

My Example

Gracie is a shelter rescue of uncertain breeding, but likely is 1/2 Basenji (based on temperament and appearance) with the other 1/2 possibly being Staffordshire Terrier (based on the location of the shelter from which she was adopted).  Gracie's also a very busy girl, and her owner (me) realized early on that not only was she active, but also utterly relentless in her pursuit of all things small and running.  To top it all off, her pain threshold is remarkably high—turns out she doesn’t stop just because of a minor inconvenience like blowing out her stifle joint.

I'm fairly active myself, and from the start planned on running and hiking with Gracie regularly, as well as intending frequent visits to the dog park.  After 6 months of observing her activity level, her tenacity and her uncanny ability to completely ignore everything other than whatever critter she's chasing, I felt it prudent to buy pet insurance.  As a mutt, though, illness coverage was less likely to be needed for any breed-specific problems, and due to the frequency of exercise, good grooming and general care she would receive at home, wellness coverage was unwarranted. 

Post-TPLO x-rayI ultimately selected an Accident Only plan for Gracie, and chose one from the lowest-priced tier (which came with a $100 deductible, 20% copayment, and per-incident limit of $2,500); that lower premium was my hedge against good luck and her suffering no injuries.  Alas, we were not lucky, and about two years after purchasing the plan, while gamboling at the dog beach, Gracie ruptured the cruciate ligament in her left hind leg.  This required surgery to repair.  Then, two years later, while avidly chasing a radio controlled car in a straight-line pursuit, she ripped through the cruciate ligament in her right hind leg.  I didn’t even realize she’d done it until we were walking back to the car and she finally started limping.  She hadn’t missed a step running down that R/C car, even after tearing up her knee, and that injury required surgery, too.

When initially purchased, I paid an annual premium of about $380 a year for Gracie’s insurance (the price started lower than that and has gotten higher, but that’s the average cost), or about $1,520 to date over the 4 years it has been in-force.  Both of Gracie’s leg injuries, from initial diagnosis to surgery to final check-up, totaled very close to a combined $8,000.  Between the two incidents, I received $5,000 in payments from the insurance policy.  Some simple arithmetic shows that:        

       $8,000 (cost of accidents)
    + $1,520 (cost of policy)
    = $9,520
     - $5,000 (total payments to me)
    = $4,520 (my final total cost)

So, I paid $3,000 for Gracie’s two surgeries, plus $1,520 on insurance premiums, for a total cost of $4,520, rather than the $8,000 I would have paid were she not covered, for a grand total savings of $3,480.  We've had a few other miscellaneous incidents over the past four years, as well: a couple of torn dew claws, stitches here and there after bounding into the scrub after a rabbit or squirrel, and even an ear infection that was covered as an injury rather than an illness.  These amount to another $1,000 or so I’ve saved.  (And before you comment, know that during our last visit to the vet the doctor mentioned that, yes, she seems to have had a lot of boo-boos—like I said, she’s a busy girl!)

At the same time, she’s had almost no illnesses, and beyond standard immunizations has only needed a good teeth cleaning once.  A comprehensive plan would have still paid for itself, but by a much smaller margin, and even with the present plan had Gracie not suffered either leg injury, I would have spent about $500 more on insurance and her miscellaneous covered visits than paying for the visits alone.

A Final Consideration

Good night, Gracie!In addition to the variety of general coverage options, some specialty plans exist, including dental plans, alternative treatments, and cancer-only plans.  All of these variable, along with your pet, your activity level, your location and your gut feeling can make picking a plan, or even whether or not you need a plan, a difficult decision indeed.  Fortunately, there’s one more resource that can help you sort it all out: your veterinarian.  They’ve seen most breed types, most owner types, and have first-hand information about what to expect from a plan.

Say goodnight, Gracie!