Pet insurance is now booming

Pets are living longer, vet services are getting pricier; more people are buying coverage to offset health care costs. Is it a good investment or a waste of money?

When they’d started for the vet that January night, Christine Linsalata just thought Donny looked a little under the weather.

Then his condition began to plummet. Within 15 minutes, her beloved 12-year-old dog seemed to be shutting down. By the time they arrived, the visit to the vet had turned into a life-or-death emergency.

The ER vet arrived stat, and with one look, agreed. Donny needed to be admitted overnight. There would be monitoring. Medication. Oxygen.

And a bill, the next morning, for at least $4,000, the vet told her.

“Here you are, crying over your pet,” she said. Then you hear “$4,000, for starters.”

The situation was a pet-owner’s worst nightmare – nobody wants to think about the financial aspect, the harsh reality, when your beloved companion animal is in a dire situation. But now,  Donny’s life was in her hands – and her wallet.

Donny was a good dog.

He died that night. In her arms.

“I didn’t ever want to be in that situation again,”  Linsalata said. That’s why today she pays $106 a month to cover two of her dogs through Trupanion, one of a growing number of companies specializing in pet health care coverage.

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Though pet insurance has been available in other parts of the world for nearly a century, it only arrived in North America in 1982. Nationwide’s Veterinary Pet Insurance subsidiary sold the first policy to one of the collies who played TV’s Lassie.

Insalata had bought insurance for one of her dogs during the industry’s early days – a time when policies were rigid and loopholes were many; they were notorious for denying claims. That had been Linsalata’s experience; “I swore off it at the time,” she said.

The industry has evolved, however – as has veterinary medicine and pet ownership. The insurance business has improved its image and its reliability. Today, about 1.6 million pets are covered by pet insurance – an average annual  growth rate of 12 percent in the last two years alone, according to the North American Pet Health Insurance Association (NAPHIA), the trade group that represents 99 percent of the industry. It is also one of the fastest growing segments of the insurance field in general.

While only about 1 percent of the 76 million pet-owners in North America  currently have insurance, a lot more are thinking about it.

They’re considering it for several reasons, said Loretta Worters, vice-president of communications for the Insurance Information Institute, an education and outreach organization. First, the advancements in veterinary medicine mean pets are living longer — illnesses that would spell death 10 years ago can now be cured. Plus, the older the pet, the more likely they are to have health problems — and are showing up with some of the same illnesses humans suffer from later in life, including arthritis, cancer and now dogs are even diagnosed with  canine dementia.

The good news about  all the new technology and treatments available has a flip side of bad news: steadily increasing costs.  Pet owners spent an average of $235 on routine visits and $551 on surgical procedures for dogs, $196 and $398, respectively, for cats.

One additional reason insurance is on the upswing:  “A lot of us will do anything for our pets,” said Worters, who admits she speaks from experience. “We view pets differently today.

“There was a time, remember, we didn’t even let them in the house. Now we view them more like they’re our children.”

Overall, health costs for pets are rising even faster than they are for people. The number of vets has doubled in the last 10 years, and from one lone pet insurance company in 1982, there are at more than a dozen today. The largest is Veterinary Pet Insurance Company, a division of Nationwide Insurance; others include the aforementioned Trupanion, Embrace,  Healthy Paws,  Pets Best, Petplan, ASPCA, PetfFirst, PetPremium, AKC, 24PetWatch and the newest entrant, FIGO.

One of the significant changes in the industry, Worters says, is the different tiers of coverage offered. In the past, insurance policies covered illnesses and other acute problems, but also came with a detailed schedule for routine exams and vaccinations. If you strayed from the schedule, you were, in effect, off your warranty, so any claims you made could be denied.

Today coverage has been unbundled, giving owners three choices:

• Accidents only (such as injuries caused by motor vehicles).
• Accidents and illness – which adds coverage for everything from cancer to heart disease to heartworm and mange.
• Wellness coverage – which pays for some routine care, like annual exams, flea and tick treatments and vaccinations.

Accident and illness coverage is what 97 percent of policy-holders buy, since a major incident like cancer, or being hit by a car,  could cost tens of thousands of dollars – the average cost of coverage, in comparison, is $465 for dogs, $316 for cats, according to the latest data from NAPHIA.

Catherine Biss of Wallington has spent the last 20 years as a veterinary receptionist and has seen pet insurance become a more viable option over time. “I have heard clients say ‘I wish I had pet insurance’ or ‘I wish I could put my pet on my own insurance’ numerous times.”

Biss has seen the difference it makes. People with insurance are more apt to visit the vet than those who don’t. It “minimizes putting off medical treatment, declining necessary diagnostics, or unfortunately resorting to euthanasia as a means of treatment due to lack of personal financial resources,” she said.

Biss has insurance for her two Miniature Schnauzers, Pippi and Finn. Finn, whom she adopted last year from Pet ResQ, based in Tenafly, tested out the coverage soon after joining the family, when he ate two acorns. Not a big snack, but one that soon required emergency surgery. “Finn had eight inches of his small intestine removed and a rather expensive seven-day stay at Oradell Animal Hospital – the bill was slightly over $17,000,”  Biss said. Her insurance covered 90 percent – less the office visit (one of the fine-print aspects of many policies) – or about $14,000.

“Rewind 20 years ago, I would have had to put Finn to sleep due to that bill, ” she said. She says she wouldn’t think of having a dog and not getting coverage today.

It seems more pet-owners are considering the option – and sooner. Dr. Shelagh McCaffreyof Old Tappan Veterinary said, “People come in with new puppies and kittens, they ask about it, saying ‘I hear how expensive things can get. What are your thoughts on buying insurance?’ “

Her thoughts are that those people with young pets are  “prime candidates for insurance.” With no history of illnesses, and at the low end of the age chart, you’ll get the widest coverage at the lowest rates.

Many purebred dogs and cats have breed-associated hereditary conditions and illnesses. They may or may not show up during the animal’s lifetime.

But “It’s important to get them insured before any potential problems evolve into real ones,” she said.

Once your pet has an illness, or a possible breed-related hereditary conditions becomes a reality, it will be considered a pre-existing condition by insurance companies. Even if you have insurance, when you renew, they may exclude those illnesses in the new policy.

Some insurance companies routinely exclude breed-associated hereditary illnesses such as hip dysplasia in large dogs or heart disease in some breeds of cats. That’s why McCaffery stresses the importance of reading any policy you’re considering closely  to learn about exclusions – and whether they may apply to your pet.

“I’ve seen people purchase the insurance and then their claim is denied because the pet or a particular treatment is among the exclusions.”

Most companies require a veterinary examination before they’ll issue a policy; others require the vet to fill out forms. There may be a waiting period of 15 days to a month after purchase before coverage kicks in.

The best thing you can do is have a conversation discussing the advantages or limitations of a policy with your vet, in advance, she said.

“There’s no one plan that’s perfect,” she says. But most do help, especially in serious (and usually the most expensive) situations – the ones where euthanasia might otherwise be the only option  an owner could afford. “With advances in medical care, more people are interested in coverage because they want to pursue those advanced treatments,” McCaffery said.

“You want to make the right decision for your pet,” she added. “The last thing you want is to be given a life-threatening diagnosis and have to take into consideration the financial side.  No, you want to say ‘Just get him better.’”

A shopping list of considerations

While pet insurance basically comes in three varieties –  coverage for accidents only, accidents and illnesses, or for wellness services – every company and policy has its own requirements, limits and exclusions.   

Look at some comparison charts and see which companies come closest to fitting your budget and your pet’s health needs – which will vary depending on breed, age, and other factors (consult your vet).  Get copies of the actual policies you’re considering and read every word, so you know exactly what’s covered and what’s excluded. 

Keep these considerations and questions in mind as you read the policies.

• Does the policy cover genetic conditions and illnesses associated with particular breeds? If you have a purebred pet, find out if  there are problems associated with  the breed. Insurers will cover these conditions if your pet isn’t showing symptoms when you sign up. But no insurer will cover a pre-existing condition – one documented prior to buying thee policy. 
• Are there age limits? Most policies won’t cover animals less than 8 weeks old, some don’t cover pets over a certain age, and some have no age limit.  In all cases, coverage for older pets will cost more. 
• What are the deductibles?  Many companies  offer a range; a larger deductible will bring down the cost of the policy.
• Is there a cap on coverage?  Insurers can impose limits several ways: An annual limit on overall payments; a max per accident/illness; a max based on a schedule of allowances for specific health conditions (asthma, knee surgery, etc.); or per “body system” i.e., digestive system, or nervous system. Most caps are per year, but a few are lifetime limits. 
• Renewing your policy: If your pet is treated for a covered condition one year, will the carrier continue to cover treatment for that condition when the policy renews?  Does the cost of your policy increase as your pets get older (usually yes)? If so, by how much?
• Covered costs:  Accident and illness policies will cover the thousands of dollars in tests, surgery and hospital stays, but won’t cover the line item for “office visit.” They may not pay for medications.  They usually don’t pay for routine services like  vaccinations and heartworm prevention. Most don’t cover spay/ neutering surgery or dental care. 
• What is the claims process? For the most part, you’ll have to shell out the money at the time of treatment, then you’ll be reimbursed.  
• If you have more than one pet, ask your insurer if they offer a multiple-pet discount. 
• Review any optional extra coverage that may be available. Some insurers cover items such as wellness, drug, dental, cancer treatment, etc. only if you pay extra. 

How to do your due diligence 

 Unlike auto, home and other types of human insurance, you can’t just call your insurance agent and have him or her advise you. It’s up to you to get educated. Here are some of the best resources. Also, check with your vet – who knows your pet(s) and can look at policies you’re considering. 

Pet Insurance University (pet-insurance-university.com):  Written by a veterinarian for pet-owners wading through the confusion of insurance shopping. The nine-lesson primer (not as huge as it sounds) will have you policy-shopping like a pro.

Canine Journal (caninejournal.com/pet-insurance): Has a  dedicated area for pet insurance issues and reviews, including the staff’s annual picks for the three best insurance providers (Healthy Paws, PetPlan, and PetsBest were Nos. 1, 2, and 3 for 2017).  Check out the coverage comparison chart, and the insurance quotes grid, comparing the differences in price, reimbursement levels, deductibles, available extras and other features of a policy for a particular dog or cat (say a 4-year-old purebred black lab).

Pet Insurance Review (petinsurancereview.com):  Along with reviews of every providers, the site has a chart comparing the features, costs and the all-important “not covered” category. 

North American Pet Health Insurance Association (naphia.org/buy-pet-insurance): The advocacy group for the industry offers detailed  information for consumers under the “Buy Pet Insurance” category (they don’t sell policies however).

The NJ Department of Banking and Insurance (www.state.nj.us/dobi): The state’s watchdog for all things insurance-related.  Offers tips on shopping for insurance, and handles consumer complaints.