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The Cheapest Pet Insurance Isn’t Always Right For You
The Cheapest Pet Insurance Isn’t Always Right For You
July 28, 2022 / Serguei Solokhine
The Cheapest Pet Insurance Isn’t Always Right For You
July 28, 2022 / Serguei Solokhine

We love our pets, but let’s face it, they are expensive. In the US, routine vet visits for your furry friend can easily set you back $700-$1500 a year. That doesn’t even include unexpected medical bills, food costs, and the cost of toys and accessories.

With all these costs piling up, it might be tempting to save where you can by buying the cheapest pet insurance plan available. However, this could come back to bite you. Here are 5 good reasons why the most affordable pet insurance coverage isn’t always the best pet insurance option to protect your fluffiest family member.

1. Your claim won’t come cheap

Injuries, illnesses, lost pets, or even, in the worst case, euthanasia can all be covered by pet health insurance, so you will probably file a claim several times during your pet’s life.

Pet insurance companies typically reimburse a percentage of your total bill. Spot, one of our top choices for pet insurance for dogs and cats, lets you choose 70%, 80%, or 90% reimbursement. Selecting a smaller reimbursement amount will lower your monthly premium, but it could cost you dearly when you do file a claim.

Let's say your pet was diagnosed with a severe medical condition, resulting in a vet bill of $3000. On a 90% reimbursement, you will be on the hook for $300. At 70%, you will need to pay $900. By going with the cheaper monthly plan, you will pay $600 more at claim time.

To make matters worse, reimbursement only kicks in after you have paid your annual deductible. A deductible is an initial amount you are wholly responsible for every year before your coverage starts kicking in. Spot lets you choose a deductible between $250 and $1000.

Going back to our previous $3000 expense example, if you chose a $1000 deductible to keep your monthly payments low, you would be on the hook for $1000. After that, your coverage would only reimburse 70% of the remaining $2000, leaving you with a bill of $1600 in total. Had you chosen the more expensive $250 deductible with a 90% reimbursement, you would only be responsible for $525, a difference of $1075.

Most families can afford a slightly increased monthly premium, but a sudden expense of $1600 may not be in reach at that crucial moment when your pet needs it most. The bottom line is that making your policy cheaper by cutting features makes it less effective and less likely to help when your pet needs it most.

2. You might not get a payout at all

Insurance companies work by weighing the odds. Suppose your policy covers common health conditions, like ear infections for dogs or urinary tract infections for cats. It will be more expensive than a policy that covers something specific and rare. For instance, insurance that only protects your pet from bills related to car-related accidents will be a lot cheaper than one that covers a broad range of vet costs.

This logic makes sense. The odds of your pet getting hurt in a car accident are much lower than those of it getting sick from a range of common conditions, so insurance companies are comfortable paying less for car accident coverage.

However, the car accident insurance is also more likely to be a useless monthly payment. There is a good chance your pet will go its whole life without being hit by a car, but the odds of your pet getting sick from a common ailment at some point in its life are pretty high.

For example, based on our testing, Spot’s Accident Only policy is about 60% cheaper than its Accident + Illness coverage, which can easily save you $20-$40 a month or more. However, this Accident Only policy is cheap for a reason: Spot knows, based on statistics, that your odds of needing a payout from Accident Only coverage are much lower.

In other words, Accident Only is cheaper but useless in most scenarios, while Accident + Illness will be more expensive, but you will probably use it several times during your pet’s life.

Getting a lower premium is good, but make sure it does not come at the cost of making your policy so specific that odds are you will never get a payout.

3. They might not be there when your pet gets older

One of the most significant hidden costs of pet insurance is increased costs with age. When you first insure your pet, it will probably be quite young. After all, pet insurance is one of those things you think about when you first welcome your furry friend to the family.

But, like people, the odds of your pet experiencing a significant health condition increase with age. Thus, as your pet gets older, insurers will raise your premiums.

Some providers get around this by simply refusing to insure pets beyond a certain age. These companies will offer you a cheaper deal upfront to entice you away from more expensive insurers that insure pets regardless of age.

Beware of buying a cheap policy and paying it diligently for the first 5, 8, or 10 years of your pet’s life, only to find that the insurer is no longer willing to protect your pet right at the age when serious health problems start.

4. You could come out ahead with add-ons

Most pet insurance plans do not cover routine or preventative treatment by default. Routine or preventive procedures include spaying, vaccination, dental cleaning, heartworm tests, and other procedures that you will almost certainly need for your pet.

Some pet insurance providers will cover these conditions if you purchase an add-on to your coverage. Spot, for example, offers a preventative care package for $9.95/month, which is $119.40/year for dental cleaning, deworming, rabies vaccines, and a wellness exam. In the best-case scenario, you can be reimbursed for up to $250 for all of the above tests.

Unlike illnesses or accidental injuries, which are unpredictable, you probably already know if your pet needs to do these tests this year and might already have some or all of them scheduled. $250 reimbursement minus $119.40 premium costs is a net positive of $130.60, assuming you carry out all of the tests as planned. While you may not actually turn a profit after paying your portion of the costs, it is still a significant discount on tests you planned to do anyway.

Naturally, this only works if you have all the tests scheduled and a high reimbursement percentage selected, but this is a genuine way to save money with your pet insurance policy.

To do this correctly, read your pet insurer’s fine print carefully, and make sure you can cancel any additional coverage once you no longer need it. Also, make sure that tests you’ve scheduled before you insure do not count as “pre-existing conditions,” which are usually not covered by the insurer. If that is the case, it’s best not to schedule any tests until after you purchase your insurance policy.

5. Your pet’s life is not worth the risk

A pet insurance policy is not a Netflix subscription or a car expense. It is money set aside to protect your pet’s life. Many of us, myself included, consider our pets family members and would do anything to keep them safe. Sometimes it is almost impossible to do that without the help of pet insurance.

Most vet bills range from hundreds to thousands of dollars, but they can get truly astronomical. According to the North American Pet Health Insurance Association’s 2022 report , the largest pet insurance claim paid out in 2021 was $50,602.67 for a 5-year-old female terrier mix hit by a car. The second-highest was $49,939.96 for a 2-year-old French Bulldog with a gastrointestinal health issue.

Imagine, in that second case, if the owners of that 2-year-old pup opted to save $30/month on dog insurance by opting for accident-only coverage, only to be faced with a bill of nearly $50,000 that their pet insurer does not cover. That dog is only alive today because its owners had to foresight to buy the best dog insurance instead of the cheapest one available.

If you consider your pet to be part of your family, and you’re financially able to, extend that concern to your pet’s health insurance. You would not skip coverage for illnesses if you were buying health insurance for yourself or a relative, so think of your cat or dog the same way.

Our Top 3 Pet Insurance Services

#1
Visit Site
Pros
  • Multi-pet and bundle discounts
  • Fast claims processing
  • Easy-to-use mobile app and website
  • Unclaimed premiums donated to charity
Cons
  • Not available in every state
  • Alternative therapies not covered
In addition to providing renters, homeowners and car insurance, Lemonade now allows you to protect yourself from costly vet bills with its pet health insurance. Its basic plan covers your pet against accidents and illnesses, and you can purchase additional coverage for preventative care as well as add-ons for physical therapy, vet visit fees, dental illness, and end of life and remembrance. Their 5% multi-pet discount, 10% bundle discount, and annual pay-in-full discount really are great ways to decrease your premiums.
#2
Visit Site
Pros
  • No limits on specific conditions
  • No upper age limit for pets
  • Extended customer support hours
  • Some pre-existing conditions are covered
Cons
  • Long wait time for claims
  • Customer service wait time can be long
Spot offers highly flexible pet insurance coverage where you choose the upper limit, deductible, and reimbursement percentage. Reimbursement can be as high as 90%, deductibles as low as $100/year, and coverage maximums range from $2500 to unlimited. There are no upper limits on specific illnesses or conditions, just one overall annual limit. If you want flexible coverage where you are in control, look no further than Spot pet insurance.
#3
Visit Site
Pros
  • 10% multi-pet discount
  • 5% discount for military personnel
  • 24/7 access to veterinary professionals
  • Additional wellness plan available
Cons
  • Dogs and cats only
  • 6 month wait period for orthopedic coverage
With attractive multi-pet discounts and reduced deductibles for healthy pets, Embrace Pet Insurance could be an excellent choice if you’re looking for dog or cat insurance at an affordable price. As well as providing 24/7 access to veterinary experts, it allows you to submit claims and manage your account through its full-service mobile app. Furthermore, the company offers additional wellness plan for your pet’s routine and preventative medical needs.

Summary

All in all, as with anything, the cheapest pet insurance may not be the best.

You would not cut down your own health insurance bill or that of a family member, saddling them with the bills for life-threatening conditions, if it meant saving a few bucks a month. It is similarly not worth it to do that for your pet if you have the financial means.

Good pet insurance coverage is expensive, but while inadequate coverage is cheap, you probably won’t get a penny back. Insurance companies only offer cheap coverage for unlikely conditions, with low payout odds. If you are paying very little for your pet insurance, odds are the company knows they probably won’t have to pay out a claim.

Worse yet, if you cheapen your premium with small reimbursement percentages or large deductibles, your eventual bill might still be too high to afford, even with the insurance. In some cases, you can purchase additional add-ons for guaranteed coverage that could help you save significantly, or at least break even if you play your cards right.

Next Steps

By now, you hopefully have a good understanding of what to look for in a pet insurance company. The next step is to compare pet insurance plans. The best place to start is with our pet insurance reviews of some of the best pet insurance for dogs and cats. Just remember, while shopping for the best deal, that pet insurance cost is not the only factor to consider when buying protection for your furry friend.

By Serguei Solokhine
Serguei Solokhine is a freelance writer based in Vancouver, British Columbia. A digital nomad, he loves writing about finance, marketing, and travel. With degrees in finance and marketing, plus five years of experience in the financial services industry, Serguei particularly enjoys writing about personal finance and investments. Serguei’s work has been published in TechRadar, ITProPortal and MoneyVisual.
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