Is Pet Insurance Worth Buying?

Our labradoodle, Bailey, just turned 11. Of course, my husband and I celebrated, marveling at his continued energy and agility. But Bailey’s vet bills tell another story.

We used to pay $100 once or twice a year for a routine visit. These days we’re charged $150 or $200 every few months, because of Bailey's health issues, including a buildup in his lungs.
 
Every time I left the vet, I wondered if we should have purchased pet health insurance for Bailey. Finally I looked into whether pet insurance is worth buying. Turns out, there’s no simple answer, although I did come away with some useful guidance.
 
Who Should Consider Pet Insurance
 
Mike Hemstreet, founder of petinsurancereview.com, an independent online clearinghouse in Longmont, Colo., says there are certain owners who might want to look into buying policies.

“Pet insurance is for people who cannot stand the thought of having to put down their pet for economic, not health, reasons," he says. "And it's for those who want to offer their pets medical treatments, such as chemotherapy, but can’t afford the out-of-pocket costs.”
 
(MORE: The 10 Best Pet Companions to Have at Your Side)
 
Today, only about 1 percent of North American pets are insured. That's partly because “vet care has been relatively affordable for most pet owners until recently, when all sorts of new technology and options became available for pets,” says David Lummis, senior pet market analyst for the market research  firm Packaged Facts, who is based in New Orleans.
 
The costlier medical treatments have made pet insurance increasingly popular. Meanwhile, big-name insurers such as Aon, Aetna and Nationwide now underwrite policies — and a growing number of employers, from McDonald’s to Boeing, offer pet insurance as an employee benefit.
 
The variety of policies has grown, too, expanding to include illness coverage for old dogs like eight-year-old Bailey. Three years ago, I couldn’t find any policies with illness coverage for him. Now I can.
 
How Pet Insurance Is Priced
 
What you’ll pay for pet insurance is based on three factors:
 

• Breed. Some are more prone to health problems than others. Basset hounds, for example, are often plagued by intervertebral disc disease. Labradoodles like Bailey carry a genetic propensity toward conditions that frequently afflict labradors and poodles — cataracts, hip dysplasia, obesity, glaucoma and Addison’s disease, among others — so they’re a high-cost breed.

• Age. Premiums are higher for older animals than younger ones, just the way older people tend to pay more for health insurance than younger people.

• Your Zip Code. Pet care costs more in, say, Manhattan, N.Y., than it does in Manhattan, Kansas.

 
Comparing Premiums for My Dog
 
To see what coverage I could get for Bailey and what I'd pay, my first stop was petinsurancereview.com. I entered Bailey's breed, age and Zip Code; the site then sent the information to insurers, who emailed me four premium quotes within minutes.
 
One insurer, VPI, offered me only injury and accident coverage. That policy — priced at $126.60 a year — would help defray costs if Bailey was, say, hit by a car or hurt in a dog fight, but it wouldn’t cover any illnesses. If I agreed to pay another $144, Bailey would also be covered for up to $250 a year in routine-care treatments, including two exams, vaccinations, and fecal and heartworm tests. But the total premium would then be $270.60, and that didn’t seem like much of a deal.
 
The three other companies covered illnesses as well as injury and accidents. Their policies cost between $281.76 and $942.48 a year. But a close reading of the fine print revealed that none would cover Bailey’s pre-existing conditions.

As a result, I decided we had passed the opportune time to insure Bailey, because the odds were small that the insurance coverage would exceed the cost of the premiums.
 
(MORE: Your Dog Can Be Your Best Friend for a Healthier Lifestyle)
 
What Other Reporters Say
 
My fellow journalists have differing opinions on the value of pet policies.
 
Jessica Anderson, an associate editor for Kiplinger’s Personal Finance, recently wrote that she felt vindicated about her decision to buy pet insurance.

Anderson’s policy helped defray $3,030 in vet bills after her four-year-old beagle mix (also named Bailey!) began suffering seizures. “The first two years I had Bailey, the premiums and the payouts were pretty much a wash. But this year, the payouts have exceeded my premium by hundreds of dollars,” Anderson wrote.
 
But in a 2011 article evaluating pet insurance, Consumer Reports said “we believe most pet owners will be better off passing up pet insurance and instead putting some money in an emergency ‘kitty.’”
 
The magazine looked at nine policies from three insurers, analyzing how much of the vet bills they would have covered over the lifetime of Roxy, a generally healthy 10-year-old beagle in a New York City suburb. None of the policies would have paid out more than what the insurance premiums added up to (between $3,029 and $6,474).

Five of the policies would have returned positive payouts, however, once the magazine added in a series of hypothetical, potentially costly medical problems.
 
Consumer Reports noted that all nine policies would also have saved Roxy's owners money for their two real-life cats, which have serious and expensive health problems.
 
No Clear Answer

In the end, I’ve come to the conclusion that there’s no single, definitive answer to the queston of whether pet owners should buy this kind of insurance.
 
If you’re considering purchasing the coverage, start your research by visiting petinsurancereview.com and the North American Pet Health Insurance Association’s site. You should also read "Your Pet Insurance Guide" by Memphis vet and blogger Doug Kenney. “I think pet insurance is a good thing for most owners to have, provided they can pay the veterinary bills upfront and wait for the reimbursement,” says Dr. Kenney.
 
2 Tips for Pet Owners
 
Two more pet-insurance shopping tips:
 
1. Know what you’re buying before you sign up. A good rule to remember is the less expensive the plan, the less extensive the coverage. Many plans bar coverage for hereditary conditions or charge more for them. No plans cover pre-existing conditions.
 
Be sure you understand the policy’s coverage limits per health incident, per year and over the life of your pet.
 
Some policies pay 80 percent of your entire vet bill, or at least 80 percent of procedures they cover. Others pay 80 percent, excluding the cost of the vet’s exam. And still others reimburse 80 percent of a national fee schedule, no matter where you live. That means, if vet fees are far higher than the national average in your town, your out-of-pocket costs could be steep.
 
Ask the insurer how you’d be affected if your pet were to contract a serious or chronic illness. With some policies, if that happens, when renewal time comes around, you could see a dramatic premium hike or find that this coverage has been dropped.
 
2. Consider buying a pet wellness plan instead of pet insurance. With a pet wellness plan, you pay a monthly fee for coverage of routine physical exams, vaccinations and the like.
 
Banfield Pet Hospital, which is associated with PetSmart, sells wellness plans around the country. The annual cost is $263.40 to $599.40 for an adult dog; $215.40 to $479.40 for an adult cat. Pet Assure has a $119.40-per-year plan for dogs ($95.40 for cats).
 
While these plans may reduce some of your costs, you could still face high bills for illnesses and injuries. And your vet might not participate in the plans, so be sure to check before purchasing one.
 
In our case, we love our vet and he doesn’t offer wellness plans. So I’ll continue taking Bailey there, without an insurance policy and without a wellness plan.

Yes, we know we'll likely wind up spending a bundle. But we also know that we can’t put a price on our lovely labradoodle.