Is taking out pet insurance worth it?

Find out why four million US households have purchased this type of coverage

Is taking out pet insurance worth it?

Insurance News

By Mark Rosanes

Pet ownership in the US has been rising steadily in recent years, driven by the health- and mood-boosting benefits these animal companions provide, the latest figures from the American Pet Products Association (APPA) have shown.

About 70% of households across the country – equivalent to 151.1 million homes –brought in pets between 2021 and 2022, up from 67% in the previous two years, according to the non-profit industry body’s biannual National Pet Owners Survey.

Of the total respondents – which included non-pet owners – 14% said they obtained a new pet at the height of the pandemic, a quarter of whom admitted that the uncertainties brought about by COVID-19 have played a major part in their decision.

In terms of expenses, the report estimated that owners spent $32.3 billion on veterinary care and products – including pharmaceuticals and other items purchased in clinics – in 2021, an almost 3% increase from $31.4 billion in the previous year.

APPA noted, however, that this trend was not something new as consumer spending on pet medical care has been climbing consistently every year since the association officially started collecting data in 2001.

The rise in veterinary care expenditure comes at a time when the pet insurance market is seeing a huge boom.

Data from the North American Pet Health Insurance Association’s (NAPHIA) State of the Industry 2022 report has revealed a flourishing pet insurance sector, with total in-force premiums hitting a record $2.84 billion in 2021, up more than 30% from the previous year’s $2.18 billion. This equates to more than 4.4 million insured pets and an almost 28% jump from 3.45 million in 2020. All figures include Canada.

“The societal and behavioral changes we are experiencing around our relationships with pets have contributed greatly to an unprecedented period of growth for our industry,” said Kristen Lynch, executive director of NAPHIA. “A record number of household pet adoptions and purchases during the pandemic, combined with continued work-from-home arrangements, and pet owners’ desire to mitigate unexpected veterinary costs have contributed to even higher growth rates in the past several years.”  

What type of coverage does pet insurance provide?

Pet insurance plans are designed to protect pet owners from the financial impact of unexpected veterinary expenses. Most policies follow a reimbursement-based model, allowing policyholders to consult or get treatment from a specialist of their choosing, but there are also a few providers that offer the option to pay the veterinarian directly.

According to the Insurance Information Institute (III), there are three types of coverage that pet insurance policies in the US provide. These are:

1. Accident and illness coverage

The most common type of coverage, accident and illness policies cover injuries caused by accidents – including broken bones, torn ligaments, bite wounds, eye trauma, and poisoning – and sickness – including skin infections, cancer, arthritis, allergies, ear infections, diarrhea, and internal parasites.

Experts advise pet owners to get this type of cover while their pets are young as many insurance providers limit illness coverage as animals age. Doing so can also help policyholders save on premiums and reduce the impact of pre-existing condition exemptions.

2. Accident-only coverage

Some insurers offer accident-only plans, which essentially cover anything associated with sudden physical injury. This type of policy usually costs less than accident and illness plans, and suits pets with pre-existing conditions.

3. Wellness coverage

This optional coverage pays out for wellness expenses, including annual physical exams, spay or neuter procedures, routine blood panels, heartworm testing and treatment, fecal testing, urinalyses, routine vaccinations, teeth cleanings, and flea and tick treatments.

What factors should pet owners consider when taking out insurance?

To find the insurance policy that best fits their needs, pet owners need to consider a few factors before settling on one. These include:

Deductibles: This is the amount pet owners need to shell out before a policy pays out. There are two types of pet insurance deductibles. The annual deductible – where policyholders pay the amount in each policy term – and the per-condition deductible – where pet owners pay the amount for each condition or incident. The deductible amount varies between insurance companies but typically ranges between $50 and $1,000.

Reimbursement: This is the part of the veterinary expenses that the insurance policy covers. Common reimbursement options are 70%, 80%, and 90%. A few insurers, however, offer up to 100% reimbursement of veterinary costs.

Coverage cap: This is the highest amount the insurance provider will pay for a claim that the pet insurance policy covers. Typically, the amount is pegged at $5,000, but there are also insurers that offer unlimited coverage.

How much does pet insurance cost?

Several factors impact the cost of pet insurance policies, including the pet’s breed, age, gender, pre-existing illnesses, and geographical location. According to NAPHIA, the average annual premiums for dog insurance with accident and illness coverage in the US were $583.91 or $48.66 monthly in 2021. Cat insurance premiums are priced about 41% lower at $342.84 or $28.57 per month. For accident-only policies, yearly premiums cost $239.11 for dog insurance and $130.24 for cat coverage.

The association added during that year, about 82% of in-force gross written premiums were for dog cover.

Is pet insurance worth having?

According to experts, the biggest benefit of taking out pet insurance is peace of mind. It gives pet owners the assurance that in an event of an expensive illness or accident, they can afford to give their pets the best care possible.

“You can't predict when your dog or cat will get sick or injured, but you know it could happen at any time,” pet insurance specialist Embrace wrote on its website. “Pet insurance protects your finances by covering your pet's unexpected vet bills.”

Canine Journal added that the worst scenario for owners “is learning your dog has cancer but turning down treatment because you can’t afford the bills.”

“No one wants to face this decision and signing up for pet insurance can cover much of the cost,” the review site noted. “Pet insurance allows you to make the best choices when an emergency arises instead of the least expensive ones.”

To give pet owners a picture of the different treatment expenses that they may encounter while taking care of their furry friends, specialist insurer Pets Bests analyzed annual claims costs from 2017 to 2021. Here’s what the insurance provider gathered.


Average cost of treatment for dogs

Average cost of treatment for cats




Ingested foreign objects






Broken bone



Heart murmur






Dental disease



Bladder infection/UTI



Eye conditions



Feline kidney disease



Source: Pets Best

Meanwhile, most veterinarians Pawlicy Advisor talked to said that they have difficult conversations with pet owners about the cost of care anywhere from five to 10 times per day.

“As healthcare costs rise across the board, pet healthcare is no exception,” according to the pet insurance marketplace. “The right coverage plan can buy you priceless peace of mind and empower you to do the right thing for your dog or cat.”


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