Man’s Best Friend—Are They Covered?

My blog post last month, Man’s Best Friend—Are You Covered, took a look at 2017 dog-bite statistics in the United States and whether the typical homeowners policy covered these types of injuries. The answer to that question more often than not is “yes.” However, there has been a tremendous growth recently in another related industry—pet health insurance (“PHI”). A few statistics provide an interesting framework for this unique insurance.

The pet insurance industry got its start when the North American Veterinary Pet Insurance Company, a subsidiary of Nationwide, sold its first pet insurance policy in 1982 to cover the dog that played “Lassie” on television. In 2017, the North American Pet Health Insurance Association (“NAPHIA”) posted reports¹ that the North America’s pet health insurance sector (composite of United States and Canada) posted a record growth in 2017 with combined gross written premiums of $1.2 billion. This number represents a twenty-three percent (23%) increase in gross written premiums over 2016.² At year-end 2017, the total number of pets insured in the United States and Canada reached 2.1 million—up seventeen percent (17%) from 2016.³

According to NAPHIA, there are 12 major pet insurance companies in North America. Because pets are legally considered to be property, pet insurance is similar to car or homeowners insurance. It falls under the Property and Casualty insurance classification and functions as indemnity insurance.

There are generally four types of coverage offered for pet health insurance:

•Accident Only—foreign body ingestion, lacerations, motor vehicle accident, ligament tears, poisoning, etc. Basically, this plan would provide coverage for veterinary treatment for unexpected injuries.

•Accident & Illness—accident benefits plus illness such as cancer, infections, digestive problems, etc.

•Insurance with Embedded Wellness—comprehensive plans that may include vaccinations, early screening diagnostics, consultations for proper nutrition, dental care, etc.

•Endorsements—riders such as wellness or cancer endorsements.⁴

Premiums for the above four areas vary. In 2017, the Accident and Illness policy averaged approximately $535.95 for dogs and $335.19 for cats.⁵ Accident Only policies in 2017 for dogs averaged $190.08 and for cats $152.66. The average age of insured dogs was 4.6 years and the average age of insured cats was 5.37 years.⁶

Pet insurance plans are generally reimbursement plans, and as the name implies, the pet owner pays the bill upfront with the veterinary clinic and is reimbursed by the insurance provider. If you are considering purchasing pet insurance, ask the insurer how quickly reimbursement time is with the company and if there are any limits on the number of incidents per year.

Generally, pre-existing conditions (unlike Obama care) are not covered, but hereditary and congenital conditions may be covered. You will also need to ask the insurer how premiums are determined: by species, breed, age, or your location, and if premiums are likely to increase in the near future. Some insurers offer discounts for coverage of more than one pet. Questions about co-pay, deductibles, add-on charges and other fees, should also be explored.⁷

Like all other areas of medicine, veterinary medicine is becoming more technologically advanced and the cost of pet care increases along with these advances. Your individual vet is the best source of information on purchasing pet health insurance. Happy tails.
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¹ See NAPHIA State of the Industry Report Highlights 2018.
² Id. at 10.
³ Id.
⁴ Id. at 4.
⁵ Id. at 10.
⁶ Id. at 14.
⁷ See AVMA GUIDELINES ON PET HEALTH INSURANCE FOR PET OWNERS, https://naphia.org/find-pet-insurance/avma-guidelines-on-pet-health-insurance-for-pet-owners/ at 1-2.