Does It Pay to Insure?

Find out if pet insurance is right for your dog and your wallet.

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When Michelle Young and her husband decided to get a dog last year, the family rounded up all the essentials: puppy food, toys, a comfy dog bed – and pet insurance.

“We had decided we were going to get pet insurance on our dog before we even got him,” says Young, who lives in Austin, Texas. “My husband’s uncle did not have insurance, and his dog got hit by a car.” The dog survived, but lost a leg. The bill? A whopping $2,400.

A little more than 2 percent of all U.S. pet owners carry pet insurance, according to the American Pet Products Association. That may not seem like much, but the trade group expects the number to climb significantly by 2010, to between 5 and 7 percent of all owners.

Why the change? It’s simple: Interest in pet insurance has grown as spending on veterinary care — including once unheard of procedures for animals like MRIs, CAT scans, and even kidney transplants — has jumped.

The APPA says Americans spent $11.1 billion on veterinary care last year, up roughly 8.5 percent from 2007. As spending increases, pet owners are looking for ways to save money. But is pet insurance the right choice?

Pay now, save later?
Jo-Eveline Nisewanger of Orlando, Fla., pays around $40 per month to insure her two Yorkshire Terriers, 2-year-old Maverick and 1-year-old Cosmo.

Like Young, watching a family member pour thousands of dollars into unexpected vet bills led to the decision to purchase insurance.

“My dogs are seemingly healthy, but experience tells me that may not always be the case,” Nisewanger says.

The American Society for the Prevention of Cruelty to Animals says the average owner pays around $225 per year to insure a pet. Policies vary, but most plans reimburse between 50 and 90 percent of covered medical expenses.

Most plans also carry caps on payouts per year, per incident, or over the pet’s lifetime. A typical annual cap ranges from $7,000 to $20,000. Per incident, that number swings from several hundred dollars to in excess of $25,000.

The good news is most plans allow you to mix and match benefits to best suit your needs — and bank account.

A bare-bones plan that covers mostly emergency care, for example, can save you quite a bit on premiums. If you’d like more protection, you can opt for increased coverage that includes treatment for many illnesses and injuries, and add other options like dental care and routine checkups.

Young’s plan, which costs around $50 per month, pays for her 1-year-old Miniature Schnauzer Fizzer’s heartworm preventive and a teeth cleaning every year. She bought the optional insurance through her husband’s employer, a move that can save anywhere from 5 to 10 percent off premiums. Most plans also provide a discount for insuring multiple pets.

Read the fine print
Got an older dog? You’ll pay more. Most policies also exclude coverage for hereditary conditions common to certain breeds. So if you’ve got a Labrador Retriever — known as much for his susceptibility to hip dysplasia as his endearing nature — forget about reimbursement for tests or treatment related to dysplasia.

Preexisting conditions are also typically excluded, and some plans limit coverage for ongoing issues. For example, if your dog develops cancer during one plan year and requires treatment into the next plan period, that additional treatment may not be covered.
(One exception is Embrace Pet Insurance, which covers hereditary and chronic
conditions.)

Loran Hickton, executive director for the North American Pet Health Insurance Association, says policy exclusions help companies keep premium costs down. “Like any insurance product, certain exclusions must be in place to provide fairness to others who are insured,” Hickton says. “If a pet has a very high probability of a certain illness, it is only fair that the owner assumes the additional risk (for that
condition).”

Insurers also cap what they’ll pay for individual services, and base benefits on these allowances. So if your vet charges $100 for anesthesia, but your insurer only allows $75, your reimbursement will be based on $75.

Bob Hunter, director of insurance for the Consumer Federation of America, encourages consumers to examine any potential policy’s fine print “very carefully.”

Hunter doesn’t carry pet insurance for his two dogs, 11⁄2-year-old Border Collie Jane and 15-year-old Schipperke Pepper. Most people don’t need it, he believes, because the chances are relatively slim that you’ll be hit with a catastrophically expensive vet bill, and many expenses can be taken care of out-of-pocket.

And owners do have options, such as they are. If you’re staring down a $5,000 vet bill and recently lost your job, you can make the tough decision to put your dog down rather than go into debt. But many owners would opt to finance it. “If your dog is like your child, and you’d do anything to save it,” then pet insurance is probably for you, Hunter says.

The savings option
A better strategy for most people, Hunter contends, would be to figure out what you’d spend on pet insurance premiums every month and set aside that amount in a separate savings account.

If you start saving $25 per month when you get a puppy, and he tears his anterior cruciate ligament at 6, surgery that normally costs around $1,500, you’d have more than enough money in the bank to pay the bill.

But for Young, there was no question. “I know that if anything happened to my dog, and I did not have this insurance, I would not be able to get a loan, and I would not be able to save my dog’s life,” she says.

Nisewanger agrees. She says her insurance picked up half the $800 bill to treat her dog last year for chemical burns to his tongue after he accidentally lapped up drain cleaner. “I think it’s a great deal for the peace of mind it gives me,” she says. “I’d rather pay the money for the policy and never need it, than need it and not have it.”

Maureen Kochan, the former editor of DOG FANCY, is a freelance writer and editor who lives in Southern California.


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