Americans may be obsessed with therapy as a nation, but every pet owner will confirm that there is no psychiatrist in the world like a puppy licking your face! Maybe that is why, according to a 2023 study by Pew Research Centre, 97 percent of pet owners in the US consider them as a part of their family.
Pets sure have a more humanizing effect on us than our fellow humans themselves. They remind us we have an obligation and responsibility to preserve, nurture, and care for all life. And with this responsibility to protect, comes a moral obligation to ensure they lead a healthy life. Of course, this brings into the picture the financial aspect of this as well.
The American Pet Products Association has estimated that Americans spent $147 billion on their animals in 2023, including $38 billion on their healthcare. With such big bucks at stake, the pet insurance industry does not remain unsusceptible to scams, either.
To put this in perspective, at least 17 states across the country assessed at least $1.5 million in fines for violations by the pet insurance industry since 2013 — and ordered close to $5 million in restitution to customers.
But this may be the tip of the fraud-iceberg. Fraud thrives in the shadow of trust. It is the experiences of these unassuming pet owners who find themselves duped by hundreds of dollars in premiums without seeing any of their claims reimbursed that paint a dark picture of the pet insurance industry.
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Understanding Pet Insurance
Depending on the terms of your policy, Pet insurance can provide a wide range of cover for your pet – from the cost of veterinary treatment, a pay-out if your pet should die, be lost or stolen, or cover if your pet harms someone or damages property.
Just like in health insurance for humans, pet owners pay a monthly premium, and after they’ve paid a vet bill, they submit it to the insurer to try to get their money back.
Also, just as with human health insurance, there are deductible copays and annual limits on how much the policy will pay out.
Broadly speaking, there are three categories of pet insurance:
- Accident only;
- Accident and illness; and
- Accident, illness, and wellness(which includes dental and vaccines).
As a thumb rule, the more coverage you add, the higher your premium goes. Of course, there are other factors, like the age of the pet and any preexisting disease conditions, to calculate the final premium. So if you insure your dog Roger at 6 months of age, the premium you will pay will be substantially lesser than if Roger was to be, say, 8 years old. This is because health deteriorates with age, and the safe bet for insurance companies is that the 6-month-old Roger is more unlikely to file for reimbursements than his 8-year-old counterpart.
As we mentioned, Americans consider their pets as their family. So pet insurance is not just a hard-core practical decision coldly calculated to come up with a final number to conclude whether it makes financial sense or not. Some pet owners would rather cough up thousands of dollars in their lifetime just to feel at ease that they are doing the best for them.
However, others, who might just be as emotionally attached to their pets, may have to take the hard decision to discontinue medical treatment if they cannot bear this huge financial burden, with or without pet insurance(pet insurance often has a limit on how much can be reimbursed.)
Hence, while acknowledging any of these decisions with a non-judgemental attitude, we have to factor in the personal and emotional side of the equation as well.
The scams that shadow the pet insurance industry
Now that we have briefly described the pet insurance product to you, we must get you familiar with all the disclaimers, too! As it is, it may be difficult to paint a rosy picture of it when it is making news for various sketchy reasons and scams. Some of these scams that have especially caught our eye are:
1. The ‘Nationwide’ Withdrawal
Nationwide, regarded as the largest pet insurer in the country with 1.2 million animals covered, disclosed in mid-June 2024 that it would shed 100,000 policies over the next year.
Now, to understand how pet insurance works, we should know that premiums on pet insurance coverage increase with each year, which adds to the pet’s age. So there was an unsaid compact between the pet insurer and the pet owner. Buy the policy when your pet is young, stick with us, and we will take care of them when their health declines due to age.
Also, getting comparable insurance coverage with another company is usually not possible because most companies do not cover preexisting conditions under their insurance coverage. So if you got your dog insured with Nationwide when he was eight and he developed cancer when he was 10 years old, Nationwide may be obligated to cover the vet charges. But if you switch to another company, this will be a preexisting condition for them because it happened before you bought their policy and hence they are not liable to reimburse you.
Nationwide policyholders who will have their policy discontinued will be stranded in a lurch despite paying hundreds of dollars in premiums. Thus, such a big company bailing out on its policyholders breaks the basic promise of pet insurance. It is sure to create a trust deficit for this insurance product as a whole.
It also flies in the face of advice given by many veterinarians to buy insurance coverage for your pets when they are young to reap the benefits later.
2. The Trupanion Fiasco
The way to legal recourse is also difficult and mired in uncertainty.
This is because pet insurance isn’t technically even health insurance. Rather, it falls in the property-and-casualty category and is generally regulated pretty lightly by states.
Because 50 states and the District of Columbia together have 51 different versions of rules for pet insurance, insurance companies often take advantage of loopholes to make an easy buck.
At least 10 states have cited Trupanion and its subsidiaries for violating local insurance and fraud laws over the last decade in cases involving thousands of pet insurance policies. The violations range from having unlicensed workers sell insurance, improperly paying fees to veterinarians for encouraging pet owners to buy Trupanion policies, and charging different rates to different customers
3. The Corporatization of pet insurance
A decade ago, pet insurance was run by small businesses and founders with vision. Today, like every other business, it is moving towards corporatization. And like these businesses, the founders who cared about their products are being pushed out. Many of these large businesses are publicly traded, that is, they are ultimately answerable to shareholders for profit margins.
JAB Holding Co, for example, is a German investment firm that is one of the private equity firms that have been buying veterinary practices around the world. In 2024, it owned National Veterinary Associates, which has about 1,400 general and specialty offices in North America.
Why is that relevant? Well, in 2022 and 2023, JAB went on a $4 billion-plus spending spree on pet insurers. As it tries to corporatize the pet insurance product, it has ruffled the feathers of some senators who have demanded explanations for its intentions from the company heads.
4. The skyrocketing premiums
The North American Pet Health Insurance Association found that pet owners in the US paid $3.9 billion in premiums in 2023, a 22% increase from the year before. Anecdotally, however, individual policyholders we spoke to have reported higher premium hikes than the reported average.
One reason, of course, is the cost of veterinary services, which is rising faster than inflation. The U.S. Consumer Price Index shows veterinary services went up 6.2% in the 12 months ending in July compared with 2.9% inflation across the index.
However, the growing corporatization and hunger for profit that follows is an equally significant reason. The premium for pet owners keeps increasing as the pet ages and many pet owners are not able to keep pace with these steep hikes.
As a result, many of them are unable to continue with the police and are left helpless when they need the policy the most in their pet’s old age. The industry lapse rate is estimated at 20 to 30 percent.
However, there is another side to this story. Pet insurers argue that people who have healthy pets end up not continuing with the policy, and hence, insurers are left largely with a population of less healthy animals, which pushes up premiums.
According to them, if there was a zero lapse rate, premiums for all would be less. While this may be true to an extent, the truth of the matter remains that pet owners who need insurance are finding it difficult to keep up with the skyrocketing premiums.
5. Sketchy promotions and False advertising
The pet insurance industry suffers from its shares of false advertising and sketchy promotion strategies that we feel you should be aware of before you venture into the arena as a customer.
One example that we can cite is from Rhode Island. The state Department of Business Regulation found United States Insurance Co. and Spot Pet Insurance Services were improperly trying to induce potential pet insurance customers by offering $25 Amazon gift cards and was ordered to stop.
Another one is Healthy Paws Pet Insurance & Foundation of Washington, which was selling other companies’ pet insurance policies, but deceptively advertising them as their policies in emails and on its website.
The list can go on and on, but we think you get the picture!
What to look for in a pet insurance product?
There are clauses and there are sub-clauses and it is easy to get entangled in the alluring language of policy promises and assured benefits. Yet there are a few details you need to be especially on the look out for. Some of these are:
Comprehensive coverage
Comprehensive coverage will ideally contain accident, illness, and wellness benefits at a reasonable cost. However, different companies offer different benefits, and the most important thing is to read the fine print. Your company may include prescription food coverage, end-of-live benefits, and congenital/hereditary condition coverage.
At the same time, many pet insurance policies don’t cover routine vet care such as vaccinations and annual checkups.
The Preexisting condition clause
As mentioned before, pet insurance companies usually do not reimburse pre-existing disease conditions.
However, pet insurance companies don’t necessarily define “pre-existing conditions” the same way every time. For example, some companies provide coverage for “curable” conditions.
So, be clear on what your selected insurance company considers a ‘pre-existing condition’ and their policy rules around it.
Customizable Policies and Deductibles
Pet insurance companies let you customize your coverage and your deductible. Hence, you can choose to add wellness to your plan, or you can stick to accidents and illnesses only.
Likewise, if you choose a higher deductible, it will lower your monthly pet insurance payment, or you can pick a lower deductible, which will mean a higher monthly premium.
As they say, the devil lies in the details. Some companies have a per-incident or lifetime limits on your policy. So if you hit a lifetime limit on your policy, you’ll have to switch insurance providers. And if you do so, the pre-existing disease condition clause kicks in. That brings us back to the age-old advice: read the fine print!
Avail your discounts
Some companies offer up to 10 percent if you take multi-pet insurance. Also, some companies allow you to club your pet insurance with home insurance, auto insurance etc, which can help you make a reasonable saving. Be sure to ask your selected pet insurance company whether they offer any such product services and dig in for any further discounts that they may have to offer.
Cost of the coverage
When all is said and done, the cost of coverage plays a huge role in zeroing down on the pet insurance plan of your choice. As mentioned above, accident and illness plans charge less premium than wellness plans.
In Fact, according to NAPHIA, the average annual premium rise was 11.4% between 2022 and 2023 for U.S. dogs that had policies including coverage for preventive care and 5.6% for U.S. dogs covered for accidents and illness only.
So if cost is a consideration, you can choose to go for accident and illness plans only. If however, you want to include other facilities like dental in your plan, you may have to get the wellness plan too, but you will have to loosen your purse strings further.
Be Scam Aware
We have listed a few scams above, but be sure to google your pet insurance company before you make the final call. Some of them don’t hold proper licenses and don’t have adequate paperwork, while others may be indulging in shady kickbacks to vets for recommending them.
The reputation of a company is an invaluable asset in building trust with customers, and those with a good reputation will surely have a better chance of living up to their commitment.
Also, when looking online for the best insurance, some websites take commissions from pet insurance companies they endorse, so you cannot take their word for granted.
On this note, we would like to add that we are not one of them. Our recommendations are well-researched and personally verified with many pet owners so that you can take the advice as if from a friend who has taken many rough roads to finally get to the ocean with smooth sails!
The Best Pet Insurance for you
All of the above discussions lead to the final question: what are the best insurance plans that are also not too heavy on the pocket and have the maximum reimbursement rate?
All your research ends here with our recommendations for the best products in pet insurance:
1. Pets Best Insurance
Pets Best offers deductibles as low as $50, has no upper age limit, and has a 24×7 helpline staffed with vet techs and veterinarians for round-the-clock support.
Also, it’s the vets’ favorite as well, and it offers the speediest direct payment to them, so you can be assured of a speedier service if you show up in their practice with your pet’s best insurance under your belt or below your dog’s belly(pun intended)!
It also covers behavioral therapy which is not covered by many other insurances.
However, it offers a 5 percent discount on multiple pets, which is less than most other pet insurance. Also, Exam fees are not included in the basic plan.
2. Pumpkin
Pumpkin has an unlimited coverage limit and reimbursement rate as high as 90 percent, making it one of the best pet insurance products on the market. It has no upper age limit (making it senior pet friendly)or breed restrictions, and plans include exam fees and microchipping.
Pumpkin also covers a wide range of illnesses and injuries, including cancer, digestive issues, and hip dysplasia. It only requires a 14-day waiting period for breeds with common hereditary conditions like hip and joint problems, in contrast to other providers which may require waiting periods of up to 60 days.
However, its sample premiums are higher than other insurance companies and it does not have a mobile app.
3. Figo
Figo offers a unique 100 percent reimbursement option and a shorter-than-average one-day waiting period for accident coverage.
It also offers plans with lower yearly reimbursement maximums. So, the more you pay in premiums, the less you pay at the time of service. Also, it has a PetsCloud App to make your pet’s record more manageable.
It also provides coverage for non-routine dental care, alternative treatments, and hereditary conditions
However, it does not offer an accident-only policy.
4. Embrace
Embrace provides customizable coverage options, including wellness care and specialist consultations. It offers unlimited annual coverage and policies that are not often covered by insurance.
It offers a diminishing deductible feature, reducing the deductible amount each year a claim is not filed. Hence you get more discount each year you file less or no claim. It is also available in all 50 states.
However, it has an upper age limit of 14 years for pets.
5. ASPCA Health Insurance
If your pet suffers from a pre-existing condition, this pet insurance is your safest bet. Pet insurers typically exclude pre-existing conditions, but ASPCA Pet Health Insurance considers coverage for curable conditions if your pet has been treated- and symptom-free for at least 180 days.
Its Complete Coverage plan covers alternative therapies like acupuncture and chiropody as well as treatments for behavioral issues, and it comes with a 30-day money-back guarantee.
However, bilateral conditions are not covered under its insurance plan.
6. Lemonade
If you are primarily eyeing affordable pet insurance with the speediest claim processing, Lemonade is the pet insurance for you. Lemonade is known for its user-friendly digital platform and utilizes artificial intelligence and chatbots to process claims efficiently.
Also, it offers pet insurance coverage that starts at only$12 monthly. Also, you can club this insurance with your car or rental to get additional discounts.
However, it is not available in only 37 states and does not have a 24×7 tier Healthline for veterinary advice.
The Future of Pet Insurance
Some countries have had a very successful experience with pet insurance. In Sweden, where it was first introduced in 1924, the country’s largest pet insurer, Agria, says 92% of dogs, 75% of horses, and 50% of cats are covered.
In comparison, while 6.25 million dogs and cats are insured in the United States and Canada, the proportion of pets covered remains stubbornly low, between 3 and 4%. Hence, even decades after its introduction, its penetration in the market remains low.
However, things are slowly changing with the government taking baby steps into intervention in the earlier unregulated market.
For example, The National Association of Insurance Commissioners adopted a model law in 2022 that recommends that states regulate pet insurance. That guidance included barring insurers from dismissing previously covered pet health issues as a “preexisting condition” during renewals, mandating that insurers communicate a policy’s fine print up front, and giving pet owners 15 days to ask for a refund of a new policy.
On the other hand, to increase pet insurance’s draw in North America, many seasoned veterinarians suggest insurers diversify their offerings, providing options for limited coverage that costs less.
All these events promise an optimistic and healthier future for both pets and pet insurance in the US.
Of course, we need to embrace our roles as enthusiastic citizens and mindful consumers, always keeping an eye on the fine print of policies! Sharing our experiences and supporting each other will help us navigate any bumps along the way.
Together, as a vibrant community of pet lovers, we can ensure that no one experiences the heartache of knowing their furry friends could have been healed with a little extra help. After all, while our pets may not be our entire lives, they truly bring so much joy and completeness to our world!