Is Pet Insurance a Scam?

As a veterinary assistant, I’m frequently asked questions like "Is pet insurance worth it?" or "Is pet insurance a scam?"

From my observations, pet owners with insurance are more assured and able to follow through with their pet's treatment plan. I encourage many clients, particularly those with new puppies or kittens, to enroll in pet insurance as soon as possible to maximize its benefits and minimize worries about pre-existing conditions.

As a pet parent of three fur babies, I value having access to thousands of dollars if something happens to my pets. My six-year-old German Shepherd was recently diagnosed with osteoarthritis. Thanks to pet insurance, I can consider treatment options that are out of my budget, such as hydrotherapy, acupuncture, and laser therapy. It would take me years to save up that amount for her care with my current income.

Having worked in the pet insurance industry, I've witnessed the thousands of dollars we paid out to pet parents in need daily, and the life-saving care families can access because of pet insurance. While there’s undoubtedly an opportunity for improvement to an imperfect product (I'm still anxiously awaiting more options for pre-approvals and direct payment to the veterinary clinic), I am grateful that a product like pet insurance exists.

I can confidently say that pet insurance is not a scam.

There are no pyramid schemes or multilevel marketing “friends” trying to bring you “an investment opportunity.” But, in light of recent news about mass policy cancellations, frustrated pet owners are understandably skeptical and wondering if pet insurance is worth the money.

The truth is there needs to be more clarity about what benefits pet insurance truly offers. Considering your financial needs and your pet's current and projected future health, you are the best person to determine if pet insurance is a worthwhile investment. Therefore, let’s clear up some common misconceptions to help you decide if pet insurance makes sense for your family.

Pet insurance does not make your pet care “free.”

It's common for there to be a misunderstanding about what pet insurance coverage actually means. Pet parents often compare pet insurance to their health insurance, which can cause confusion and disappointment. In the US, the Affordable Care Act requires preventative care coverage at no cost to the policyholder.

However, in pet insurance, saying that preventative care, an accident, or illness is “covered" means you are eligible for coverage, but the benefits may be less than what you pay at the vet. Additionally, preventative care is often sold as an add-on to your base policy, so don't assume you have preventative care coverage just because you have pet insurance.

With pet care preventative costs averaging $300 to $600 annually, it's important to be aware of your policy's reimbursement limit and keep these limits in mind when choosing a vet.

But what about accidents, illnesses, and injuries? Remember that co-insurance, also known as the amount of reimbursement you are eligible for, varies from policy to policy and is chosen at sign-up. A higher reimbursement rate will come with a higher cost, so evaluating how much you can afford as a monthly premium versus how much money you will be reimbursed for an approved claim is essential.

Typically, reimbursement rates range from 70% to 100%. Luckily, Figo has made it easy for you to find the perfect policy for your pet using this super handy comparison chart.

Pet insurance does not cover illnesses or injuries your pets already have.

When a pet owner considers getting pet insurance, it usually goes something like this:

Your dog is primarily healthy but has had a few trips to the vet recently for vomiting, and the costs are adding up. You wonder if pet insurance would help you save money on vet bills and decide to sign your pet up for insurance- after all, the website says illnesses like vomiting are covered!

A few weeks later, the vomiting recurs, and you file a claim, grateful for the help with bills. However, you're disappointed to learn that vomiting will not be covered because it is considered a pre-existing condition. This may lead you to think, 'So, vomiting won’t be covered for the rest of my pet's life? Is it even worth it to make a pet insurance claim?'

While no longer relevant in human health care (again, thank you, Affordable Care Act!), pre-existing conditions still exist in other insurances, including pet insurance. Pre-existing conditions can be any accident, injury, or illness that occurred or showed symptoms before the start of your policy (even if a specific illness is undiagnosed).

Remember, all insurances act as a safety net to assist with the cost of unexpected events while enrolled in the policy. Your car insurance does not reimburse you for damage that happened before you signed up, right?

However, most pet insurance companies work with veterinarians to ensure their policies meet the needs of their policyholders. Many companies like Figo have coverage for some pre-existing conditions if they meet certain criteria.

Before signing up for pet insurance, call the company and speak to someone over the phone to explain coverage for pre-existing, curable, and bilateral conditions.

Pet insurance has waiting periods (even if your coverage begins immediately).

Here's another example: Your indoor-outdoor cat is suddenly limping and appears to be in pain. You know you should get her to the vet immediately, so you sign up for pet insurance and schedule the first available appointment with your vet the following morning. Since you bought the policy before taking your cat to the vet, everything should be covered, right?

Most pet insurance policies have waiting periods, or the amount of time it will take four accidents or illnesses to be eligible for coverage. This waiting period can range from 24 hours up to several months, depending on the type of event you are claiming.

Waiting periods protect against insurance fraud (aka someone purchasing an insurance policy to have coverage for a vet visit and then immediately canceling). Many pet owners are surprised to learn that their insurance policy only provides reimbursement benefits after a period of time. Insurance companies are businesses; if they pay more than they receive, they could go out of business. As a result, they need to protect against situations like this.

“But what if I pay more for my pet insurance than I get back?”

While I understand this sentiment, I can’t emphasize this enough—pet insurance is not something you want to use often because you want your pet to be healthy. When pet parents receive high payouts, it is usually the result of an emergency (being hit by a car, foreign body removal, or other emergency surgeries). Ultimately, the most important benefit of pet insurance is knowing you can give your pet the best care possible if an emergency occurs.

Keep in mind that one in four pet parents have taken their pets to the emergency room in the past year, and 29% of pet parents have been unable to provide emergency care due to cost.

Far too often, economic euthanasia—or worse, lack of access to a peaceful passing—is the result of financial limitations. Many pet insurance policies offer end-of-life benefits to ensure your pet is comfortable and memorialized when it is time to cross the rainbow bridge.

So, is pet insurance worth it? Would pet insurance deny your claim? The answer varies for each family, but all pets benefit from having a dedicated savings account regardless of their insurance status. Consider your pet's breed's common health issues, your savings ability, the average vet and emergency care costs, and the following questions to help with your decision:

• If my pet were to go to the emergency room today, how would I afford it? (Remember that most veterinary clinics require payment at the time of service).

• How long would it take me to save that amount of money?

• Do any veterinary clinics near me accept payment plans or have pet savings accounts?

• Is it better for me financially to pay a smaller amount each month and more out-of-pocket costs at the vet or pay a higher monthly amount to get reimbursed more money when it's needed?

• Does my pet have any current health issues? What health issues should I prepare for based on my pet's age, breed, behavior, etc.?

• What is the upper limit of care I could afford financially without pet insurance?

• If I had to withdraw from my savings to pay for my pet's care, how quickly would I need to replace that money?

Ebony R is the founder of Atlanta Dog Mom, a community founded to bring together diverse dog moms to connect, learn, and encourage each other to be the best dog moms we can be. In real life, she enjoys deep-diving of various topics, studying veterinary nursing, and doing queer things in the streets of Atlanta with a small group of friends.