Types of Pet Insurance

Sorting through the choices

If you want to insure your pet, experts advise that you shop carefully because you will face a confusing array of options. To begin with, you have a choice of types of insurance, a discount plan or traditional insurance. Pet health care discount plans aren't actually health insurance plans at all. Instead, they are programs that offer discounts from local vets in exchange for a monthly or annual membership fee. The plans also offer discounts on pet products and services at participating retailers. However, there is no discount or other benefits if you use a vet that's not in the plan. Additionally, discount plans still leave you vulnerable to very large vet bills should your pet require expensive treatment for an illness or accident.

Traditional dog insurance and cat insurance has predefined coverage, exclusions and annual limits. There is often a choice among several levels of deductibles and co-pays. Traditional insurance companies themselves vary in what they will cover. Some exclude hereditary conditions, or charge more for breeds at risk for these conditions; others exclude congenital conditions. Some offer accident-only plans, impose per-incident limits on what they will pay, or apply a per-incident rather than an annual deductible. Several won't write a new policy for an older pet. None of the companies cover pre-existing conditions, but they may define that term differently.

Most companies have a waiting period before the policy goes into effect as well, which varies from company to company. Finally, companies differ in whether they pay a percentage of actual charges or usual and customary charges.

A customizable plan is similar to a traditional plan except that it gives you more control over things like deductibles, co-pays and annual limits. Only one pet insurance provider, Embrace, currently offers customizable pet insurance. You can choose whether or not to cover prescriptions and non-routine dental procedures, and can even add on a wellness plan that pays for preventive care. This gives you flexibility; you buy a plan tailored specifically to your situation, so you're not paying for coverage you don't need.

Experts say you should consider your specific needs carefully before purchasing pet insurance. If possible, insure your pet while it is young; at that point there are less likely to be pre-existing conditions, and the coverage should last a lifetime as long as you continue to renew the policy each year. Read the fine print on what conditions are excluded, what constitutes a pre-existing condition, and what the plan's limitations are. Finally, be sure you choose a company with high ratings from existing customers, and you may want to check for complaints filed with the Better Business Bureau.