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The Basics of Pet Insurance

What Is Pet Insurance?

As with other types of insurance, pet insurance is the transfer of risk to a third party in exchange for paying a premium. In other words, you the pet owner are paying a premium to the pet insurance company for them to assume a portion of the risk for your pet’s covered medical expenses. Neither you nor the insurance company want your pet to be sick or injured, but by you paying the premium, the pet insurance company is assuming the economic risk instead of you.

Purpose of Pet Insurance

Like other types of insurance, pet insurance works by transferring the economic risk of having to pay for your pet’s medical expenses in exchange for paying a premium.

Pet insurance should be purchased to transfer the risk of unexpected and unanticipated medical expenses that could be very expensive. The insurance policy is a contract that determines the claims which the insurer is legally required to pay following the payment of the premium. If you purchase coverage that transfers risk to cover every minor medical expense (ie. low deductible), you will pay more premium up front. Therefore, the smart purchase is to buy a policy that protects you for the amount that is above your ability or willingness to pay.

How Much Does It Cost?

Pet insurance typically costs $30-90/month, but can be higher based on the level of coverage and the breed of the dog, and can cover up to 90% of vet bills.

You can select the premium and amount of coverage by choosing the deductible, the co-insurance and the annual policy limits appropriate for you and your budget. Some pet insurance policies offer premium discounts. A common discount is given for multiple pets enrolled from the same household. Others offer discounts for policies purchased online, reducing the cost to the company.