How Does Pet Insurance Work? (2022 Guide)

How Does Pet Insurance Work? (2022 Guide)

In this article: What Is Pet Insurance? | How Does Pet Insurance Work? | What Does Pet Insurance Cover? | What Doesn’t Pet Insurance Cover? | Cost | The Bottom Line | FAQs | Methodology

Pet insurance is a health care policy that covers your pet’s medical procedures and treatments. A good pet insurance plan covers accidents or illnesses your pet may experience and some routine care, such as annual checkups. However, there’s a lot of terminology to sift through while shopping for a pet insurance provider. 

To help you understand the jargon and how pet insurance works, we at the Home Media reviews team researched the best pet insurance companies and compiled this detailed guide.



What Is Pet Insurance?

Pet insurance partially or fully reimburses your pet’s medical bills. Standard pet insurance covers unexpected expenses for accidents and illnesses, but you can add coverage for routine wellness and other care. With a pet insurance plan, you can focus on your pet instead of worrying about the cost of treatments they need to live a happy, healthy life.



How Does Pet Insurance Work?

Pet insurance differs from human health insurance in that you pay your vet directly and submit the bill for reimbursement, rather than only paying a co-pay at checkout. You typically submit these claims to your pet insurance company via an online portal, mobile app, email or mail. Once approved, you’re reimbursed for the percentage of the bill you selected during enrollment.

Pet insurance providers often require a health checkup and a waiting period before beginning coverage. These are in place to avoid insuring a pet that’s already sick. The average waiting period is typically a few days. 

Below are a few standard terms you’ll come across when shopping for pet insurance. These factors determine the quality of your policy depending on your budget and needs. 


A premium refers to the monthly fee you pay for your plan. Other factors, such as your deductible and reimbursement rate, influence your premium.  


A deductible is a set amount you must pay for your pet’s care before receiving reimbursement. Some insurers have a per-incident deductible, which means you’ll need to meet that amount for every incident. Other companies offer an annual deductible, so you’ll only need to meet the deductible once per year. 

Deductibles range from $0 to $1,000 per incident or year. 

Reimbursement Rate

You also select a reimbursement rate when you enroll in a policy. This term refers to the percentage of costs you’ll get reimbursed after meeting your deductible. You’ll pay a lower monthly premium if you choose a lower reimbursement rate, but you’ll owe a greater portion of the bill. You’ll pay a higher monthly premium if you choose a high reimbursement rate, but you’ll get more cash back on your claims.

You can set a reimbursement rate between 50{95b18eb6fc4f42efd0d92738dfc3fb79fde21da267a711ecdf0381147c27bb86} and 100{95b18eb6fc4f42efd0d92738dfc3fb79fde21da267a711ecdf0381147c27bb86} depending on your insurer. 

Annual Limits

An annual limit refers to the maximum amount of reimbursement you can receive in one year. You’ll have to cover additional expenses out of pocket if you exceed this amount. Most pet insurance companies offer an annual limit of at least $2,500. Some insurers even offer unlimited annual limits, meaning you’ll never have to pay out of pocket.



What Does Pet Insurance Cover?

Pet insurance covers many common treatments and procedures resulting from accidents and illnesses, including the following items: 

  • Accidental injuries such as broken bones and ACL ruptures
  • Chronic illnesses such as allergies and skin illnesses
  • Common illnesses such as infections and kennel cough
  • Hereditary issues such as hip dysplasia
  • Hospitalization procedures such as surgeries and veterinary care
  • Lab work such as X-rays and blood tests
  • Serious illnesses such as cancer and diabetes

Though standard pet insurance plans don’t typically cover wellness and routine care, you can enroll in add-ons or an additional wellness care plan to receive the following coverage: 

  • Behavioral treatments such as therapy for aggression or anxiety
  • Holistic (alternative) treatments such as acupuncture and chiropractic procedures
  • Wellness care such as routine checkups, vaccinations and spay/neuter surgery



What Doesn’t Pet Insurance Cover?

Preexisting conditions are the primary exclusion in all pet insurance plans. These conditions are injuries or illnesses your pet experiences before your plan goes into effect or during the waiting period. For example, you won’t receive coverage for allergy treatments or medications if your dog or cat is diagnosed with allergies before your policy starts.

Here are a few other standard exclusions pet insurance companies include:

  • Breeding costs for procedures associated with breeding or pregnancy
  • Cosmetic procedures such as tail docking and claw removal 
  • Dietary and nutritional supplements such as dog and cat food
  • Experimental treatments, including any treatment not within the standard of care accepted by your state’s veterinary medical board



Cost of Pet Insurance

Pet insurance costs vary by your provider and plan. The monthly premium can cost anywhere from $10 to $100. Most pet owners can expect to pay $30 to $50 for dogs and $15 to $30 for cats. Your location, reimbursement percentage, deductible, and pet’s age and breed also influence your premium. Opting for an additional wellness plan will increase the cost.



The Bottom Line: Do I Need Pet Insurance?

Pet health insurance protects you from paying hundreds or thousands of dollars to get your pet care if it gets sick or injured. A policy can even save your pet’s life if it needs surgery for cancer or another threatening illness. If you’re worried about the additional expense, plenty of cheap pet insurance companies can match your budget.

We recommend finding a reputable and reliable pet insurance company. Get a quote from at least three different providers to compare their pricing and coverage. Below are some of our top recommendations. 


Lemonade Pet Insurance: Most Affordable Plans

Lemonade is an excellent option for pet parents looking to save money. The insurer offers some of the most affordable pet insurance plans available and a user-friendly smartphone app to manage your claims, policy coverage and billing. 

Lemonade has one comprehensive plan that covers treatments related to accidents and illnesses, such as diagnostic tests, hospitalizations, surgery, cancer treatments, broken bones or sprains, prescription medications and more. 

To learn more: Lemonade Pet Insurance review


Spot Pet Insurance: Most Customizable

Spot Pet Insurance provides customizable coverage, with annual limit options ranging from $2,500 to unlimited. Spot’s policies also cover a few items that many other pet insurance providers don’t, such as exam fees and microchipping. 

Spot offers a more affordable accident-only plan and a comprehensive accident-and-illness plan for unexpected injuries or other conditions, including dental disease, cancer, heart disease and more.

To learn more: Spot Pet Insurance review

Trupanion Pet Insurance: Most Flexible Deductible

Trupanion is a nationwide pet insurance provider that offers unlimited annual coverage caps, customizable deductibles and direct payments. Most pet insurance requires you to pay your entire vet bill and get reimbursed later, but if you choose Trupanion’s $0 deductible option, you only pay your percentage of the bill at checkout. In addition, Trupanion provides one comprehensive pet insurance plan with accident-and-illness coverage.

To learn more: Trupanion Pet Insurance review



Frequently Asked Questions About How Pet Insurance Works

Methodology: Our System for Ranking the Best Pet Insurance Companies

Our review of pet insurance companies is based on in-depth industry research that includes reading hundreds of customer reviews, simulating the quote and purchasing process, speaking to representatives on the phone to assess the customer service experience and surveying 1,000 dog and cat owners nationwide to determine the most important elements of pet insurance coverage.

We scored each provider on a 100-point scale based on those elements. We then divided the points earned for each provider’s final score on a 5-point scale.

Here are more details about each factor and how they’re weighted:

  • Monthly pricing (25 points): How much each company charges for its pet insurance plans is an important part of a customer’s decision. The best pet insurance companies combine comprehensive coverage and plan options with affordable rates.
  • Plans (15 points): The top pet insurance companies offer accident and illness plans, accident-only plans and wellness or preventive care add-ons to give customers the option to choose a plan that’s best for their pet.
  • Covered treatments (15 points): With this factor, we scored companies based on the treatments and procedures they cover. Companies with a breadth of included treatments and unique coverages received more points than providers with more standard or general policies.
  • Customization options (10 points): Customizing your policy is a valuable way to ensure you only pay for what your pet needs. Providers with more annual-limit, deductible and reimbursement-rate options earned the highest scores.
  • Customer care (10 points): We scored companies on their website accessibility and overall usability, customer service availability, mobile apps (if any), money-back guarantees and veterinarian telehealth options, awarding points to the insurers with more customer experience offerings.
  • Industry reputation (10 points): To determine each company’s industry reputation, we reviewed up-to-date ratings and accreditation information from the Better Business Bureau (BBB) and scored companies on their years of experience in the industry and their state availability.
  • Waiting periods (10 points): Companies with shorter accident, illness and orthopedic waiting periods between the sign-up and coverage start date scored higher than companies with longer waiting periods.
  • Eligible age (5 points): Some companies don’t offer policies for pets that are over a certain age. We deducted points from providers that have age limits for covered pets.

We use our rating system to compare and contrast each company against key factors to help us determine the best pet insurance companies in the industry. Additionally, we keep our research up to date and revisit our reviews on a regular basis.