Auto, Home, Life, Fido?

By Mark Loehrke
Appears in the June 2024 issue.

Here’s the scoop on pet health insurance

These days pets are often considered members of the family, and many owners will spend whatever it takes to keep Fluffy and Snowball happy and healthy. Still, even the most loving and generous soul can be severely tested when it comes to the spiraling costs of a pet’s medical care, creating situations where owners are forced to make hard decisions about expensive veterinary treatments.

Hoping to avoid such difficult choices, more and more pet parents are opting for pet health insurance. “Today we live together more closely with our pets than ever before, sharing mealtimes, cozying up for naps, going out on social adventures, and even traveling together,” says Kristen Lynch, executive director of the North American Pet Health Insurance Association (NAPHIA). “This shift, coupled with the desire to protect our beloved companions, has fueled a notable rise in the importance of pet health insurance, attesting to the growing need and desire to protect and care for our pets.”

According to NAPHIA’s 2024 State of the Industry Report, more than 6.2 million pets were insured across North America last year (a 16.7 percent increase from total pets insured in 2022), and the total pet health insurance premiums for 2023 was more than $3.9 billion (a 21.6 percent increase from 2022).

And while most of those premiums come directly from the pockets of pet owners, Lynch says an increasing number of employers are adding pet health insurance as a benefit right alongside (human) health and long-term disability coverage.

She notes that pet health policies tend to follow the typical rules and trends of other types of insurance in terms of cost (for example, lower-deductible policies tend to have higher premiums, older animals tend to command more expensive premiums due to a higher risk of injury or illness, etc.) and coverage (the more conditions/treatments covered, the more a policy tends to cost). But there is one notable difference: “Pet insurance is unique in that—unlike other forms of coverage—it is designed to be used,” she explains. “You can and will use it, perhaps often, to offset the cost of pet medical treatments.”

According to the NAPHIA Industry Report, there are four types of pet insurance products:

• Accident-only policies: covering foreign-body ingestion, lacerations, motor vehicle accidents, ligament tears, poisoning, etc.
• Accident and illness policies: accident benefits plus illnesses such as cancer, infections, digestive problems, etc.
• Insurance with embedded wellness: These comprehensive plans cover vaccinations, early screening diagnostics, nutrition consultation, dental care, and more.
• Endorsements: riders such as wellness or cancer endorsements

And for many people who are already paying to insure the most valuable things in their lives, Lynch believes adding coverage for four-legged family members is probably a foregone conclusion. “It’s been observed that, in this generation, pets have gone from the barnyard to the backyard to the bedroom—this encapsulates how deeply we’ve incorporated them into our lives.”

Did You Know?

Pet Protection

• In 1982, Hollywood’s Lassie received the first pet insurance policy in the United States.
• About 30 or so companies make up the pet insurance marketplace in North America.
• In the United States, dogs are the majority of insured pets over cats, 78.6 percent to 21.4 percent, respectively.
• In 2023, the average U.S. health insurance premium for a dog was $675.61 a year for an accident and illness policy and $204.16 a year for accident-only coverage. For cats, the average U.S. premium was $383.30 a year for an accident and illness policy and $116.11 a year for accident-only coverage.

Photos: iStock