How Does a Pet Insurance Company Determine the Premium?

PetMD Editorial
Updated: September 06, 2017
Published: April 21, 2011
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By Frances Wilkerson, DVM

Many factors are used to determine the premium you will pay. These factors include your pet's age, breed, species, where you live, the amount of medical coverage you choose, the amount of monetary coverage you choose, the deductible you choose, and the co-pay you choose.

1. Your Pet's Age

Older pets have higher premiums than younger pets. As a pet ages, the probability of a costly illness occurring increases.  Pet insurance companies account for this by giving higher premiums to older pets.

2. Your Pet's Breed

Some breeds have a higher probability of acquiring costly medical conditions. As a result, pet insurance companies charge a higher premium for those breeds.

3. Your Pet's Species

Dogs have a higher incidence of medical problems than cats. As a result, dogs tend to have higher premiums than cats. This is not to say cats have a low incidence of medical problems, just that the incident is lower than dogs.

4. Your Geographic Location

Where you live plays a role in determining your premium. Premiums will be higher in places where the cost of veterinary medicine is higher. For the most part, large metropolitan areas tend to have higher premiums.

5. The Amount of Medical Coverage You Choose

The more medical coverage you have the higher the premium will be. A plan that covers accident and illnesses will cost more than a plan that covers accidents only. The more comprehensive the medical coverage is the more it will cost. And though this is where a lot of people like to skimp to keep their premiums down, it is not the area you want to use to keep your premiums low. If you do, you run the risk of not having the proper coverage when you need it. Try increasing your deductible and/or co-pay instead.

6.The Amount of Monetary Coverage You Choose

Similar to medical coverage, the more monetary coverage you have the higher the premium will be. That said, it is important you choose enough monetary coverage to cover a “Worse Case Scenario Case” based on your geographic location.

7. The Deductible You Choose

The deductible is the amount you must pay before the insurance company will start paying your bill. There are two types of deductibles: per-incident and annual. A per-incident deductible is the amount you must pay for each new illness or injury. An annual deductible is the amount that you must pay each policy year.

Because a higher deductible will lower the premium cost, adjusting the deductible is a good way to decrease your premium. However, if you do decide to choose a high deductible (e.g. $250 or more), make sure it is an annual deductible and not a per-incident deductible or the insurance may never kick in.

8. The Co-pay You Choose

The co-pay is the percentage of the veterinary bill that you must pay after the deductible is met. The company pays the remaining percentage of covered expenses. For example: if your co-pay is 20 percent, the pet insurance company will pay 80 percent of covered expenses. The key word here is "covered expenses.” There may be medical expenses that you incur that are not covered by the pet insurance plan.

The higher the co-pay the lower the premium. So adjusting the co-pay is also a good way to decrease your premium.


As you can see there are many factors that go into determining the premium you will pay. Some you have control over and others you do not. Please note that premiums will increase over the life of your pet. Make sure you take that increase into account.