How Does Pet Insurance Work?

Katie Grzyb, DVM
By Katie Grzyb, DVM. Reviewed by Sandra C. Mitchell, DVM, DABVP on Jan. 30, 2024
A woman cuddles with her French Bulldog.

What Is Pet Insurance and How Does It Work?

Pet insurance allows pet parents to provide reasonably priced medical care for their pets. In exchange for a fee, a pet insurance plan covers a percentage of medical care for your companion. The type of plan that’s best for you depends on your needs.

There are pet insurance plans available that cover both wellness and preventive care and emergencies or illness. However, wellness plans are usually separate plans or add-ons to the accident-only or accident and illness plans, which tend to be more affordable.

There are many pet insurance companies available. Ask your veterinarian who they recommend. Inquire if they accept payments directly from the insurance company or whether they will require you to pay the bill and wait for reimbursement.

Many insurance companies have a waiting period between purchasing the policy and the coverage going into effect. These periods can range from one week to 30 days.

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Types of Pet Insurance and What They Cover

Pet insurance plans can range substantially in coverage, so it’s important to explore many options when looking for insurance for your pet.

Whatever type of policy you are considering, carefully read all the details so you understand what you’re buying and compare each pet insurance policy to other plans.

Common types of pet insurance include:

Accident and Illness Coverage (A&I)

This is the most common type of pet insurance plan. These plans partly cover:

  • Unexpected surgeries

  • Imaging testing, such as abdominal ultrasound and X-rays

  • Hospitalization

  • Treatment for urinary tract, respiratory, gastrointestinal, and other infections

  • Cancer therapy

  • Emergency care

Accident-Only (AO)

Some insurance companies offer more affordable accident-only plans. These plans help cover unexpected surgeries such as a gastrointestinal blockage or a broken bone.

Wellness Plans

Pet wellness plans cover preventive medicine and routine healthcare. Most pet wellness plans do not cover dental cleanings or dental problems.

Many wellness plans cover spaying and neutering, but they may have limitations on the age of your pet and when the surgery is performed.

Wellness plans also enable you to make more frequent preventive visits to the veterinarian without worrying about the cost.

Dental Insurance

A dental insurance plan can help you with unexpected, costly dental issues, and can help keep up with your pet’s routine dental care.  

Extra Coverages to Look For

Some other types of therapy that should be considered when shopping for pet insurance include the following:

  • Behavioral therapy, including compulsion or reactivity therapy
  • Training
  • Rehabilitative treatment
  • Alternative therapies (e.g., laser therapy, acupuncture, chiropractic)
  • Prescription diets for chronic diseases
  • Supplements, including those recommended for treating chronic disease
  • End-of-life expenses, including humane euthanasia, cremation, and/or burial

Pet Insurance

What Does Pet Insurance Not Cover?

This depends on the policy you choose. Most policies will not cover hereditary issues, pre-existing conditions, or dental coverage. 

Many will not include an “expected” condition. For example, if your dog needs knee surgery before the policy was purchased, the insurance company may decline treatment if the opposite knee develops a problem after the policy was bought.

Breeders may need to look for policies that cover reproductive problems. It’s important to look at what you anticipate your pet might need going forward and confirming that those situations are covered.

What Is a Pet Insurance Deductible?

A pet insurance deductible is a certain amount of money that must be spent at the veterinarian before the policy will help pay.

Once you have spent the deductible listed in your policy, the insurance company will then review your additional charges and cover a percentage of the allowed fees.

What Is a Pet Insurance Claim and How Do They Work?

A claim is a request that you send to the insurance company to pay you back for your expenses at the vet.

You submit a claim using forms and/or through the insurance company website or app. Many vet offices will give you the information needed to fill out the paperwork. You will need to upload a detailed receipt/invoice from your vet showing that you paid for treatment. Once the claim is approved, you will either get a check or direct deposit or fund transfer.

Claims may be denied if medical records are not complete or clear, if there is a pre-existing condition, or if you haven’t kept up with your monthly payments.

It’s important to note that the company may have a set reimbursement rate that can be anywhere from around 70% to 90% of the original bill that they will pay back. Alternatively, you may be able to choose your rate from a certain range.

Reimbursement caps—or limits to how much the insurance will cover for certain conditions—are possible and should also be considered when choosing an insurance plan. Reimbursement caps may be put in place for costly testing, therapy, and management of chronic conditions. This includes cancer, diabetes, and immune-mediated diseases.

Some pet parents will pay extra for care above the monthly premium if their pet hits the reimbursement cap.

Luckily, most pet insurance companies have moved to a structure that reduces the invoice total by the deductible amount and then reimburses 80% to 90% of the remaining balance.

Here’s an example of getting a claim paid:

Your dog breaks their front leg in the park. The average cost for a radius/ulna fracture repair is around $4,000. You would pay your vet to treat your dog, then you would send the receipt to your insurance company.

Let’s say the injury/accident deductible for your insurance plan is $800 per medical condition. The company will subtract your deductible, so the remaining amount is $3,200. Let’s say your reimbursement rate is 90% of the claim, or $2880 for this specific medical issue.

If the claim is approved, it could take a few weeks to a few months to get reimbursed.

Pet insurance isn’t for everyone, or for every pet—but it can be lifesaving. Understanding your financial status and what care your pet may need are good first steps in deciding if you need a policy. 

Once you’ve chosen a policy that works for you, speak with your vet and local emergency clinic to make sure they can comply with the terms of the policy.

Remember—when choosing pet insurance, work through each step slowly and carefully.

How Does Pet Insurance Work FAQs

What pet insurance is best?

There really is no “one size fits all” pet insurance. Not all pets need an insurance policy. The best pet insurance is a policy that fits your needs from a reputable company with a fast claim turnaround time.

Is there insurance for exotic pets?

Some insurance policies do cover exotic pets, but they are often very limited in what they cover. Review the terms thoroughly.

Featured Image: PeopleImages/iStock / Getty Images Plus via Getty Images

Katie Grzyb, DVM


Katie Grzyb, DVM


Dr. Katie Grzyb received her Doctorate of Veterinary Medicine from Ross University in 2009. She continued her clinical training at...

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