Americans love pets. In fact, 65% of US households have a pet. But of these pet owners, less than 1% has pet insurance. That’s a pretty astounding figure that I’m sure most people would be surprised by. By Comparison, in Sweden – the country that issued the first dog insurance policy in 1924 – 30% of all pets are covered by pet insurance.
But owning a pet isn’t cheap. In addition to the basic costs such as food, toys and grooming, pet owners can spend more than $27.8 billion on veterinary bills every year, according to the American Veterinary Medical Association.
So when a client of mine recently asked me my opinion on pet insurance, my answer wasn’t clear cut. As a single woman, her only “child” is her dog. Understandably she wanted to know if it would make financial sense for her to spend on pet insurance.
Pet insurance may seem like an extra bill you’d prefer to avoid, but it’s important to factor in your personal situation. Can you afford not to have the financial fallback the insurance provides? How would you cope if your pet needed life-saving treatment that couldn’t be paid for?
Why Do People Get Pet Insurance?
Just as with my client, for many Americans, pets are their children. No expense is spared when it comes to the health of their pets. Since this can be quite expensive, pet insurance may help to defray major medical expenses.
Pet insurance is there to cover a risk that you cannot potentially afford, and as a sort of “forced savings” in the event of a claim. If your beloved pet required $20,000 for surgery, would you be able to pay it? Would you have cash in an emergency fund you could tap to pay the bill?
Essentially, by having pet insurance you are building that emergency fund via an external third party; the insurance company collects the money you might otherwise be setting aside for a potential major medical vet claim.
How to Look for Pet Insurance
One resource shared with us that Healthy Paws and FIGO seem to trade off as best value. Many insurance plans also include vet visits and other such foreseeable expenses. These drive up the cost of the policy for no reason, and can easily be budgeted for in addition to your monthly insurance payments, so be sure to look for pet insurance that only covers what you really need.
If you aim for true insurance for unplanned expenses, pet insurance may make sense. It offers financial reassurance, and helps avoid the heartbreak of having to decide whether or not you can afford to save your pet’s life.
Don’t Forget to Account for Pre-Existing Conditions
Be mindful of “pre-existing conditions” with your pets. Pre-existing conditions, breeding and cosmetic surgery aren’t typically covered, and accident and illness coverage can vary by provider, so it’s worth checking on what a policy will and will not cover.
Some pet insurance companies will deny claims for rescue pets due to potential pre-existing conditions,” so check to make sure that a company will cover your rescue pup.
Decide What Feels Right for You and Your Family
In our opinion, there is really no right way to go here. If you are inclined to pay for chemotherapy and other very large expenses that could potentially happen down the line, (and you don’t have a rescue), you might want to consider pet insurance.
If having pet insurance will give you peace of mind, there is a value in that, too. However, you could also consider saving monthly into your emergency fund an amount, say $100, that you would allocate to pet care.
If you’ve had an experience with pet insurance we’d love to hear it. And for more valuable information on all things financial, check out our book where you’ll find many of the trusted resources we use for smart financial moves.
