Picking the Right Pet Insurance

As animal lovers in New Hampshire understand, veterinary care can be eye-poppingly expensive. The number of American households with at least one pet is at an all-time high, as are pet care costs. This year, consumers are estimated to spend well over $30 billion on veterinarian care and product sales, according to the American Pet Products Association.

As pressure mounts on the family budget in an inflationary economy, many who consider their pets like family are trying to balance veterinary costs with the ability to provide the best possible care for their pets. It is not surprising that so many are now turning to pet insurance for financial protection.

In 1982, the first pet insurance policy was sold in the United States and issued to television K9 star, Lassie. Since then, the pet insurance industry has skyrocketed. The North American Pet Health Insurance Association reports that the industry exceeded $2.83 billion in premium at the end of 2021, and that the industry has more than doubled between 2018 and 2022. They indicate that over 4.41 million pets are currently insured across North America.

With the prominence of pet insurance rising, we believe it is important for consumers to contemplate some key questions as they consider whether pet insurance is right for them.

First, while this product concerns the health of a pet, this coverage is not a health product. Pet insurance is really a property and casualty product. This is not meant to insult anyone by labeling their four-legged best friend as simply a "piece of property," but it is important to understand how these products are classified as you try to understand the regulatory protections that are in place.

As you are considering whether to purchase pet insurance or which policy might be best for you, here is what you should bear in mind:

Will my veterinarian accept my policy?

What is the deductible, copay or other out of pocket expenses such as partial payments?

What coverage is included, and what is excluded under the policy?

Is there a waiting period before the coverage takes effect?

Does the policy include annual wellness exams and spay/neutering?

Are medications covered under the plan?

Additionally, there are other important considerations to be aware of pet insurance plans are generally reimbursement plans – you pay the bills up front and get reimbursed by the insurance provider. Therefore, you will want to ask the insurer how claims are processed and the timeframe for reimbursement.

Pet owners should find out how the insurer defines and handles pre-existing conditions, including any diseases and conditions your pet has now or prior to purchasing the policy.

An insurance provider should clearly spell out the details, including the limitations and exclusions, of coverage for routine and/or wellness care, as well as emergency treatment and conditions that require extensive care. Find out if your premiums will increase as your pet ages or if you make any claims.

The last two considerations are good practice for any insurance product: Read your policy to understand your coverages and be sure to shop around and compare plans to ensure you are getting the best value at the best price. There are more than 20 insurance companies in North America that are selling or underwriting pet insurance products, so consumers have options.

Finally, our mission at the New Hampshire Insurance Department is focused on consumer protection. To that end, we are encouraging the New Hampshire Legislature to support House Bill (HB) 249. With the growth of pet insurance, we believe it is necessary to have more standard and comprehensive pet insurance frameworks in state law to protect consumers.

HB 249 strikes the appropriate balance between limiting regulation, while also ensuring that when a consumer has a problem with their pet insurance policy, our department's Consumer Division has the tools necessary to assist the consumer, as we do with all other insurance products.

As always, consumers with questions can contact us at (603) 271-2261 or [email protected].

D.J. Bettencourt of Salem is the Deputy Commissioner of the New Hampshire Department of Insurance and James Fox is the Director of the New Hampshire Insurance Department's Property and Casualty Division.