New California law requires pet insurers to be more transparent about coverage and costs

On September 26, 2024, Governor Gavin Newsom of California signed a bill that requires pet insurers to be more transparent about their policies.

This bill is meant to help pet owners make informed decisions before purchasing a pet insurance policy. It’s not clear if these new protections will expand nationwide.

California’s new consumer protections for pet owners

SB 1217, introduced by Senator Steve Glazer, requires pet insurance companies to be clearer about coverage and costs.

The new law requires pet insurance companies to:

• Disclose if a policy doesn’t cover pre-existing conditions, hereditary disorders, congenital anomalies or disorders or chronic conditions.
• Disclose if coverage is limited through a waiting period, deductible, coinsurance or policy limit. Waiting periods cannot apply to renewed policies.
• Explain if coverage is reduced or will cost more based on claims history, the pet’s age or a location change.
• State what is required if a medical exam is required to purchase a pet insurance policy. Vet exams cannot be required if a policy is renewed.
• Be clear about the difference between pet insurance and wellness programs. They must have separate marketing materials, and wellness programs can’t be marketed as pet insurance. Payments for wellness programs must be separate from payment for a pet insurance policy, and a wellness program can’t duplicate coverage offered by a pet insurance policy.

A second bill was signed allowing a California veterinary school to develop a certification program to make spay and neuter services free or low-cost.

In the news release, Governor Newsom stated, “Every pet deserves a home – and every home is happier with a pet – but the rising costs of pet care and the growing number of animals in need of adoption present real challenges. California is addressing both issues: reforming the pet insurance industry and supporting efforts to meet the high demand for accessible spay and neuter services to address overcrowding in shelters.”

How this bill could affect pet insurance nationwide

Because California is the most populated state in the United States, changes in California law may expand to the rest of the country. It can sometimes be easier for a company to apply the changes in all states rather than making changes for specific ones.

Pet insurance previously has been generally unregulated, with state requirements varying widely. California’s new law could prompt pet insurance companies to make changes that will apply nationwide.

It remains to be seen how pet insurance companies will respond.

What pet owners should do to understand pet insurance

Whether you are in California or elsewhere in the United States, understanding your policy is key to deciding if pet insurance is worth it. Before purchasing a policy, make sure you understand exclusions in coverage, premium costs and reimbursements so you know what to expect if you need to file a claim.

California’s bill requires companies to be more transparent, but you should always do your due diligence by reading the fine print before purchasing pet insurance.