How are pet insurance premiums determined?
Key takeaways
- Pet insurance premiums are the monthly or yearly fees you pay to maintain insurance coverage for your furry friends.
- Pet insurance premiums for an accident and illness policy generally range from around $30 to $50 per month.
- Several factors affect premium costs, including your pet’s health, location and the level of coverage you want or need.
- There are ways to reduce premiums, such as choosing a higher deductible, opting for accident-only coverage and taking advantage of discounts.
In 2023 the average monthly premiums for an accident and illness pet insurance policy were $31.94 for cats and $56.30 for dogs. For an accident-only policy, the averages are $9.69 and $17.07 per month. But how much will you pay for your pet’s health insurance policy?
Calculating how much pet insurance costs starts with understanding the factors that may impact your premiums. Things like your pet’s breed, age, health condition and where you live are only a few examples of what insurers consider when calculating your pet insurance rates.
The basics of pet insurance premiums
Familiarizing yourself with the basics of pet insurance premiums is a good place to start as you navigate how pet insurance works.
Pet insurance premiums are the monthly or annual payments you make to keep your policy active. These premiums cover a portion of your pet’s veterinary expenses, depending on the type of policy you choose. There are generally three types of pet insurance policies:
- Accident-only: These policies cover injuries resulting from accidents, such as broken bones or swallowed objects, but they do not cover illnesses. An accident-only policy is typically the most affordable option and is ideal for young, healthy pets who are less likely to develop health issues early on.
- Accident and illness: This type of policy provides broader coverage, including both accidents and a wide range of illnesses such as cancer, infections and even chronic conditions. While these policies are more expensive than accident-only plans, they offer comprehensive protection for your pet’s health.
- Wellness plans: Often available as add-ons, wellness or preventive care add-ons or riders cover routine care such as vaccinations, dental cleanings, flea prevention and spaying and neutering. While they add to the overall cost of your policy, wellness plans can save you money on routine vet visits by spreading out these costs over time.
Factors that affect pet insurance premium costs
In most cases, potential insurers will ask for specific information on your pet before they give you an estimate for your premiums. Be ready to offer the following information.
Your pet’s breed
The breed of your pet plays a significant role in determining your premium. Certain breeds are predisposed to specific health issues, which can increase the likelihood of needing veterinary care.
For instance, larger dog breeds like Great Danes or German Shepherds may be more susceptible to hip dysplasia, while smaller breeds like bulldogs might be prone to respiratory issues.
Cats also vary, with purebred cats such as Persians more prone to genetic conditions than mixed-breed cats. Insurers assess these breed-specific risks and adjust premiums accordingly.
Your pet’s age
As pets age, they are more likely to develop health problems, leading to increased premiums. Puppies and kittens typically have lower premiums since they are less likely to have pre-existing conditions. As pets reach middle age, the cost of insurance can rise significantly. Senior dogs and cats, especially those with a history of health issues, will likely face higher premiums in their golden years.
Many insurers impose age limits, restricting new policies for older pets. It may be in your best interest to enroll your pet in an insurance plan while they’re still young.
Your pet’s health condition and medical history
If your pet has a pre-existing condition or chronic health issue, it can lead to higher premiums or coverage exclusions. While most pet insurance policies do not cover pre-existing conditions, some providers may offer limited coverage for conditions that are curable or have been symptom-free for a specific period.
For example, if your dog had an ear infection before enrolling but has been healthy for a year (or sometimes longer), the insurer might cover future ear infections. However, pre-existing/ongoing conditions like diabetes or arthritis are generally excluded, and you may need to look for specialized insurance or savings plans to cover these costs.
Your location
Your geographical location significantly impacts pet insurance premiums due to the varying cost of veterinary care across different regions. For example, veterinary services in urban areas are generally less expensive than in rural areas or smaller towns. Insurers adjust premiums to reflect these regional differences.
The level of coverage you’re after
The amount and type of coverage you choose directly impact your premiums. Comprehensive plans with accident, illness and wellness coverage will cost more than basic accident-only policies.
Policies with higher annual limits, lower deductibles or higher reimbursement rates also have higher premiums. On the other hand, choosing a policy with a lower coverage limit, a higher deductible, or a lower reimbursement rate will reduce your monthly payment. Essentially, you get what you pay for.
Deductibles and reimbursement percentages
A deductible is paid out of pocket before your insurance kicks in. The reimbursement level is the percentage of the vet bill that your insurance will cover after you’ve met the deductible.
A higher pet insurance deductible typically means a lower monthly premium because you’re taking on more of the risk up front. Policies with lower deductibles and higher reimbursement levels (e.g., 90 percent instead of 70 percent) will have higher premiums.
Choosing the right balance between these options is key to managing your expenses without compromising your pet’s care.
Your pet’s lifestyle
You might not think it, but your pet’s lifestyle can also influence your premiums.
For instance, an outdoor cat or dog might be at a higher risk for accidents or infectious diseases than pets that spend most of their time indoors. Higher risk means higher premiums.
On the other hand, pets that are primarily indoors or lead a more sedentary lifestyle may qualify for lower premiums due to their reduced risk of injury or illness.
Insurer’s underwriting criteria
Each insurance company has criteria for underwriting policies. Some companies might offer lower rates for specific breeds or ages, while others might have more expensive policies for the same factors. Shopping around and reading the fine print can help you find the best rate for your wallet and your pet’s needs.
How to reduce your pet insurance premiums
Owning a pet is expensive, whether you have insurance or not. Luckily, there are ways to reduce your pet insurance premiums.
- Choose a higher deductible: A higher deductible can significantly lower your monthly premium. Be sure you have the cash flow to pay the out-of-pocket costs if your pet needs care. For example, if you have a healthy pet and can comfortably pay a $500 deductible, this option could save you money in the long run compared to a lower deductible with higher premiums. You might also be able to avoid out-of-pocket expenses if your insurer (and your vet) offer direct vet pay.
- Consider a lower reimbursement percentage: Choosing a lower reimbursement level can reduce your premium. This option works well for pet owners who are comfortable covering a larger portion of the vet bill themselves.
- Opt for accident-only coverage: If your pet is young and healthy, accident-only coverage might be a cost-effective option. This is particularly useful for pets less prone to genetic or breed-specific health issues but may still face risks like injuries from play or outdoor activities.
- Review your coverage regularly: As your pet ages, their health needs may change. Regularly reviewing and adjusting your coverage can help ensure you’re not overpaying for unnecessary coverage or can add coverage for new needs. For example, if your pet no longer needs certain routine treatments, you might consider dropping a wellness plan to save on premiums.
- Shop around: Pet insurance premiums vary widely between providers for the same coverage. It’s a good idea to compare quotes from the top pet insurance companies to find the best deal. Some insurers even offer price-match guarantees or will lower your rate if you find a comparable plan for less.
- Take advantage of discounts: Many insurers offer discounts for various reasons, such as enrolling multiple pets, paying annually instead of monthly or having your pet microchipped. Ask your insurer about discounts when shopping for a policy. Some companies even offer employee discounts, so it’s worth checking with your employer.
Next steps
With a clear understanding of pet insurance premiums and how to manage costs, your next step is to assess your pet’s needs and budget.
Start by comparing quotes from multiple insurers, focusing on deductibles, coverage levels and any discounts available. Regularly review your policy as your pet ages to ensure it continues to meet your pet’s needs and adjust as necessary to maintain comprehensive and affordable coverage.
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