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Pet Insurance: The price for peace of mind?

April 9, 2007 - Amy Jo Hanna-Eckenrode

So, are you one of the 5-8% of American pet owners who are expected to buy pet insurance in the next decade?

My crystal ball says the next pet-related topic to inundate the media will be pet insurance. For people like my co-worker Erik, who abhor the endless coverage, you can thank the food recall.

Oddly enough, pet insurance is not a new concept. It has been around for more than 20 years in this country, longer in others, including the United Kingdom.

The first company to offer this service, Veterinary Pet Insurance (VPI), was started by a consortium of 700 veterinarians headed by Dr. Jack Stephens in CA. (Orange County for you TV buffs. Their first customer: Lassie.) Stephens wanted “to reduce the number of pets being put down because of the high cost of veterinary care.”

More than that, he was perceptive enough to see how Americans were starting to consider Fido as more than just a dog, but a member of the family who provided a much-needed source of companionship in a society experiencing the isolating effects of a rapidly changing world thanks to technology and loss of the nuclear family.

Despite its premature advent, VPI is still in existence and, for the first time in its history is turning a profit. After barely holding its head above water for its first 15 years, VPI now has about 85% of the pet insurance market with 380,000 active policies (about 1-100 pet owners) and revenues topping $100 million. Considered to be one of the most trusted in an industry still unfamiliar to most, VPI’s sales have jumped 40 percent each year for the past four years.

Thanks to the invention of more sophisticated and expensive techniques and procedures in veterinary medicine, people are able to do more to help enhance the quality of life and longevity of their pets. And, they’re paying for it. Vet costs have risen 73% in the past five years.

I don’t know about you, but it’s all I can do to understand how my own, ever-changing health insurance plan works. Getting sick is not as much of a worry to me as knowing I have to figure out what role my insurance can and will play.

Whether pet health insurance is for you or not is strictly a personal decision. I’m sure we are going to be hearing a lot about this issue for a while so I have tried to boil down a few facts and guidelines to help you better understand and make an informed assessment.

  • Pet health policies are similar to human insurance policies; annual premiums, deductibles, co-pays and (annual) caps.
  • Plans are based on species, age, pre-existing conditions and in some cases, lifestyle of the pet (i.e. indoor vs. outdoor cat).
  • Before you buy insurance, read policies carefully for details about specific conditions and exclusions. The details of pet health insurance plans change often.
  • The current overall average for annual deductibles is around $100. Prices will vary quite a bit depending on a dog's breed and age, where you live and the different plans available.

Do your homework before you buy. Shop Around and Compare. Ask Questions.

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