How to prepare for your four-legged friend
By Craig Manning | October 22, 2022

Did you know that 91.7% of the US population had some form of health insurance coverage as of last year? While that figure still leaves tens of millions of Americans without a health safety net, it also means the vast majority of people in the United States are insured.

Such a majority does not exist for American pets.

Currently, approximately 90.5 million American households have pets, according to the American Pet Products Association. Yet, according to a recent “state of the industry report” from the North American Pet Health Insurance Association (NAPHIA), only about 4.41 million pets “were insured in North America at the end of 2021”.

Pet Insurance in Northern Michigan
Why isn’t pet insurance more common? Northern Express asked local insurance adjuster Scott Tilford to step in, given that local State Farm Insurance in Tilford began offering pet insurance policies about a year and a half ago.

It turns out that few customers jumped on the pet insurance bandwagon during this 18-month period. Tilford says he only gets one or two requests a month from pet owners interested in getting a policy quote. Compared to many other types of insurance offered by the Tilford office, including coverage for things like cars, homes, condos, and personal items, pet insurance is a small potato. .

Tilford has a few explanations for why pet insurance might not take off among its customer base. One factor: The Tilford office only offers policies for dogs, which means cat owners should look elsewhere for coverage. Tilford also thinks that many pet owners simply don’t know pet insurance exists or how it works – and if they do, he feels they’re put off by some of the inherent limitations of pet insurance. cover.

“What is not covered? Pre-existing conditions, preventative care, flea and tick control, neutering or neutering, exam fees, wellness visits,” says Tilford. “In my experience, it seems like most consumers are looking for help with more of these preventative things, vaccinations, regular checkups, that sort of thing. So that might explain the hesitation.

Breaking the Bank: The Costs of Pets in America
Of course, annual checkups and flea or tick prevention aren’t usually on the list of top pet expenses. Most sources put the average cost of a routine veterinary exam between $50 and $250. Life-saving procedures, treatments for serious health conditions, and other uncommon veterinary costs are where pet owners usually end up spending a lot.

Tilford says many pet owners choose to “self-insure” for these expenses, simply by setting money aside for potential accidents, injuries or illnesses that may occur to their pets. But even pet owners who are vigilant about building a “rainy day fund” for their dogs, cats or other critters can still find themselves overwhelmed in an emergency, simply because they underestimate the cost of veterinary bills.

Case in point: In 2019, Healthy Paws Pet Insurance compiled a report on the cost of pet health care that explored common pet accidents and illnesses in the United States, average treatment costs for these problems, and more. A key section of the report details the most expensive insurance claims Healthy Paws received in 2019 from its policyholders.

In one situation, a family had submitted claims totaling $56,533 to treat acute kidney failure in their seven-year-old Pitbull terrier. In another case, a pet owner with a 10-year-old Russian Blue feline named Hugo racked up $34,830 in veterinary bills, between back surgery to fix multiple herniated discs and additional treatments for everything from… from congestive heart failure to diabetes to pancreatitis.

In both cases, Healthy Paws Pet Insurance picked up 90% of the bill, leaving pet owners with significantly lower out-of-pocket costs than they would have otherwise faced.

Growth in the pet insurance industry
Stories about pet parents saving a small fortune with their pet insurance policies are helping to drive the growth of the industry. Indeed, Brian Macias, president of Embrace Pet Insurance, one of the leading pet insurance providers in the United States, says Northern Express that more and more pet owners are starting to see the value in coverage.

Although routine veterinary expenses aren’t covered by pet insurance, Macias says the list of issues and expenses that pet insurance pays for is still quite long. Specific treatments covered by pet insurance may include emergency veterinary care, hospitalizations, surgery, prosthetics and mobility devices, diagnostic tests, prescription food or medication, therapy behavior, etc. Embrace reimburses “up to 90%” of these expenses, less a deductible that policyholders can choose in advance.

“The goal of pet insurance is to take the financial burden off pet owners when these unexpected issues arise,” Macias explains. “Essentially, pet insurance is peace of mind for pet owners when they need it most.”

Beyond financial peace of mind, Macias believes there are elements to the pet insurance customer experience that are also appealing to new customers. While pet insurance has often been described as “health insurance for your pets,” Macias says the industry lacks some of the inconveniences or shortcomings that often plague the insurance market. sickness. For example, many pet insurance providers, including Embrace, have no equivalent to the physician networks that exist in the health insurance industry.

“So [policyholders] can visit any veterinarian — in the United States and around the world — whenever an unexpected accident or illness occurs,” says Macias. “There are no networks, so the pet owner will pay the vet directly and then submit their claim to Embrace. Once the claim is processed, pet owners are reimbursed in as little as two days by direct deposit.

Pet insurance usually doesn’t come with the same exorbitant premiums as health insurance for humans. While Macias says it’s “difficult to pinpoint an exact cost” for a pet insurance policy, given how the animal’s age, breed and other factors can have an impact on premiums, he notes that typical Embrace plans tend to range from $35 to $50 per month for dogs and $15 to $30 per month for cats.

Greater awareness of these details is helping to drive growth in the world of pet insurance, Macias says. According to NAPHIA, this market has grown by 27% overall between 2020 and 2021, and some vendors are growing even faster. Macias says Embrace “has more than tripled its business over the past three years.”

Tilford agrees that growth is happening, although he doesn’t see much of it locally yet. An early indicator, he says, is the increased interest in the blanket from dog owners who tend to spend a lot of time exploring the great outdoors of northern Michigan with their four-legged best friends. Hikers, runners, hunters: These groups, he notes, are asking questions about pet insurance with greater frequency because they want to plan ahead for any potential injuries or accidents that may occur to their pets. very active.

The other piece of the puzzle, Tilford thinks, is that more and more people accept the fact that their “self-insurance” method isn’t working, at least not to cover those more expensive vet bills. Pet insurance is the logical solution.

“It’s like life insurance,” says Tilford. “A lot of people say, ‘Well, I’m going to skip life insurance and just invest the money or save it myself, because I have no intention of dying young!’ But really, when people say, “Oh, I’m going to save up for that” or “I’m just going to put some money aside,” I think the vast majority of them never do. And then if something happens to their pet and they have a $3,500 vet bill, they end up putting that on a credit card, and then they start having credit problems. So, I would say unless you are really disciplined with your finances, you should probably consider the pet insurance option. Otherwise, you roll the dice.

Photo by Mikhail Nilov.