Is Pet Insurance A Waste Of Money Or A Good Idea?

You'll find veterinarians, pet owners, and financial experts on both sides of this question. I believe that the most helpful answer isn't "yes" or "no," but "it depends." It depends on your expectations and reasons for purchasing insurance for your pet. I'll explain what I mean:

Since the contract is between the pet owner and the insurance company, the pet owner must pay their veterinarian first and then get reimbursed by the insurance company after filing a claim. This usually isn't a problem until you're facing a large bill and you don't have enough money in the bank or available credit to pay your veterinarian.

So, unless you can afford to pay your veterinarian in full with either money in your checking or savings account and/or a credit card and then seek reimbursement from the insurance company, then pet insurance is a waste of money for you.

The only exception to this is if you purchase a policy from a company that will reimburse your veterinarian directly (instead of you) and your veterinarian consents to allow this to happen. Most veterinarians are reluctant to do this.

You purchase a policy that doesn't cover what you thought it did. Before purchasing a pet insurance policy, you must know what it covers and what it doesn't cover.

For example, if you have a female dog that you purchase a policy on when she's a puppy and you breed her, but she has complications when whelping and has to have a C- section, it's very likely it won't be covered. Why? Because pregnancy related expenses is a common exclusion in most pet insurance policies. I've actually had a client tell me, "I can't believe this isn't covered. That's why I bought the insurance!"

Suppose you buy a policy for your Labrador Retriever puppy and when she's 2 years old, she's diagnosed with hip dysplasia. Unless you bought a policy that covers hereditary conditions, you will pay out-of-pocket for that problem the rest of the dog's life.

You should always read a sample policy if one is available.

You purchase a policy with limits that are too low so that you end up paying a substantial amount of your veterinary bills out of pocket - especially the large bills. Isn't this the reason you bought insurance - so you won't have to end up doing that? Many pet owners purchase a policy with the lowest premium and hence also with the lowest limits. The best policy is always the one that gives you the lowest out-of-pocket expense including the premium should you have to file a large claim.

You purchase a policy with the expectation that you'll get more money back in benefits (reimbursements) than you pay in premiums. You may or you may not. Pet insurance isn't an investment or a forced savings plan, but a risk-sharing vehicle.

The bottom line is that unless you know how pet insurance works and how to choose a company and policy wisely, pet insurance could indeed turn out to be a waste of money for you.