Is pet insurance worth it? Here's what you need to know before you buy coverage

An animal companion has a way of enriching your life, but if they're hurt or sick, you'll need to cover the financial fallout from their medical care. If you don't have hundreds of dollars on hand, this could put a strain on your budget. 

That's where pet insurance comes in. This type of coverage can help you pay for treating injuries and illnesses your pet faces. However, pet insurance doesn't cover every situation, so here's what you need to know to decide if getting a policy is the right move for you (and your pet).

Pet insurance is an insurance contract where you pay a set amount called a premium (you usually pay this either monthly or annually). When your pet incurs eligible expenses — often at a licensed veterinarian's office — your insurance reimburses you for some of the cost (some pet insurance companies offer the option to pay your vet directly, but this isn't as common).

When you purchase your policy, you and the insurance company agree on how much you'll be reimbursed for your pet's care. There are three moving parts to a pet insurance policy that influence the price and the amount you'll be reimbursed: the deductible, the annual limit, and the reimbursement percentage. 

Here's how each of these factors influences how much you'll be reimbursed or pay:

• The deductible. This is the amount you'll pay out of pocket before your insurance kicks in. Your deductible usually resets each year, though some policies have per-incident deductibles to meet each time your pet visits the vet. Make sure to read your policy to understand whether your deductible is per incident or per year.  
• Reimbursement amount. The amount you've chosen to be reimbursed after you meet your deductible, often 70%, 80% or 90% of the cost. 
• Annual coverage limit. The maximum amount you can be reimbursed over a 12-month period. Some insurance companies and policies offer unlimited annual coverage limits.

If you're shopping for pet insurance, several companies stand out based on price, service and coverage. Our top picks for pet insurance companies include our best overall pick, Spot, and Embrace, our runner-up pick.

The average cat owner spent about $32 a month for accident and illness coverage in 2022, while the average dog owner spent about $53 a month for the same coverage, according to the Insurance Information Institute. 

However, pet insurance costs vary based on the type of pet you're insuring, the breed, your pet's age, the type of coverage you're getting and the limits you choose and your location. It's worth noting that older pets tend to cost more to insure, and pet insurance premiums can increase as your pet gets older. 

While there are a number of situations where having pet insurance makes sense, here are two of the most common scenarios when you should seriously consider shopping for a policy:

You don't have a very large emergency fund

If your emergency fund is limited and you're concerned about affording a potentially large vet bill, getting pet insurance might make sense. Pet insurance coverage could help you afford the expense in the long run if your pet needs immediate, expensive veterinary care. 

While experts recommend keeping three to six months' worth of expenses on hand for unexpected situations like a pet injury or illness, that's not always possible. Pet insurance could help cover that gap while you work on building up an emergency fund or savings. 

Your pet is relatively young and healthy 

Similar to life insurance, pet insurance tends to be the cheapest to buy when the covered party is young and healthy. This is also when you can get an insurance policy with the most benefits, as your pet may not yet have developed chronic illnesses that could be excluded as pre-existing conditions.

Pets can often be enrolled in pet insurance as young as seven or eight weeks old, but some pet insurance companies have upper age limits. 

Before you sign your pet up for a new insurance policy, it's worth taking note of the things your policy won't cover. Since every pet insurance policy is slightly different, reading the fine print may help you to get a better picture of the coverage. 

What your specific policy excludes will be listed in your policy documents, and exclusions can vary by company. Some of the common situations not covered in most policies include:

Pre-existing conditions

Pet insurance almost never covers conditions that your pet already had before signing up for coverage. For example, if your pet had a chronic illness like diabetes before you enroll, expenses related to that condition may not be covered under your pet insurance policy.

Wellness visits and routine expenses

A standard accident or accident and illness policy will generally exclude routine costs like annual vet visits, vaccinations or other expenses. 

While policies exist that cover things like routine vet visits and vaccinations, they're generally an added cost. Several of our top pet insurance picks offer wellness coverage. However, wellness plans add to your cost, and it might make more sense to pay for these expenses without the help of insurance.

Whether pet insurance is the right move for your pet and your wallet is a highly individual choice. However, knowing what a pet insurance policy would exclude and having a good understanding of your financial situation can help you make an informed decision. 

Have a new pet? Check out NBC Select's Best for Your Pet Awards.

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