April 14, 2008

Is pet insurance worth buying?

Yesterday Free Money Finance had an article on the cost of pets. That lead me on a tangent thought about pet insurance.

I have been considering buying pet insurance for my cat. I know that vet bills can be pretty expensive if theres a serious injury or illness. I've shopped around and found I could get a basic insurance policy for about $120 a year. So I've been thinking of doing it. My logic being that I didn't want the risk of my cat getting a serious problem and being faced with a $5k-10k vet bill.

But I ran across this article from Consumer Reports titled Is Pet Insurance Worth the Price? They concluded that pet insurance is not indeed worth the price. Read the article yourself for the full story, but the basic conclusion is that pet health care will not cost you as much as the insurance in general. One big point they make is that the insurance policies have deductibles, coinsurance and maximums so overall they don't really pay you out that much.

There's two pet insurance providers I've seen: VPI Pet Insurance and Pets Health.

I've gotten a quote on the VPI and the rate for my 6 year old cat is $128 a year for their basic plan. A 7 year old dog would run $198 a year. They have a $50 deductible and then pay 90% up to their maximum. VPI's benefits summary lists the maximums paid out. VPI has an example of benefits paid for a claim with the standard plan. The vet invoice total is $1451 and the insurance only pays $755. If you look through the benefits summary the maximums there are not all that high considering how much procedures can cost.

Pets Health basic plan is described as:
The Basic Plan covers treatment and medication for injury and illness.
The Basic Plan has a maximum benefit of $8,000.00 per year, with a $1,500.00 per incident limit.
The Basic Plan includes a FREE Lost Pet Recovery Service Tag.
Coverage starts at $11.58 for cats and $16.61 for dogs.

I've thought about getting insurance as a safe guard against an expensive bill. But overall it looks to me like the insurance companies don't cover that much of the cost and have some low maximum limits. Looks to me like Consumer Reports got it right that pet insurance is NOT worth the cost.

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