Should You Insure Your Pet? Without State Oversight, It’s Hard to Say.

BATH, Maine — Danielle Crossen, 33, playfully ruffled the hair on her small, white mixed-breed dog, Wilson, as they played at the South End Park on the banks of the Kennebec River on a recent drizzly summer day. The love between the two was obvious. But does she have pet insurance on him?

Nope.

“I thought about it now that he’s getting older,” Crossen said of her 8-year-old bichon frise/Shih Tzu mix. “I probably should have done it when he was a puppy. He tore the equivalent of an ACL. I was told it should heal by itself.”

She’s not sure whether it’s fully healed, but the dog ran around the park without a noticeable limp.

Pet insurance experts say Crossen, who works as a fraud analyst at Wayfair and moonlights as a bartender at an Irish pub, is right that purchasing pet insurance early in a dog’s life ensures the best financial deal. She’s also among the vast majority of pet owners who don’t have the insurance.

Some 4.4 million pets (mostly dogs and cats) are insured in the United States, according to the North American Pet Health Insurance Association. But that’s less than 5% of the American pet population, industry experts told Stateline.

But with the rise in the number of pets adopted during the pandemic came a rise in pet insurance, making it one of the fastest-growing types of insurance of the past few years. The market more than doubled from 2018 to 2021, according to the North American Pet Health Insurance Association.

At the end of 2021, the premiums amounted to more than $2.5 billion in the United States, the organization said.

Yet only two states — California and Maine — have specific statutes governing the pet insurance industry, according to the VIN News Service, a trade publication. California’s law has been in place since 2015; Maine’s was passed this year and goes into effect in January.

Most other states regulate the companies under “property and casualty” insurance laws. The disparities in state insurance regulation led the National Association of Insurance Commissioners, known as NAIC, to develop a model law in August in the hope that legislators in more states will adopt it. The swiftly developing industry and the dozens of policies now available made the time ripe for promulgating consistent, clear rules, NAIC said. 

Absent that, pet owners may find it difficult to discern what the coverages, deductibles and copays will be and how much premiums will rise as a pet ages. Not surprisingly, veterinarian groups support pet insurance, partially because it tends to keep pet owners connected to a vet and eases concerns about treatment costs. But consumer advocates are skeptical about whether the policies will save owners enough to make it cost-effective, even with regulation.

The NAIC’s model law includes provisions requiring companies to reveal waiting periods (it calls for 30 days for illnesses; none for injuries) and conditions, benefit schedules and limitations. The model act also would limit denials of coverage based on pre-existing conditions and make the pet insurance companies prove that a pre-existing condition exists before refusing coverage.

Pet insurance does not typically cover wellness care, such as routine immunizations and checkups, though some companies offer separate policies to insure those visits.

The new Maine law was generally based on the group’s model act. It’s aimed at streamlining the pet insurance process and making information easily available to potential customers, said state Sen. Heather Sanborn, a Democrat who sponsored the bill.

“We wanted to make sure the consumers were clear about coverage,” she said in a phone interview. “Including waiting periods and when coverage begins.

“What if a puppy is in a car accident a week after buying the policy? In some instances, it wasn’t covered,” she said. “The law makes the waiting period clear. The other big thing is being very clear about pre-existing conditions and what the plan covers and what it doesn’t.”

There was no opposition to the bill, she said, though the insurance industry disputed a couple of points, including asking to increase the waiting period for coverage of accidents once a policy is purchased. The legislature rejected the industry’s proposed changes.

The prohibition on waiting periods for injuries resulting from accidents in the Maine law concerned Cari Lee, an attorney in the Washington, D.C., firm of Steptoe and Johnson, who represented the North American Pet Health Insurance Association during the Maine Senate’s consideration of the bill.

“We were in overall support of the law because it pretty much mirrors the [model law],” Lee said in a phone interview.

But the elimination of the waiting period for accidents, she said, might entice bad actors to buy “just in time” insurance and try to claim the accident happened after the purchase. The group also differed on some rules governing wellness plans, which often are sold along with the insurance. The law prohibits wellness plans, which cover routine vet visits, immunizations and the like, from being sold together with insurance policies.

Lee said a lot of customers “like to buy everything in one stop.”

But, she said, it would be good to have consistent pet insurance regulations across the states.

California Insurance Commissioner Ricardo Lara wants to go even further, according to spokesperson Madison Voss, and is pushing to include spay and neuter services for pets.

“As it stands now insurance companies provide little to no coverage for sterilization unless it is through add-on policies, and at the same time illnesses that are caused by non-sterilization are actually excluded from most policies,” Voss wrote in an email. Lara backed a bill last year that would have done that, but it did not make it out of committee.

The lack of regulation leaves it largely up to individual pet owners to figure out what insurance covers and whether it’s worth buying, and advice varies widely.

All advisers agree that potential pet insurance customers should read the fine print carefully, as most policies have exclusions for pre-existing conditions or don’t cover certain procedures. Most also have deductibles and copayments.

“Overall, I would say the answer is you are going to pay more out of pocket for the insurance that you get back in benefits,” said Kevin Brasler, executive at Consumers’ Checkbook, a financial advice platform.

Brasler said if a pet owner has disposable income and is of a mindset to “pay whatever it takes” to provide medical treatment for a sick or injured pet, then the insurance policies can be helpful, because the monthly cost is relatively low and very expensive procedures generally are covered (subject to deductibles and copays).

But owners who are struggling with monthly bills and who would probably opt against expensive treatments for their pets, particularly older dogs, are less likely to come out ahead financially, he said.

“It’s about evaluating your financial risk,” he said.

The nonprofit Consumers’ Checkbook looked at a wide swath of pet insurance companies in March 2022 and estimated that over 13 years, the premiums would cost pet owners between $8,100 and $40,700 to insure a dog and between $4,500 and $12,400 for a cat. The group calculated that each year there was a 4% chance of a pet needing care costing more than ,000.

The consumer group put the average annual pet insurance premium in 2020 at $594 for dogs and $342 for cats.

Elise Paisley, 59, who lives half the year in Maine and half in Mill Valley, California, said she decided not to get pet insurance for her 12-year-old blind, Nova Scotia duck tolling retriever, Moxie. If Moxie were to get sick, “I might as well just pay for it,” she said, as the rain began to fall in the dog park. “Even if I had insurance, if my dog needed $20,000 worth of surgery, I don’t know that I would do it [at this stage of life].”

Richard Walther, a veterinarian who practices near Sacramento, California, serves as an adviser to Pawlicy.com, a website that lets prospective pet insurance customers compare policies. He recommends “pet insurance for every pet,” including his two mini Australian shepherds, Kiya and Kimba.

“I think pet insurance is a great resource for owners because it allows them to make that decision in a calm and controlled way … without having to think about ‘can I afford those X-rays?’”

He warns, however, that because pre-existing conditions are not covered, it’s best to get the insurance early in a pet’s life. Premiums for pet insurance rise with a pet’s age, he cautioned, and the increases vary drastically among companies and policies.

It’s best not to sign up for a policy you’re ultimately going to cancel when the premiums start to rise, he said. Canceling a policy when a pet gets older and the plan becomes more costly “defeats the purpose.”

But it’s difficult for consumers to find information on websites about how much premiums will rise, so customers very often have to ask.

“It is impossible for us to determine the exact increase a policy may experience as pet’s [sic] age as this information is only shared between the insurance provider and the Department of Insurance until the moment the rates are live,” wrote Pawlicy spokeswoman Lauryn Bayley in an email.

For Marcia Klompus, another part-time resident of Bath, who lives half the year in Hawaii, the pet insurance has been well worth it. Tatala, the sixth Pomeranian she’s owned, has the insurance plus the wellness care rider. It has paid for many routine examinations and several major issues, including seizures and a current liver ailment that will cost ,000-,000 to address with surgery, she said.

Each of her dogs has had health issues, she said, and none of the dogs but Tatala has had insurance. The last Pomeranian she owned before Tatala had a series of expensive procedures, and her husband said no more dogs unless they have insurance.

“I absolutely recommend it,” she said. “Especially when you consider what you are paying for dogs. Would you dream of not insuring your house?”

The insurance, she said, will not make the difference if it comes to end-of-life care for Tatala.

“If your dog is in any kind of pain, they can’t talk,” she said. “For all the years your pet is good to you, it’s up to you to decide when you don’t want them to suffer.”