Pet Insurance 101: What You Need to Know [2022]

With companion pets living in 70% of U.S. households, pet insurance is a huge revenue growth opportunity for consumer-focused insurtechs - or anyone who sells pet-related products or services. 

But if you’re not a financial services business, how do you get started? Let’s start with the basics.

What Is Pet Insurance?

Pet insurance, sometimes called pet health insurance, is an insurance policy to cover medical or other expenses related to a pet. Like human health insurance, pet insurance usually includes a deductible, and not every treatment is covered by every policy.

How Does Pet Insurance Work?

Signing up for pet health insurance is similar to other forms of insurance. The process includes the steps below:

1. The pet owner fills out an application form for a pet insurance policy. These forms usually include questions about the pet’s age, breed, past health issues, and other information that relates to the risk of offering insurance for that individual pet.
   
   
2. The insurance provider analyzes the information in the form, then offers a quote for what they would charge to insure the pet. This amount will depend on the insurer’s underwriting guidelines; for example, the insurer might charge a higher rate for pets over a certain age, as the insurer would likely have to pay out a higher amount for older pets’ health care.
   
   
3. If the pet owner accepts the quote, the insurer issues them a policy. The pet owner may also choose to add additional coverages not included in a standard policy, such as extra protection for a specific condition.
   
   
4. When the pet needs qualifying veterinary care, the pet owner can submit a claim with the insurer and be paid out the amount covered in their policy. 

In reality, the process is even simpler than this. Modern insurance offerings tend to use algorithmic underwriting to make underwriting decisions in real time. With the right insurer, a pet owner might complete the first three steps in minutes, and then rest easy knowing that their pet is protected.

Common Pet Insurance Use Cases

Pet health insurance can be used in many different cases. Below are the most common uses from emergencies to unexpected events.

1. Emergency care. A pet suffers an unexpected injury or illness, and needs care from an emergency vet. These cases often result in significant unplanned costs for the pet owner.
2. Preventative care.  Routine preventative healthcare for pets, such as vaccinations or blood screening.
3. Chronic illness.  Treatment and medicine for ongoing conditions that limit life activities, such as hip dysplasia or feline diabetes.
4. Unexpected life events.  Costs such as boarding the pet at a care facility while the pet owner is hospitalized.
   
   

Pet Health Insurance in Action

So what does that look like in real life? Here’s an example scenario of how pet health insurance helps consumers protect their furry family members (and their wallets).

Katie adopted a rescue dog named Roscoe, and she immediately bought an accident & illness policy to cover any unexpected costs of care. That turned out to be a wise decision because Roscoe is an escape artist, and after getting out of the yard one day, he ran into the street and was struck by a car.

Katie rushed him to the animal hospital, where they ran his blood work and took X-rays of both his spine and his obviously broken front leg. Luckily, his spine was clear, but Roscoe needed surgery to ensure his leg would heal soundly.

Roscoe spent the night at the animal hospital, and he ended up needing a follow-up surgery. The vet also prescribed some anti-inflammatory medicine to help with pain and swelling from the accident and the subsequent surgery as well as an anti-anxiety medicine to keep Roscoe calm during his recovery.

With multiple surgeries, a hospital stay, and lots of tests, caring for Roscoe after the accident quickly becomes very expensive. Fortunately, since Katie had the foresight to buy pet health insurance, the majority of the costs will be covered: 

Only 39% of Americans have enough savings to pay for a $1,000 emergency expense. The bills for Roscoe’s accident were 3.5 times that amount – a sum that would have been difficult for Katie to absorb. But thanks to her advance planning, Katie only has to pay for 2% of the total bill out of pocket. Everything else is covered by her pet insurance accident & illness policy.

With vet bills doubling over the last ten years, it’s not surprising that more and more Americans are considering pet health insurance to ensure they can afford care for their pets. This makes offering embedded pet insurance a great opportunity for pet-related brands to create new recurring revenue streams and deepen the relationships they have with their customers. American households contain more pets than ever, so the time is right to add pet insurance to your product portfolio.

What’s the easiest way to get started? Find an expert embedded insurance partner like Boost that can help you navigate the complexities of the insurance part of the equation, while you manage your business and your customer relationships.

Download The 2022 Guide to Growing Your Revenue with Embedded Pet Insurance, and learn everything you need to know to get started selling pet health insurance. Or, if you have questions and would like to speak to one of our pet insurance experts, you can contact us to learn more.