Posted on 14 Mar 12
Charlie swallowed a $3,600 corn cob. Well, that's about how much it cost to remove the corn cob from the Komondor puppy's belly.
Luckily, his owner, Les Kaciban of Ashburn, Va., only paid about $1,000 out-of-pocket for the procedure. Kaciban's policy with Pets Best Insurance covered the difference.
As veterinary expenses continue to mount, more pet insurance companies have emerged to help "pet parents" budget for unexpected emergencies — such as Charlie's surgery — as well as routine care. Between regular check-ups and surgeries, most dog or cat owners racked up about $650 in vet bills last year, according to a survey by the American Pet Products Association.
A boom in pet insurance
Pet insurance providers have grown tenfold during the last decade to combat these costly visits. Today, 11 companies — including Pets Best Insurance, the Hartville Group and Embrace Pet Insurance — insure dogs, cats and sometimes exotic pets in the U.S. From 1982 until 1997, Veterinary Pet Insurance was the country's only pet insurance agency.
"It's definitely a niche insurance product, and we're seeing a general rise in these specialty insurance products," says Jeanne Salvatore, spokeswoman for the Insurance Information Institute. "The one thing you need to do with all specialty insurance is look at how much it costs and what you would get back."
The majority of providers offer different levels of coverage. The most basic plans protect against accidents and illnesses. Policyholders can purchase more benefits or add wellness coverage to pay for regular expenses such as annual exams, blood work and vaccines. Monthly premiums range from around $15 for a basic plan to about $75 for the most comprehensive coverage, and most policies will reimburse 80% or 90% of a claim.
Dogs are insured four times more frequently than cats, Middleton says. Some of the most common claims for dogs are allergies, swallowed objects, cancer and ear infections, according to ASPCA Pet Insurance and Pets Best Insurance. For cats, kidney disease, cancer and bite wounds were among the top claims, the groups say.
Although pet insurance can offset the costs of pricey treatments, it doesn't cover everything. No plans cover pre-existing conditions, but some companies will cover them after a pet has shown no symptoms for a certain period. Some other common exceptions include genetic disorders, cosmetic surgery and breeding expenses.
But pet insurance hasn't caught on among U.S. pet owners as much as it has in Europe. Only about 1% of the USA's dogs and cats are insured, compared with about a fifth of pets in the U.K
The market is growing, though. In 2009, revenue for all pet insurance plans totaled $303 million — a figure expected to jump to $753 million by 2014, according to a report by Packaged Facts research firm.
Overall, pet insurance policy sales have increased between 8% and 10% annually at different companies, says Kristen Lynch, executive director for the North American Pet Health Insurance Association. Pets Best Insurance has seen a 20% increase in sales each year since it was founded in 2005, Vice President Chris Middleton says. The ASPCA Pet Health Insurance program also grew through the recession and beyond. At Embrace Pet Insurance, plan sales lagged during the recession but have since rebounded, says Alex Krooglik, co-founder and chief marketing officer.
Jack Stephens, who founded both VPI and Pets Best, attributes this increase to two factors: the rising cost of veterinary care and the strengthening bonds between pets and their owners.
"At the point where you're starting to view your pet as a member of the family, your sense of responsibility to that animal grows incredibly," Middleton says.
As veterinary medicine becomes more akin to human medicine, the costs associated with it continue to rise. Treatments and surgeries once reserved for people — such as chemotherapy, organ transplants and acupuncture — have made their way into the animal kingdom, along with hefty price tags.
In 2011, Americans spent an estimated $50.8 billion on their pets, and more than a quarter of those expenses — $14.1 billion — came in the form of vet bills, according to the American Pet Products Association. That's up about a third since 2007, when vet fees totaled $10.1 billion, the APPA reports.
Because "pets are becoming like our children," Stephens says, the money we devote to them is steadily rising.
"They want to have health insurance for their whole family, and most people consider their pet as part of the family," Salvatore says. "You don't want to have to make a heartbreaking decision if the pet could be saved but you don't have the money."
Pet insurance isn't the only financial product designed to keep pets healthy. Discount programs offered by companies such as PetSmart's Banfield Pet Hospital, Pet Assure and United Pet Care charge monthly fees and provide discounted veterinary care to members. And animal hospitals are making their own moves — such as forming health management organizations or offering loans — to assist pet owners.
Industry representatives predict pet insurance will catch on as pet owners look for ways to protect themselves from rising vet bills.
"You never know what happens," Kaciban says.