Jessica Parsons, an intensive-care nurse in Indianapolis, had given little thought to pet insurance. But when her employer, Indiana University Health, offered it as part of the company’s regular benefits package several years ago, she signed up, the $40 monthly premium coming out of her paycheck automatically. It was fortunate timing. Shortly after getting the insurance, her then 2-year-old yellow Labrador retriever, Charlie, slipped under a tractor on her s farm and suffered a crushed back and tail. Soon, the dog could no longer move her back legs and had blood in her urine. Rushed to Purdue University Veterinary Teaching Hospital, Charlie underwent one operation to stabilize the spine and one to remove a badly damaged kidney. Her pet insurer, Nationwide, paid most of the $14,000 bill.
Today, Charlie is doing well. “Compared with dealing with human insurance, I found it pretty pleasant,” Ms. Parsons said of the experience. Ms. Parsons is part of a fast-growing trend in veterinary medicine: employer-sponsored benefit plans that insure the family pooch or cat ( even the occasional ferret or potbellied pig) against accidents and illness. Some 5,000 companies, including Microsoft, Yahoo, Xerox and Hewlett-Packard, now offer pet insurance, sometimes covering part or all of the costs, in an effort to lure talent but also to recognize the strong emotional bonds between people and pets.
It’s a side of the insurance industry that is growing rapidly, said Dr. Carol McConnell, chief veterinary medical officer for Nationwide, the nation’s largest pet insurer. “People find this type of insurance more credible if an employer has vetted it first.” As the sophistication of veterinary medicine grows, so do pet owners’ concerns about whether they can afford to pay for care. The American Pet Products Association, a trade group, estimates that Americans will spend nearly $70 billion on their pets this year, with nearly a quarter of that devoted to veterinary care.
Pets undergo state-of-the art imaging tests like CT and M.R.I. scans to diagnose problems, and they get valve replacements for ailing hearts, chemotherapy to fight many cancers, surgery to extract impacted teeth, even transplants for failing kidneys. “Pet insurance is a game-changer for many pet owners” who otherwise could never afford these procedures, said Dr. Tracey Jensen, a private-practice veterinarian in Wellington, Colo., and a former president of the American Animal Hospital Association, which accredits animal hospitals in the United States and Canada.
“Pets today occupy a special place in people’s lives,” Dr. Jensen said. “They’re family members, and their owners don’t want to cut corners on care.” Only a small fraction of pet owners in the United States carry pet insurance. An estimated 1 to 2 percent of the nation’s nearly 90 million pet dogs and more than 94 million pet cats are insured, industry statistics show.
Nevertheless, the marketplace has grown from one pet insurer, Veterinary Pet Insurance (now called Nationwide), in 1982 to at least 11 companies today, including the Hartville Pet Insurance Group, which offers insurance through the A.S.P.C.A. The North American Pet Health Insurance Association cited a growth rate of 12 to 15 percent in policy holders over each of the last two years.
“There’s definitely an uptick in the number of insured pets out there,” said Chris Middleton, president of Pets Best, an insurer in Boise, Idaho. He said that since 2013, the 11-year-old company has seen a 60 percent increase in the number of employers seeking pet insurance for their workers. But unless owners have faced high vet bills in the past (as Mr. Middleton has with his “rock-eating hound,” he said), many are deterred by the monthly premiums.
Much like human health insurance, pet insurance comes with a dizzying array of options. A basic plan for certain illnesses and accidents can cost $20 or less a month; more comprehensive policies covering annual wellness exams, vaccinations, blood work and a range of treatments start at around $63 a month. In general, cats tend to cost less to insure than dogs. Many pet insurance companies charge more for breeds prone to certain medical conditions, like cancers or heart disease; a large dog, like a Great Dane, will cost more to insure than a Chihuahua.
“By and large, most pet insurance is primarily there for injury and disease,” not for wellness, said Dr. Christopher Gray, the director of Michigan State University’s Veterinary Medical Center in East Lansing. He does not insure his two dogs and two cats. His recommendation: Look at deductibles, co-payments and whether a policy covers a pet throughout its lifetime or ends when it hits a certain age.
Dennis Rushovich, senior vice president of the Hartville Group, suggests asking whether a plan covers exam fees as well as any medications or specialized foods a vet may prescribe, and whether the plan has an annual cap on what it will pay. Consumers Advocate, a company that rates a range of products, began sifting through the variables several years ago to rank pet insurers according to customer reviews, upfront deductions and whether they pay for a disease’s continuing costs.
“If your dog has hip dysplasia, it can get quite expensive” if an insurer caps the costs, said Sam Niccolls, the company’s founder. Some insurers, he said, pay for spaying or neutering along with other relatively inexpensive wellness tests but not the real drivers of veterinary cost: emergencies or chronic diseases. Some critics question the rankings’ reliability. Consumers Advocate makes its money, in part, from partnerships with some of the same insurers it evaluates, though the company says it makes its assessments independently. Others say that rankings may not be up to date (since insurers are continually updating offerings) or may be skewed by bogus consumer reviews, a widespread problem throughout the internet.
In a 2016 cost analysis, Consumer Reports looked at coverage from four industry competitors for two pets: a 12-year-old Lab mix with skin cancer named Guinness and a mixed-breed cat named Freddie. It found that for serious diseases, like cancer, all the policies carried a definite financial benefit. But for less dire conditions (an expensive dental cleaning for Freddie), only one company paid more than the annual premiums’ cost.
Consumer Reports acknowledged that the limited sample size of the study and the inability to predict the future medical needs of a pet made blanket recommendations difficult. But, it concluded, “if you’d like help with unexpected, large vet bills, a plan may be worth considering.” During her veterinary training at Colorado State University, Dr. Christine Hardy remembers, she struggled to pay nearly $5,000 in bills after her golden retriever, Sam, developed elbow problems and tore a cruciate ligament in his knee. “He was a bit of an orthopedic disaster,” said Dr. Hardy, now the director of operations at the university’s Flint Animal Cancer Center.
Sam has since died, but the experience persuaded her to insure her next pet, Winston. The policy covered 80 percent of the nearly $9,000 to treat the 8-year-old dog’s hemangiosarcoma, a blood vessel cancer in an unusual location: the roof of his mouth. “Because we had insurance, I never felt like finances weighed in our decisions,” Dr. Hardy said. “Instead, we were able to make choices based on what we thought best for Winston.”
