Understanding Pet Insurance Terms

Every responsible pet parent knows the importance of reading the fine print before committing to a pet insurance policy. But there's no denying that pet insurance terms are confusing even for pet parents who have been insured for years.

To help you make the most informed decision for your fur family, we've compiled this comprehensive guide to pet insurance terms and what they mean. All in plain English — no jargon here!

An accident refers to any unintended or unexpected injury your pet experiences.

What counts as an accident in pet insurance? Here are a few examples from the policies of leading providers:

• Punctures
• Poisoning
  
• Broken bones
• Vehicular trauma
  
• Bite wounds and stings
  

The most "pawpular" pet insurance plans cover both accidents and illnesses. However, many pet insurance providers offer accident-only coverage. These plans are for emergencies and won't cover illnesses like cancer, diabetes, or heart disease.

A bilateral condition can affect the left, right, or both sides of the body. Typically, "bilateral" refers to conditions of the joints and limbs, such as hip dysplasia.

Usually, if a condition was diagnosed on one side of the body before the pet was insured, then the same condition on the other side of the body will be considered pre-existing. This typically means it won't be covered by your plan.

Here's an example to illustrate. Let's say your dog was diagnosed with hip dysplasia in their right hip — but not their left — before they were insured. Your pet insurance policy states that bilateral conditions are treated as pre-existing. This means that, if your dog is later diagnosed with hip dysplasia in their left hip, treatment of the left hip will not be covered.

A chronic condition includes illnesses that aren't curable and are expected to continue throughout your pet’s lifetime. Common chronic conditions in dogs and cats include:

• Cancer
  
• Diabetes
• Glaucoma
  
• Kidney disease
• Hyperthyroidism

Many providers cover chronic conditions as long as they're diagnosed after the waiting period.

A claim is a request to be reimbursed for the cost of treatment through a licensed veterinary clinic or hospital.

With Most pet insurers don't pay veterinarians directly for treatment. Instead, they require pet parents to pay the full vet bill upfront, then file a claim for reimbursement.

To file a claim, you'll usually need to fill out a claim form and submit an itemized invoice from your veterinarian. Many providers require pet parents to submit their claim within a certain amount of time following treatment, usually within 30 days.

The process for submitting a claim varies based on the provider. Many insurers, like Healthy Paws and Embrace, let pet parents submit claims online or through a smartphone app. Alternatively, you may be able to submit a claim via mail, fax, or email.

Copay (also called coinsurance) is the amount you're required to pay toward each vet bill before you're eligible for coverage. Your copay may be a percentage or a dollar amount.

To illustrate how it works, here's an example. Let's say your cat is insured and requires vet treatment for an accident. Their bill comes out to $1,000, and your copay amount is 20%. That means you'll need to pay $200 out of pocket, plus your deductible, before you're eligible for reimbursement through your provider. (More on deductibles in just a second.)

Many providers let you choose from one of several copay options, while other providers let you set your own copay amount.

A curable condition refers to a temporary illness that may be covered by your policy after your pet has been free of symptoms for a period of time.

Examples of common curable conditions in pet insurance include:

• Ear infections
• Respiratory infections
• Urinary tract infections
• Vomiting and diarrhea
  

Some providers, like Embrace, cover curable conditions as long as pets don't experience symptoms of the same condition within 12 months of the first diagnosis. Typically, curable conditions don't have an underlying cause (like cancer).

Here's an example of how it works. Let's say your dog had an ear infection before you took out a policy with Embrace. Your vet determined the ear infection wasn't caused by another condition. Two years pass, and your dog hasn't had any other symptoms affecting their ears. Then, they get another ear infection that doesn't seem to have an underlying cause.

In theory, the second infection should be covered under Embrace's plan since it didn't recur within 12 months. However, curable conditions may be covered at the insurer's discretion, so be sure to check the fine print for more details, or consult your provider.

A deductible is the amount you must pay before your insurer starts covering your pet’s veterinary care.

How do deductibles work in pet insurance? There are 3 different types of deductibles:

• Annual deductible
• Per-condition deductible
• Per-condition lifetime deductible

Let's take a closer look at each one.

Annual deductible

An annual deductible is the amount you must pay out of pocket toward your pet's vet care during the policy year before coverage kicks in. Annual deductibles are the most common in pet insurance.

Here's how it works. Let's say your annual deductible is $200, and your cat goes to the vet with diarrhea. The bill comes out to $500. You'd pay $200, plus your copay amount, before you're eligible to be reimbursed for the remainder.

If your cat goes to the vet again for a broken tooth, you'd only need to pay your copay amount since you've already met your deductible for the year. Same goes for any other vet treatments that are eligible for coverage within the policy year.

Per-condition deductible

Also called a per-incident deductible, a per-condition deductible is the amount you pay out of pocket toward the vet costs of a single health condition during a policy year. A new per-condition deductible will apply to each health condition your pet is diagnosed with, and the deductible would typically reset each policy year.

Here's an example. Let's say your plan has a per-condition deductible of $150, and your dog goes to the vet with a bite wound. You'd pay $150, plus your copay amount, before this condition is eligible for coverage. Then, 6 months later, your dog eats something toxic and goes to the vet again. You'd pay another deductible of $150 since the conditions aren't related.

Per-condition lifetime deductible

A per-condition lifetime deductible is the amount you must pay out of pocket toward each of your pet's health conditions throughout their lifetime. Instead of meeting a new deductible every year, you simply pay the deductible once for each condition. This type of deductible is exclusive to Trupanion.

For example, let's say your dog is diagnosed with heart disease. The bill comes out to $2,000, and your deductible is $200. You'd only pay that deductible once for all eligible costs throughout their lifetime. After your deductible is met, Trupanion would then reimburse 90% of the cost of your dog's heart disease treatment, which would put $1,620 back in your pocket.

And if your dog's next cardiac care bill comes out to $1,000, you'd be reimbursed $900 because you've already met the per-condition lifetime deductible for heart disease. Of course, if your dog suffers a broken leg, you'd be responsible for paying the deductible for that condition before costs are covered.

Each insurance policy has its own exclusions. These are the conditions and care costs that your insurance policy won't cover.

Common exclusions in pet insurance include:

• Grooming
• Pregnancy
• Spay/neuter
• Dental cleaning
• Parasitic infections
• Anal gland expression
• Homeopathy and alternative treatments
  
• End-of-life costs, including burial or cremation
• Cosmetic procedures, including tail docking and declawing
  

Wellness plans and pet insurance add-ons can provide coverage for routine care costs, like annual exams, spay/neuter, grooming, and more.

Exclusions vary depending on the provider. Be sure to read your policy carefully so you understand what's not covered. And if you have any questions, ask your provider.

The maximum lifetime payout is the maximum amount of money that your insurance company will reimburse you during your pet’s lifetime. This may be a dollar amount or a percentage.

For example, if your cat's policy states the maximum lifetime payout is $10,000, your insurer will not pay out for any more costs once you've been reimbursed for $10,000 total.

If you hit your maximum lifetime payout, you may need to take out another pet insurance policy. If you're concerned about maximum lifetime payouts, compare policies to find an option that suits your needs. Many providers, including Pumpkin, Figo, and Pets Best, offer unlimited coverage.

The maximum payout per incident is the maximum amount your insurance company will reimburse you for each injury or illness.

For instance, if your maximum payout per incident is $1,000 and your dog needs surgery for a broken leg, your provider will only reimburse you $1,000 for associated vet costs.

If your dog goes to the vet 6 months later with allergies, your provider would then cover up to $1,000 of the costs of your dog's allergy treatments.

Most providers offer a maximum payout per year rather than per incident, which leads us to our next pet insurance definition.

Also called a maximum annual payout, this is the total amount of vet costs your insurer will reimburse you each policy year. This is the most common type of payout in pet insurance.

For example, if your annual coverage limit is $5,000, your insurer will only reimburse you $5,000 for eligible costs during the policy year after you've met your deductible and copay amount.

Medically necessary refers to any treatment that's directly related to an illness or injury that's covered by your insurance policy.

Cosmetic and elective procedures, like ear cropping, are usually not deemed medically necessary. Additionally, surgery to correct congenital defects may not be considered medically necessary, even if they would improve your pet's quality of life.

For example, certain breeds — including Great Danes and Weimaraners — are at risk of developing bloat, also called gastric dilatation and volvulus. A surgical procedure called prophylactic gastropexy can help prevent GDV. However, this procedure may not be deemed medically necessary by pet insurers since it's not being used to treat an existing condition.

A pet insurance premium is the amount of money you pay each month or year for your insurance policy.

Monthly premium amounts range from as little as $10 to as much as $100, depending on your location as well as your pet's age, breed, species, and health history.

On average, you can expect to pay $28 to $47 each month for an accident and illness policy. Premium amounts are subject to change.

What happens if you don't pay your pet insurance premium? That depends on your provider, but typically, your pet won't be covered until you pay your premium. Some providers offer a grace period and will send a cancellation notice before coverage expires due to non-payment.

The definition of a pre-existing condition will vary depending on the insurer. Pre-existing conditions typically refer to:

• A chronic condition that a veterinary professional diagnosed before or during your waiting period
• An injury or illness that you knew about or that presented symptoms before the end of the waiting period

If your pet has a pre-existing condition, that doesn't necessarily mean they're not eligible for a policy. It just means that condition won't be covered.

Related: Are There Pet Insurance Providers That Accept Pre-existing Conditions?

Preventative care refers to any treatments or procedures that prevent a health condition rather than treating an existing one. Most providers will not cover costs for preventative care, including:

• Deworming
• Heartworm medication
• Flea and tick preventatives
• Grooming
• Nail trimming
• Vaccinations
• Spay/neuter
• Microchipping
  
• Routine blood and urine tests
• Annual wellness exams
  

As we mentioned, wellness plans offer coverage for these routine care costs. Some pet insurance policies also offer pet insurance policy add-ons that cover routine care.

Related: Pet Insurance vs. Wellness Plans: What's the Difference?

The reimbursement rate is the amount your insurer will reimburse you once you've met your deductible and copay. This is typically a percentage, but it may also be a dollar amount.

Most popular pet insurance providers will reimburse between 60% and 90% of vet care costs. You can reference your copay amount to figure out your reimbursement rate. For example, if your copay is 20%, your reimbursement rate is 80%.

Let's break it down using this example:

• Vet bill cost: $1,000
• Deductible amount: $100
• Copay amount: 20%
• Reimbursement rate: 80%

You'll pay the full bill upfront. Then, your insurer will subtract your deductible amount ($100) and your copay amount ($200). If your claim is approved, you'll be reimbursed $700 for the remainder.

A waiting period is the amount of time between enrollment and coverage taking effect. Essentially, after you enroll in a policy, your pet won't be covered until the waiting period has passed.

How long is a pet insurance waiting period on average? The length will vary depending on your provider, but a 14-day waiting period is standard for illnesses. Many providers offer immediate coverage for accidents. Certain conditions — most commonly cruciate ligament conditions — have a special waiting period of up to 6 months.

Why do pet insurance providers enforce waiting periods? Waiting periods help prevent insurance fraud by ensuring that pet parents don't sign up for a policy knowing their pet already has a health condition.

Related: Is There a Pet Insurance With No Waiting Period?