Is Pet Insurance Worth the Cost?

You come home to find your dog vomiting and listless. After rushing them to the vet, you learn that they swallowed one of your socks and need emergency surgery — to the tune of several thousand dollars. Can you afford to pay that bill? If not, pet insurance might be worth considering.

Pet insurance helps cover the cost of medical care for your furry friend. It can reimburse you for expenses like cancer treatment, emergency care, prescription medications and surgery.

In some dire scenarios, pet insurance could save the life of an animal that would otherwise be euthanized if its owner couldn’t afford treatment. But if your pet rarely gets sick, you could end up paying thousands of dollars in premiums without getting much in return.

So is pet insurance worth it? Here’s some information to help you make the decision.

The rise of pet insurance

A growing number of owners are choosing to insure their pets. More than 5.6 million U.S. dogs and cats were covered by pet insurance in 2023 — an increase of 17% from the year before, according to the North American Pet Health Insurance Association, or NAPHIA^[0]

That’s significant growth, but the industry still covers only a small fraction of American pets. In the U.S., there are an estimated 65 million households with dogs and nearly 47 million households with cats, according to the 2023-2024 American Pet Products Association National Pet Owners Survey^[0]

What pet insurance costs

The average annual cost for an accident and illness policy is about $676 for dogs and $383 for cats, according to NAPHIA data from 2023^[0]

If you choose an accident-only policy, the annual cost drops to $204 for dogs and $116 for cats. Such plans will cover treatment if your pet is hit by a car or swallows something poisonous, for example, but won’t pay if they get sick.

Premiums may vary significantly based on your pet’s age and breed, the cost of veterinary care where you live and the insurance policy you choose.  For more details and sample premiums, see How Much Is Pet Insurance?

Be aware that rates tend to increase as your pet gets older and more prone to health issues. If the plan gets too expensive for your budget, you might end up canceling the coverage just when your pet is starting to need it most.

To see how much rates might rise over time, we checked sample quotes from Pets Best, a popular pet insurer, for a medium-sized, mixed-breed dog in Katy, Texas. Here are the monthly prices we found for a policy with a $5,000 annual limit, $500 deductible and 80% reimbursement level:

That may not seem too dramatic when you see the increases monthly, but here’s how your average annual cost would change over 12 years of your dog’s life:

We also got quotes from Pets Best for a domestic shorthair cat in the same ZIP code. (Rates run through age 14 to reflect a cat’s longer expected life span.)

Though the overall premiums are lower for cats, there’s a similarly sharp price increase as they age.

In the end, you’ll likely pay thousands of dollars for insurance if you maintain the policy over the life of your pet.

Remember that these are sample numbers for one pet insurance company in one ZIP code. Your price will vary, so it’s worth shopping around.

» MORE: The best cheap pet insurance

What pet insurance pays for

So what do all those premiums get you? Though insurance can be a godsend if your pet is facing an expensive diagnosis, your plan likely won’t reimburse every dollar you spend at the vet.

Deductibles, limits and payouts

Most policies come with an annual deductible, the amount you’re responsible for before the insurer starts paying. Once you’ve met your deductible, most plans pay a certain percentage of your vet bill — typically 70%, 80% or 90%. And you may be subject to an annual maximum payout.

Insurers don’t all handle deductibles and reimbursement rates the same way. Some apply your deductible first, then pay a percentage of the remaining bill. Others apply your reimbursement rate even before you’ve reached your deductible, which means you’ll need to spend more out of pocket before you’re eligible for reimbursement.

Say you have a $500 deductible on a plan that pays up to $10,000 per year and reimburses 80% of your costs. If your dog needs a $2,000 surgery and you haven’t put anything toward the deductible yet, your plan would pay either $1,100 or $1,200, depending on when your reimbursement rate is applied. Here’s the math.

• When the deductible is applied first: $2,000 - $500 deductible = $1,500. 80% of $1,500 = $1,200.

• When the reimbursement rate is applied first: $2,000 x 0.8 = $1,600. $1,600 - $500 = $1,100.

You can often customize your plan with a lower deductible or higher reimbursement rate, but your premium will go up accordingly.

» MORE: How to get pet insurance quotes

What’s covered and what’s not

Even if you find a plan with no annual limit and 100% reimbursement, it still might not pay you back for every veterinary expense.

For example, most plans won’t cover spay or neuter surgery unless you’ve bought an add-on for wellness and preventive care. The same goes for vaccinations, annual checkups and teeth cleaning. Insurance is designed to cover unexpected expenses, not routine costs associated with pet ownership.

But pre-existing conditions are perhaps the most important exclusion in just about every pet insurance plan. Pet insurance generally covers only new injuries or illnesses, not conditions the animal has before the policy takes effect. So don’t try buying pet insurance to pay for your cat’s chemotherapy after they were diagnosed with cancer — it probably won’t be covered.

That’s why pet insurance may be more valuable for pets who are young and healthy than those who already have a chronic condition or two.

Pre-existing conditions can also be a problem if you let your policy lapse. Say you’re out of work for a few months and can’t pay Fluffy’s premiums. If you reinstate their coverage later, all their previous ailments will count as pre-existing conditions, even those the earlier plan covered.

For more details on what’s covered and what’s not, see our guide to pet insurance coverage.

The cost of veterinary care

Dog owners spend an average of $624 each year on surgical vet visits and $309 each year on routine vet visits, according to recent survey statistics from APPA. Cat owners have lower annual expenses on average, spending $251 on surgical vet visits and $183 on routine vet visits. (Remember: Most pet insurance plans don’t cover routine care unless you pay extra.)

Below are the most common types of pet insurance claims for dogs and cats, according to 2023 data from Nationwide.

Some conditions on this list are relatively minor and inexpensive to treat, such as a urinary tract infection resolved with a course of antibiotics. But others could rack up significantly more expenses.

For example, “trauma” could encompass anything from an animal bite to a car accident. Serious injuries in an accident could require surgery and hospitalization, which can cost thousands of dollars.

If your pet faces only minor health conditions throughout his life, you may end up paying far more for pet insurance than you get back. But if something serious goes wrong, the insurance may be well worth it.

» MORE: How much does pet insurance cost?

Alternatives to pet insurance

If you’d rather not buy pet insurance, you can try one of the following ways to pay for your furry pal’s care.

Self-funding

Instead of paying a monthly premium to a pet insurance company, you could contribute to a high-yield savings account for vet expenses.

The advantage of this strategy is that if your pet stays healthy, you’ll still have the money to use for something else. The downside is that you might not have enough saved if your puppy has an expensive accident three months after you bring them home.

Financial assistance

If you find yourself unable to afford care for your pet, you still have options. Your vet may be willing to work with you on a payment plan, or you can look for another clinic that charges less for the treatment your pet needs.

You can set up a crowdfunding campaign to help pool the support of friends and family. Charitable organizations may also be able to provide grants or other assistance. The Humane Society of the United States has a useful list of resources.

So, is pet insurance worth it?

Consider buying pet insurance if:

• Your pet is young and healthy.

• You don’t have enough savings to cover a hefty vet bill.

• Having insurance coverage gives you peace of mind.

Pet insurance may not be worth it if:

• Your pet is a senior or has health problems.

• A big vet bill wouldn’t be a financial hardship for you.

• You’d rather take the risk of an expensive diagnosis than pay for insurance you might never use.

Decided you're ready to buy pet insurance? See NerdWallet's list of The Best Pet Insurance Companies.