Pet Insurance: Is It Worth It?

As we’ve discussed, Piggy and I are pretty obsessed with our pets. I admire Piggy’s restraint in having but a single dog. My house currently contains four dogs, one cat, six chickens, and two clinically narcissistic garbage disposals guinea pigs. Friends who know me to be an IRL Pokemon Master often ask me what my pet insurance rates are like.

My pet insurance bill is approximately zero dollars. Same goes for Piggy.

Neither of us have pet insurance. And there’s a reason for that.

Pet insurance is a fucking ripoff

(Please note: in this article, when I talk broadly about “insurance,” I’m talking about elective insurance on tangible goods. I’m not talking about human health, life, and disability insurance, and I’m not talking about mandatory insurance like auto and homeowner. Those are different animals altogether. And yes, that was a pun. #PetPun.)

The general theory behind pet insurance goes something like this. Ten customers send in $40 per month. Nine don’t file a claim that year, and one files a claim that requires a payout of $1,000. Nine people get peace of mind, one person gets a reimbursement check and a healthy pet, and the insurers pocket $3,800 in profits for the year off of these ten customers.

A general truism of our market economy is this: no one sells anything unless it turns a profit. Pet insurance companies would not be in business if they saved their average customer money. Their system is designed to insulate a tiny percentage of their customers from extremely bad luck, while collecting a steady income from the rest.

In my opinion, this alone is reason enough to discount pet insurance. By the very nature of the system, you are far more likely to be one of the nine who receives no benefits than the one with rotten luck. It’s the same kind of thinking that leads people to play the lottery. “I could be the one,” your simple simian brain believes, logic and reason be damned!

But that’s answering based on theory. There’s so much more to this issue.

You still have to pay up

A lot of folks with pet insurance have a basic misunderstanding of how it works.

My human health insurance covers two dental cleanings every year. I walk into the dentist’s office, stare up the lovely hygienist’s nostrils for 45 minutes, and walk out with squeaky clean chompers. “Nothing due today,” the receptionist tells me as she checks me out. They bill my insurance directly.

This is not how pet insurance works. Pet insurance is a reimbursement system. You need to pay up-front, and (in theory) the insurer makes you whole later. If you have pet insurance because you’re concerned that you couldn’t come up with money in an emergency, you are not addressing that problem simply by having pet insurance.

Often people judge their medical emergency readiness based on the cost of the co-payment. But many pet insurers calculate your co-payment before your deductible.

So let’s say you have a $250 deductible and a 20% co-pay, and you’re hit with a $1,000 vet bill. They calculate your 20% co-payment first ($200) THEN tack $250 on top of it. You hoped your insurance would eat three-quarters of the shit pie, but they actually left you with half. And that’s assuming they would cover you at all.

Notice my general scare-quotes attitude about coverage? Let’s dig into that.

Do you actually READ terms and conditions?

Like, really read them? All of them?

Unlike human health insurance, pet insurance is essentially an unregulated industry. And when the cat is away, the mice will play (#PetPun).

Rules vary from state to state, and there is no standardized expectation of care across all providers. The usual rules against consumer fraud exist, but pet insurance companies don’t have to commit fraud to trick you. They can just bury the bad news so deep that it’s easier to find if you start digging from the Chinese side.

Pet insurers are out to make money, period. Their marketing materials will go on and on about how much they love your pet… but you’re not going to fall for that, are you? They have people on staff specifically to design communications that tug at your heartstrings. They also have people on staff to write policies that deliberately favor the insurer, and plenty of lawyers to defend them.

To give you a taste of the kind of shenanigans buried in there, look at the following paragraph. It’s just one tiny slide of one company’s terms, but it’s an illuminating example.

Terms:

Excluded conditions or procedures include pre-existing conditions…congenital anomalies or developmental defects…hereditary disorders…breeding or pregnancy…spaying or neutering…routine examinations…preventive treatment, including vaccines…age-related changes to your pet’s eyes or ears…diagnosis, treatment, training, or therapy for behavioral problems…diagnosis or treatment of any complication or progression of any condition excluded by this policy…hip dysplasia…renal dysplasia…cystine or urate urolithiasis…collapsed trachea…prolapsed gland of the third eyelid… distichiasis… trichiasis…ectopic cilia… inherited bleeding disorders…retinal dysplasia…anal sacculitis…

(This goes on and on and on, for pages on end.)

Translation:

We refuse to cover the most common health problems a pet might have. And we also refuse to cover rarer diseases and disorders. And we refuse to meet basic preventative needs. Basically, go fuck yourself.

The fuckery isn’t limited to what’s covered and what isn’t. There are so many loopholes built into pet insurance contracts that I assume they were constructed using Roller Coaster Tycoon.

Let’s say a drunk driver hits your pet, and you want to sue for damages—nope! The contract you signed gives your insurer your right to sue and keep the damages for themselves.

Or let’s say your cat gets her annual checkup in September of 2015, then again in November of 2016, then is attacked by a coyote. No coverage for you—you failed to fulfill the terms of the contract by letting more than 365 days pass between annual checkups. Yes, even though that issue is 100% separate from the coyote attack.

If I called out all the unethical nonsense buried in these contracts this article would be longer than the Old Testament. WHY IS DOG SUPREME COURT SILENT ON THIS ISSUE???

Horror stories from pet owners

You can take my word for all of this—or you can get it straight from the horse’s mouth (#PetPun). I’ve pulled a handful of reviews to demonstrate some common problems with pet insurance.

I promise that none of these reviews are outliers. A lot of them aren’t even reflections on their individual companies so much as reflections of the entire industry. There’s so much fishy behavior (#PetPun) that it was actually hard to narrow down the kinds of comments I wanted to include here. You can go out and visit any review site to find hundreds like them.

On Trupanion

“Even after pre-approving a $500 procedure for our poor, sick cat they then managed to find a way to justify not paying it. Who does that? After laying out well over $2500 to treat our beloved pet, Trupanion’s angle was to make each aspect of ONE ailment it’s own condition and thus require that the $500 deductible be met each time.”

On Nationwide (formerly VPI)

“They reviewed my pet records and then sold me the insurance with no pre-existing issues despite having access to everything. Now that I actually need the insurance and require a bunch of tests they have decided to add an addendum to the policy saying all gastro issues are void for coverage. The instances in the past with gastro issues have been directly related to a puppy eating something he should not have. The vet even called them to confirm that situation and let them know the issues now are unrelated and new. They disregarded the vet’s testimony and won’t cover the cost of the tests.”

On Healthy Paws

“Healthy Paws denied our claims based on vet records that describe an eye infection. Our cat died of kidney failure related to FIP, not an eye infection. But Healthy Paws looked as hard as they could for an excuse to deny our claims and latched on to the eye infection. Check out other negative reviews of HP on Yelp and etc. This is standard procedure for them.”

On PetPlan

“They made it virtually impossible to get a claim processed, they kept insisting there was not enough information provided by my vet to make a decision. Way too many phone calls, emails, and information faxed to them, basically a stall so they wouldn’t have to pay on my dog’s claim. They never had enough documentation and when their hand was forced to make a decision they turned the claim down and I am just too tired to fight them anymore.”

Yikes. That was a lot. Here, have some pet-related content to cleanse your palate:

• Twelve Reasons Senior Pets Are an Awesome Investment 
• 30 Pets Ranked for Financial Efficiency by Cold, Unfeeling Human Overlords
• Clementine: A Heartwarming Case Study in Risk Taking
• So I Got Chickens, Part 1: Return on Investment

Health insurance for pets, or anxiety insurance for humans?

Having just told you a lot of sob stories, let’s think about the effect they have on us.

I’m sure there are some people who choose pet insurance for logical reasons. But I suspect there are many, many more people who do so for emotional reasons.

Try this experiment: if you know someone who has pet insurance, ask them why they have it. Watch what happens to their face. I’ve only done it five or six times, but in every instance my acquaintance’s features would immediately contort into some variation of the following face, helpfully demonstrated by a young Haley Joel Osment, who does this face better than just about any living actor:

It’s the face of anxiety.

Now read the words that come out of their mouths. Here are some representative samples I’ve heard:

“She got really sick out of the blue last year, and luckily we could afford it, but we just don’t want to be put in that position if it happens again.”

“My parents’ dog was hit by a snow plow, and it set them back years financially. So I want to be prepared for the inevitable.”

“I just don’t have the money to pay a huge emergency vet bill out of pocket. I don’t ever want to be in a position where she needed help and we couldn’t afford to take her to the vet.”

People love their pets! They worry about what they would do if their beloved companion were to get injured or sick. It’s very easy to empathize with an imagined future self who has to euthanize a beloved pet for reasons stemming from money. It’s an awful, awful feeling. And some people are willing to pay $40/mo to make that feeling go away.

Emotions should inform all of your financial decisions. We are beautiful, mushy, human creatures. Our needs are squishy and illogical. Life isn’t something that should be optimized for efficiency (and I’m saying this as an ENTJ, for fuck’s sake.)

That said: never surrender control of your finances to negative emotions. Especially fear. Fear is the mind-killer. Fear is the little death that brings total obliteration. Face your fear. Permit it to pass over you and through you. And when it has gone past, turn the inner eye to see its path. Where the fear has gone there will be nothing. Only you will remain.

What’s the alternative?

The good news is there’s more than one way to skin a cat (#PetPun). Pet insurance is not your only option for how to deal with a veterinary crisis. So let’s think about a truly terrible situation, and how we might rationally react to it.

Piggy has a friend whose sweet-tempered dog was pumped full of buckshot by a deranged neighbor. The dog required emergency surgery and lost part of a lung, all to the tune of $12,000.

I think this is a pretty good example of a worst case scenario, because it’s terribly expensive and completely unforeseeable, yet easily repaired given the right resources. In other words: it’s a $12,000 hurdle you have to clear to give life back to an otherwise healthy, happy family member.

A good thing to keep in mind is that this kind of scenario is very, very rare. It’s so extreme that it isn’t worth spending $40/mo to prevent it. However, it isn’t so outside the realm of possibility that you shouldn’t have a plan for how you could prevent it.

Here are some examples of what I would do in such a situation.

Credit card

I’ve mentioned before that my emergency fund is my credit card. I keep one card on-hand in case of just such an extreme emergency. It has a zero balance and a $13,000 limit. If someone pumped my pupper full of lead, out comes the Visa. (And my Kill Bill soundtrack and a second gun, but we won’t get into that.)

Literally everyone but blackmailers will take credit cards—and they take bitcoin, which can also be bought with credit cards! It’s liquid and instantly deployable.

It’s true that I’d pay interest on the balance, which isn’t ideal. But for me, the remote nature of the possibility makes it the most attractive option. Even with the 100,000 pets I have, I’ve only had one true vet emergency. I handled it by putting $2,100 on a credit card, then paying it off as soon as the crisis had passed.

If, on the other hand, I’d had them all insured, I would’ve spent $13,920 on pet insurance over the past twenty years. And that’s for my cats and dogs alone! It doesn’t even factor in the cost of co-payments, rate increases, or taxes. It would’ve taken seven or more such emergencies to make the math worth it.

Emergency fund

I’m not a huge fan of large liquid emergency funds, simply because there are often better ways to invest the money. That said, I won’t stop you from putting whatever you’re willing to spend on pet insurance into a savings account for the duration of the animal’s life.

Putting $40 a month into your mattress will net you $9,600 over an average indoor cat’s lifetime. That would cover almost all of the worst case scenario of a bullet-ridden Mister Tidbits (that is your cat’s name, right?) and every less dire emergency in between.

Payment plans

Many vets offer payment plans, especially family vets (with whom you have a longstanding relationship) and emergency vets (whose customers often come in very unprepared for a major expense). Don’t wait until your pet is choking on a ham bone to find out if they do. Call them today to ask if it’s a possibility, should the need arise. If the answer is “no,” you should make sure your contingency plan accommodates that.

Call in a favor

Not everyone has Privilege Pals on speed dial, but if you do, now is exactly the time to call in such a favor. If you have a financially stable parent, relative, or friend who could help you in a time of crisis, and if could save a pet’s life, don’t hold back. Just make sure you pay them back in-full and on-time, or it’ll bite you in the ass (#PetPun).

If nobody in your inner circle fits the bill of a wealthy benefactor, you can also organize a GoFundMe or other crowdsourcing option. I hate to see people rely on these tools for predictable expenses, but they’re perfectly designed to get help quickly in a true emergency.

Surrender

Let’s say you’re in a truly terrible situation. You got a pet when things were good, but you lost your job or your home or some other terrible series of calamities visited you and yours. So what happens when you have none of the above ways of dealing with a sudden illness?

If you live in a large city, especially in New England or the Pacific Northwest, you may be able to surrender your animal to a new owner. This isn’t really an option in parts of the country with lots of animal shelter overcrowding, but my New England shelter has taken some pretty rough cases from people who had no other choice. You may also be able to do this if the pet you own is a particularly rare or beloved breed with lots of rescue groups. The wait list for a purebred rescued leonberger is so long that someone would likely be willing to take in a special needs dog.

This is a fine last resort because your pet will get treatment and a loving home—just not with you.

And remember…

Pets are a huge commitment, and I wholeheartedly endorse dedicating some money to address a potential emergency. But pet insurance is absolutely not the way to do it. If you have it, good for you. You were trying to do right by your pet. But now you know better and can cancel it. And consider forwarding this article to any friends or family who’re throwing their money away on this sham service.

Above all, know thy pet. Establishing a baseline of good health is key to surviving a sudden illness or injury, and training your pet is key to preventing accidents in the first place.

If your pet is fat, slim them down. If they’re lazy, get them up and active. Conversely, if they’re crazy high-energy, make sure your home is secure and give them productive opportunities to burn off the zoomies. Don’t take unnecessary risks if your pet is occasionally flighty or aggressive. Invest in behavioral training so your pet listens to you when you most need them to. Take them to their annual checkups and call your vet at the first sign of trouble.

And remember…