Changing Pet Insurance Companies

I first met Laura Bennett, who gives genuine hugs and refers to herself as the “chief embracer” from Embrace Pet Insurance, at the original BlogPaws event in April 2010. We had the chance to reconnect at BlogPaws West in Denver in September 2010, where we chatted some about families actually SWITCHING pet insurance companies.

I shared with her this STRANGE position of being relatively anti-pet insurance AND a pet insurance customer at the same time. In other words, I have a pet insurance policy on Lilly from the plan offered as part of her adoption from the shelter, and it has helped a couple of times on bigger things. Yet … I don’t really trust it fully, and sometimes I seriously consider axing it from my budget.

So, I began to wonder how one goes about CHANGING companies or policies, and if such a thing is even done. Hence this particular series of answers to my questions.

How big is the pet insurance market right now?

At the end of 2009, the pet insurance market was about $320 million of annual premium. That’s about 0.5% of the 171* million cats and dogs in the U.S. (*according to the APPA), which is much less than the 20%+ penetration in the United Kingdom. There’s a lot of potential for growth in the U.S. now that the products provide coverage and experience that pet parents need and expect.

Do you see more policies for dogs than for cats? I’d think you probably do since dogs seem to get more veterinary care than cats overall, even though more cats are kept as pets than dogs.

Absolutely! Right now, out of every 100 policies we sell, 82 go to dogs and 18 go to cats. Even though cat policies are much less expensive than dog policies (roughly 37% less at Embrace, for example), people certainly perceive the need more for dogs. Interestingly though, while cats go to the vet’s office less than dogs, when they are there, the vet bills cost about the same. So if you don’t want to get hit by that big bill for chronic kidney disease, diabetes, a car accident, or upper respiratory infections, pet insurance is still a good idea to protect you against the high unexpected bills.

How much jumping from one company or one policy to another do you see in the industry?

We do see it, particularly if a pet parent goes through the painful experience of having a claim not covered for an unexpected reason or the pet parent discovers their old policy doesn’t cover what they expected it would.

Mostly though, we see pet parents who are new to pet insurance who either have a new pet or recently had an awful veterinary health experience that put them financial strain. Those people typically hear about pet insurance through a friend, their veterinarian, or just an online search to see if pet insurance really exists.

How different *really* are the options out there? Is there an easy way to compare?

The pet insurance products on the market provide very different benefits and customer experiences across companies so you need to know what to ask about and compare when buying. While price is somewhat of an indicator of level of benefits, that’s not always the case, so do your homework. In my mind, this is one of the biggest issues with pet insurance – people not knowing what is and isn’t covered by their policy until it’s too late.

Apart from the policy parameter differences such as deductible, copayment percentage and annual maximums, which are fairly easy to determine (although make sure you understand what type of deductible the policy has; per visit, per incident; per year), the other key differences between policy terms and conditions are based around the following attributes:

• Does the policy cover genetic or hereditary conditions? These conditions can be excluded but are common to both purebred and mixed breed dogs (hip dysplasia for example, which is a very expensive condition to treat if it occurs). If the policy says it covers hereditary conditions, check how much coverage you are getting – does it go up to the full policy limits or is it a much smaller sublimit that might not address the real cost of the condition
• What else is excluded? Some insurers may not cover the vet exam, which can range from $35 – $90 a visit depending on your pet and where you live. Some may not cover alternative or complementary treatments, including physiotherapy. It’s good to know what these are explicitly and decide if they are important to you or not.
• How is the reimbursement calculated? Your refund can be calculated based on a) the vet bill you actually paid; b) a benefit schedule for the diagnosis; or c) a usual, customary, and reasonable charge for the procedures based on where you live. As a rule of thumb, method a, the vet bill you paid, generally pays out the most benefits, all else being equal. The other methods may be less expensive but you are trading off lower premiums for lower benefits.
• How are chronic conditions treated? Will they become pre-existing once your policy renews or not? If so, your policy will likely be less expensive than others that do continue coverage but you may be very disappointed down the road. At the very least, understand what happens to your reimbursement if your dog tears a cruciate ligament on the last day of the policy period and has treatment in the next period.
• Will the premiums go up over time? If so, what is the increased based on (common ones are pet age, veterinary inflation, and changes to the actuarial model behind the scenes).
• Will the benefits go down over time? If so, when and how?
• What other fees are you going to charge me? Some pet insurers charge a fee when you sign up for your policy, or if you want to change your policy during the year, pay your premium monthly or reinstate your policy if you should accidentally lapse it. These can all add up to a significant portion of your total cost.

What do people need to know if they’re going to make a change like this? Are there mistakes to avoid, etc.?

This is a great question. If you are switching pet insurance companies, you want to think about the following:

First of all, you can cancel your pet insurance policy at any time during the year and get a refund for the unused portion of the premium so you change pet insurers at any time and not have to wait for renewal. Don’t feel pressured to have to make a rushed decision by a certain deadline. Make the right decision in your own time.

When comparing the old and the new policies, ask yourself:

• Are you sure that your new policy provides you the overall coverage you are hoping for? Just because the premium is lower, it doesn’t necessarily mean it’s a good move for you from a coverage perspective, and vice versa.
• What are you giving up by moving from one company to the next? If a condition is covered now by your old company, it very likely won’t be covered by your new company, at least temporarily. What you might gain in extra coverage at the new company might not make up for your loss in coverage of existing conditions.
• MOST IMPORTANT: If you have decided that a move is a good idea, do NOT cancel your old policy before you move to your new policy. Did I put that clearly enough? In fact, make sure you cancel the old policy after the waiting period has elapsed so that you don’t have a gap in your coverage. As much as you might dislike your old company, their coverage might be better than nothing should something happen in that gap.

How do pre-existing conditions work in this situation, especially if you have an older dog with some health issues?

No pet insurer covers pre-existing conditions so if you do move from one company to the next, it is likely that existing or recent conditions won’t be covered by your new policy. Having said that, there are some things you can ask to clarify your particular situation.

Ask the new company what their definition of pre-existing is. Is there a time period this applies to (only conditions that showed clinical signs over the last 12 months or 3 years or forever?) and is it possible for a condition to be cured for a period of time and be covered again? You might find that the ear infection your dog had 2 years ago doesn’t matter but then again, it might.

If you really want to know if the conditions in your particular situation are covered, ask the pet insurer if they will do a review of your pet’s health history and put in writing what will and won’t be covered (at least one insurer will do this for you). That way, you’ll know your particular situation, which will help you come to the appropriate decision for you.

Are those limits, exclusions, and such different if the pet has had insurance and is switching versus a pet that has not had insurance before? I know with people that current insurance status means a lot, and I just wonder if that’s true for pets too.

I don’t know of any pet insurer that rates on whether or not your pet has been insured before. Maybe one day it will happen but not at the moment. At least that’s one less thing to think about regarding pet insurance – for now anyway!