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North American Consumers Starting to Jump on the Pet Insurance Bandwagon

Aug. 14, 2014
3 mins
A cat snuggles its owner's hands as they try to work on their laptop

Pacemaker implants, radiation therapy and CAT scans are commonplace solutions to patients suffering from serious medical ailments but increasingly these procedures are being applied to cats and dogs.

With rapid advancements in veterinary medicine come higher costs to pet owners and many are discovering that pet insurance is often the best way to keep their pets healthy and safe, and the related expenses more manageable.

North Americans are lagging in terms of taking out pet insurance policies, with close to 3% in Canada and the United States participating compared to 25% in the U.K. and 50% in Sweden. Industry trade group, North American Pet Insurance Association (NAPIA) reports that 1.86 million pets are now insured in the continent, with an average annual premium for illness and accident policies costing about $407.

In 2013, the pet insurance industry grew by 15% and garnered $618 million in total premiums, with $536 allocated to the U.S. and $82 million in Canada, according to a recent report from Packaged Facts. Increasing competition and more support from veterinarians, particularly the younger practitioners, are among the major reasons for the growth, notes the Rockville, Maryland-based researcher, which predicts a sharp uptick to $1 billion by 2020.

To continue this growth, industry observers say insurers must convince pet owners they need the coverage. Consumers often become aware of policies from literature distributed at their veterinarians as well as shelters, pet stores and breeding outlets. In selecting policies, owners should make sure they understand what procedures and services are covered and also what's excluded from coverage in terms of illness and injury.

Some companies have non-lifetime insurance policies, which cover you for conditions suffered by your pet during the course of a policy year but, on renewal, may choose to exclude that condition going forward, which means the owner will be responsible for paying for those treatments. Often included in a pet insurance policy is a waiting period for both accidents and illnesses in an effort to combat fraud. This means the owner must wait a certain period of time after the policy start date before making a claim. A typical waiting period is one week for accidents and one month for illnesses.

Like other insurance instruments, owners pay a monthly premium, a deductible for a claim and generally a portion of the medical costs, which can vary among different providers. As in many health insurance policies, coverage is generally based on age, pre-existing health conditions, type of lifestyle, and hobbies. As far as research and purchasing patterns go, about 40 percent of pet insurance plans are sold online and the main criteria to get a free quote is often as simple as listing age, breed and postal code.

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