Does Pet Health Insurance Have A Purpose?

On a fundamental level, pet health insurance provides pet lovers with peace of mind knowing their pets will receive the best veterinary care in a time of need. Pet health insurance is still insurance, though, so there is also a practical reason to purchase pet health insurance.


In general, the purpose of insurance is to help you manage risk. For example, if your home is destroyed there are very few of us could afford to rebuild it from our personal savings. Since this is the case, we pay a premium to an insurance company in exchange for the peace of mind that the insurance company will pay to rebuild our home if something unfortunate should happen. This is the reason we care auto and health insurance as well.

Insurance companies place the premiums from their policyholders into a pool to pay claims for those policyholders that experience a loss, pay administrative expenses, and pay any dividends to the owners of the insurance company in years of profitability. Insurance companies are regulated to ensure the premiums they charge are high enough to prevent financial insolvency and to monitor business practices.


One of the basic concepts of insurance is that a “risk” (i.e., life, house, car, etc.) must be insurable. In other words, insurance companies must have underwriting practices in place to screen out risks that would deplete the premium pool used to pay claims to policyholders. At its most basic, each of these risks that enters the pool should have an equal chance of experiencing a loss.

For example, most insurers would not offer auto insurance to someone right after an auto accident as they are very likely to file a claim. Of course, higher risk policyholders can be charged a higher premium to enter the pool, which is why it costs so much to add your 16 year old daughter to your auto policy.

The real value in pet insurance is that it promises to pay for covered veterinary expenses if you have them.

Pet health insurance servers the same primary purpose. For everyone reading this, our pets are a part of the family. We all want to keep them healthy and alive as long as we can. Fortunately for us, the veterinary profession is doing its job to help us by always pushing the envelope in what is available in veterinary medicine. Vets can now treat you pet for many catastrophic diseases including cancer. Unfortunately, all this ground breaking veterinary medicine comes with a price. It is not uncommon now for veterinary bills to routinely run into the thousands of dollars. With so many life-saving treatments available it is hard to say no—despite the fact that most of us don't have an extra $10,000 to spend on chemo therapy for Sparky.


I know that many of you don’t see a financial return from buying a pet insurance plan. What you don’t understand is so far, you've just been lucky. It would be like saying "I don't see a return on my home insurance". This is a good thing! After all, I don't know anyone that wants their house destroyed.

Pet health insurance is the same. It's there when you need it. But, not everyone will have as many claims to submit. The true value of pet insurance is the promise to pay for covered veterinary expenses, if you incur them. In my opinion, if a year goes by that you don't have to use a pet health insurance policy that's a good year. It means you didn’t incur any losses. I'm not sure about you, but I wouldn't want for one or both of my dogs to become hurt. If they do though, I feel secure in knowing that the few hundred dollars I spend means that my pet health insurance policy is there for them.