Popularity rises for pet health insurance


The humanization of pets and the increased costs of veterinary care have sparked a burgeoning industry: pet health care.

The economic downturn has resulted in cost-conscious consumers forced to tighten their money belts to make ends meet.

But while they've curbed their spending when it comes to purchases and services for themselves, pampering and caring for their beloved pets is still a top priority. Hence, the increasing popularity of pet health insurance and veterinary discount plans.

From 2003 until 2007, the number of cats, dogs and exotic animals insured in the U.S. increased 56%, a study by research group Packaged Facts indicates.

Dogs led the pack in 2008, with an estimated 2 million insured.

Cats followed with an approximate 900,000 insured, data provided by the American Pet Products Association indicates.

While that accounts for only about 3% of all dogs and 1% of cats, the numbers are expected to surge because of the increasingly widespread perception of pets as family members.

Pet owners with health care coverage are opting to take more extreme measures, from kidney transplants to hip replacements, to improve the lives of their elderly or ailing animals.

Although the procedures come with a hefty price tag, pet health care plans mitigate the expenses, pet owners say.

In 2010, pet owners are expected to spend $47.7 billion on their pets, compared with $45.5 billion the year before, according to the American Pet Products Association.

Owners are paying more for food, supplies and vet care, the group says.

Surgical vet visits rank as the top expense, 2009 and 2010 surveys by the association indicate.

That's likely because pet owners are willing to pay to have their pets undergo extensive operations to improve the quality of their lives and extend pets' life spans.

"Our kids are grown and out of the house and our animals are our children," said Marnie Zei, the owner of two dogs and a cat that she enrolled in a health care discount plan. "I have not found the limit of money that I wouldn't spend to fix them."

Cost of care on the rise

As the demand to keep animals alive longer continues to grow, so has the cost of veterinary care.

Since 2000, the cost of veterinary services has inflated 80.4%, in comparison with 28.1% inflation for services in all other industries.

Vets who absorb the costs of increasingly expensive equipment and medical supplies say they are stretched thin.

"My expenses have gone up dramatically," said Wendy Holst, a veterinarian who owns two pet clinics in the Phoenix area.

Those costs continue to increase as vets are forced to keep up with the new technologies needed to care for pets.

Within the next few years, it's likely the rising cost of veterinary care will increasingly convert pet owners without health care plans into clients, said Doris Amdur, founder of United Pet Care, a health care company that offers discount plans.

"There are so many people whose pets needed procedures, but they're prohibitively expensive," Amdur said.


Myriad pet health-insurance options exist. Some of the largest insurance companies are Veterinary Pet Insurance, Pethealth Inc. of Oakville, Ontario, and PetFirst Healthcare, headquartered in Jeffersonville, Ind.

Providers offer insurance plans that differ in type and cost: from minimal injury coverage, to treatment plans for chemotherapy and hip reconstruction.

To qualify for most plans, a pet can't have a pre-existing condition or exceed a certain age limit, usually 9.

Monthly premiums range from $10 to $100, with annual deductibles of $50 to $500 and annual or lifetime maximums of $1,000 to $14,000.

Depending on the provider, about 80 to 100% of a pet's claim is refunded after the deductible is paid.

Most insurance plans offer crisis coverage and charge additional fees for preventative-care procedures such as annual checkups, vaccinations and teeth cleaning. Preventative care can increase premiums by as much as $22 per month.

Still, some pet owners say health insurance has been a great investment.

Teri Morris secured pet insurance for her dog Bella, 9, about 5 years ago.

Although Bella hasn't had any major health problems, Morris knows vet bills can get expensive quickly.

Morris' dog Scooby died a year ago, after she spent about $8,000 in vet bills to treat his diabetes, thyroid dysfunction and bladder cancer, she said.

"At least some of that would have been covered if he had been insured," she said.

Pet health-care discount plans usually provide discounts on preventative care, rather than crisis care.

Savings plans provide vaccinations, annual checkups and sometimes teeth cleanings for free or at a substantial discount. The plans are usually cheaper than health insurance but provide savings that rarely exceed 20% for crisis care.

Banfield the Pet Hospital, based in Portland, Ore., is one of the most successful providers of discount health-care policies. Their preventive plans range from $14.95 to $42.95 monthly, depending on the type of animal and plan coverage.

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