Many pet owners form deep bonds with their furry friends, often considering them beloved family members. It’s no surprise that many want to financially protect their pets just as they would for a human family member. But what exactly is pet insurance, and is it a worthwhile investment?
While pet insurance may increase your monthly expenses, it can provide significant peace of mind. In addition to routine care like food and vaccinations, unexpected medical bills can arise from accidents, illnesses, or chronic conditions. Understanding the nuances of pet insurance can help you make an informed decision.
What is Pet Insurance?
Pet insurance functions similarly to human health insurance, covering some or all medical bills for your pet based on your selected coverage.
Pet insurance originated in Sweden in 1890, when Claes Virgin is credited with writing the first policy for horses and livestock. It took several decades for pet insurance to gain traction in Europe, and it wasn’t until 1982 that the first pet in the U.S.—the iconic TV collie, Lassie—was insured by Veterinary Pet Insurance, now part of Nationwide.
According to the American Veterinary Medical Association, there are an estimated 144 million to 151 million dogs and cats in U.S. households. Of these, about 4.8 million are insured, representing just over 3% of the total pet population in the U.S., according to a 2023 report from the North American Pet Health Insurance Association (NAPHIA).
NAPHIA also estimates that the total volume of premium insurance policies in the U.S. will reach approximately $3.2 billion by the end of 2022, reflecting a remarkable 157% increase in pet insurance payments since 2018—more than 20% annually. This trend indicates that pet insurance is gaining popularity, but it still has a long way to go before becoming mainstream.
How Much Does Pet Insurance Cost?
Pet insurance operates in a competitive market similar to human health insurance but on a smaller scale. Rising costs for medications, veterinary services, and overheads, coupled with a shortage of qualified veterinarians, are contributing to increasing pet care expenses.
For an “accident and illness” policy—the most basic coverage—dog owners can expect to pay around $640 per year (approximately $53 per month), according to NAPHIA. Cat owners generally pay less, averaging $387 per year or $32 per month. Costs typically increase as pets age, leading to higher expected medical expenses and annual premiums.
For a basic accident and illness plan, the average cost is close to $644 per year, covering standard diagnostics and treatments. If you add options like medical exams or prescriptions, the average cost rises to about $851.
When considering a 10-year-old golden retriever, annual costs can jump to between $1,231 and $1,578—without additional features, which also become more expensive as pets age.
To put this in perspective, the average annual vet fee in Illinois is about $230, according to Canine Journal. Emergency vet visits can vary widely depending on the severity of the case.
Emergency costs typically range from $100 to $200, with overnight stays potentially costing up to $2,000—often excluding diagnostic tests. Conditions like gastroenteritis can cost anywhere from $200 to $3,000, while severe trauma treatment can range from $2,000 to $10,000.
Given the high costs associated with pet ownership, having pet insurance can be a crucial safety net for your finances.
