What Is Pet Insurance and How Does It Work?

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10 min read

Updated - Apr 7th, 2022

No matter where you are in your pet parent journey, from preparing to adopt a puppy to caring for an adult cat, choosing the right pet insurance plan is an important decision. We’re sharing exactly how pet insurance works, and how it can help your pet get the best veterinary care possible. 

What is pet insurance?

A pet insurance plan is an insurance policy that reimburses you for your pet’s health care costs if an accident or illness occurs. For example, one day you see your dog limping so you take them for a vet visit. Your vet finds the cause is an infected abscess on your dog’s paw and recommends antibiotics. Pet insurance could help by covering or reimbursing you for an unexpected eligible medical cost like this. 

Why do I need pet insurance?

The truth is, unexpected accidents and illnesses happen way more often than you might think. 

Our beloved pets have a habit of doing crazy things with costly consequences, whether it’s gobbling up a piece of toxic chocolate off the counter or leaping down from a shelf and fracturing a paw. Pets can also get sick with very little warning, like coming down with pneumonia overnight or having unexplained diarrhea. As many as 1 in 3 pets will need emergency veterinary treatment each year!*

If your pet ever does have a serious accident or illness, the cost of their care can add up more quickly than you think. In fact, over a pet’s lifetime, families can expect to spend ~$16,600 on vet care for dogs6 and ~$13,350 on vet care for cats!

The cost of your pet’s care is the last thing you want to worry about during an already stressful time. Pet insurance can help make things easier by reimbursing you for a majority of covered veterinary bills. It can also give you peace of mind knowing you have help getting your pet the best diagnostics & treatments when they’re hurt or sick. 

These days, thanks to new veterinary advancements, better treatments are available to pets than ever before. Knowing you have help getting the best care possible without having to worry as much about the cost can make a huge difference in your pet’s life. 

How does pet insurance work?

Pet insurance plans reimburse you directly for your pet’s covered health care costs when they get sick or hurt. It works like this:

  1. You pay for your pet’s veterinary treatment costs upfront.
  2. You submit a claim for the treatment your pet received.
  3. If the claim is approved, you get reimbursed for your covered vet bill.

Unlike some human health insurances, pet insurance plans usually don’t have in-network veterinary hospitals. As long as your plan doesn’t have network limitations, your pet can get treatment from any licensed vet or emergency clinic in the U.S. 

What does pet insurance cover?

Pet insurance coverage varies from plan to plan – you can check out this comparison page to see different providers’ plans. Pet insurance plans may cover:

  • Accidents (like poisonings and bite wounds)
  • Illnesses (like ear infections and cancer)
  • Dental illnesses
  • Behavioral issues
  • Parasite infections

They may cover these conditions if they are eligible accidents or illnesses:

  • Hereditary conditions
  • Breed specific conditions
  • Congenital conditions
  • Chronic conditions

Pet insurance plans may also cover the following diagnostics and treatments if they’re used to treat a covered condition:

  • Diagnostic and lab tests (like blood panels and x-rays)
  • Prescription medication
  • Prescription food and supplements
  • Alternative therapies (like hydrotherapy and acupuncture)

Tip: We believe all pets deserve best-in-class coverage. That’s why a Pumpkin Pet Insurance plan would give your pet coverage for all the eligible conditions and treatments listed in the section above. 

What are some common exclusions? (a.k.a. what’s not usually covered by pet insurance plans)

An exclusion is something that your pet insurance plan won’t cover under any circumstances. As you research pet insurance plans, you may find these listed as exclusions:

  • Pre-existing conditions
  • Grooming services
  • Boarding and travel costs
  • Cosmetic or elective procedures
  • Spay/neuter procedures

Tip: For a full list of exclusions for a Pumpkin insurance plan, you can review a sample policy here

What are pre-existing conditions?

For all pet insurance plans, there are many reasons an insurance claim might be denied. The most common reason is that a claim has been made for a pre-existing condition. These are conditions that occur or show symptoms before coverage starts or during a waiting period. This may include things like allergies, asthma, or hip dysplasia

Pre-existing conditions are usually not covered. However, some plans do cover curable conditions, so it’s best to look at each pet insurance providers’ policy document for their exact coverage details, as every plan is different.

How much does pet insurance cost and what affects the cost of pet insurance?

If you’re wondering how much cat or dog insurance plans cost, the short answer is – it depends. Usually, you pay a monthly or annual premium for your pet insurance plan, and plan premiums can vary based on several factors. You can find out how much your premium would be by filling out a free pet insurance quote online

When you fill in your details, the monthly premium price may vary based on these factors:

  • Type of pet: Whether you have a dog or a cat will affect the price of your monthly premiums. Usually, dogs are more costly to insure than cats.
  • Your pet’s breed: The breed and size of your pet will affect your premiums. Larger pets usually cost more to insure.
  • Your pet’s age: Premiums will differ for puppies and kittens versus adult dogs and cats. This is because young pets tend to have fewer health problems. You will find that insuring senior pets typically costs more, with some insurance plans limiting coverage for senior pets, or not offering it at all. 

Tip: With Pumpkin, all pets eight weeks and older can enroll in Pumpkin insurance plans, and coverage will never be reduced or declined as pets age.

  • Your location: Where you live may alter your pet’s premium. Pet insurance providers might ask for your state and ZIP code before calculating your plan cost. 

After these details are entered, the price may change to reflect your three plan preferences:

  • Reimbursement rate: A higher reimbursement rate will increase your monthly premium. 
  • Annual deductible: A higher annual deductible will decrease your monthly premium.
  • Annual coverage limit: A higher annual coverage limit will increase your monthly premium.

Pet insurance premiums can also differ in price based on pet insurance provider-specific discounts, multi-pet discounts, and also whether you pay your premiums monthly or annually. 

What are reimbursement rates, annual deductibles, and annual coverage limits?

  • Reimbursement rate: Also known as a reimbursement percentage or coinsurance. This is the percentage your pet insurance plan will reimburse you for covered vet bills. For example, an 80% reimbursement rate means that for a $100 covered vet bill, you will pay $20 and your plan will pay you back $80.
  • Annual deductible: How much you choose to pay towards covered vet bills each year before your pet insurance reimbursements kicks in. For example, an annual deductible of $500 means you will pay $500 towards eligible pet health care costs before your insurance reimbursements kick in. 
  • Per-condition/per-incident deductible: Plans that offer this usually only offer this option, and it works differently than an annual deductible does. If you have a per-condition deductible, it means you’ll have to pay a deductible every time your pet gets diagnosed with a new condition before your pet insurance kicks in. 

For example, if you have a $500 per-incident deductible and your pet is diagnosed with two separate conditions, you will pay $500 towards care costs for condition one AND $500 towards care costs for condition two (totaling $1000) before your insurance can help with either. 

  • Annual coverage limit: The maximum amount your pet insurance plan will reimburse you for eligible expenses every year. This can be a fixed dollar amount all the way up to an unlimited annual coverage limit.

What types of pet insurance plans are there?

In order to make the right choice for your pup or kitty, it’s important to know the types of coverage that different plans offer:

  • Accident and illness insurance plans 

An accident and illness insurance plan gives your pet coverage for unexpected accidents and illnesses that arise over the course of their lives.

  • Accident-only insurance plans 

These types of insurance plans offer coverage for accidents only, and are usually a lower-cost option. Some pet insurance providers only offer this type of plan if your pet is over a certain age, or has previously been diagnosed with certain incurable illnesses, such as diabetes or cancer.

  • Accident and illness insurance plans with optional add-ons for additional coverage

Some pet insurance plans offer optional additional coverage alongside the coverage that their base plan offers, for an additional monthly fee. For example, an optional add-on could provide coverage for things like vet exam fees for covered conditions, or dental illness coverage. These options will cost an additional fee, increasing your monthly premium. 

Tip: Some plans, like Pumpkin plans, will include coverage for dental illness and accident & illness vet exam fees automatically in your base accident and illness pet insurance plan.

  • Accident and illness plans with optional wellness plans or packages

Regular wellness care visits are essential to help prevent common diseases, and detect health problems early. Some pet insurance plans have an option to add a wellness package or plan for an additional monthly fee. This additional wellness coverage is designed to help you plan and pay for preventive care services (like vaccines and parasite screening tests) that vets recommend to help keep pets healthy year-round. 

Tip: In addition to Pumpkin insurance plans, Pumpkin offers a wellness package called Preventive Essentials. While not insurance, it’s an optional benefit you can add to your insurance plan if you want refunds for select wellness services. 

When is the best time to get pet insurance?

The best time to get pet insurance is right now! The longer you wait to get pet insurance, the greater the chance that pre-existing conditions may pile up and your pet won’t be able to have coverage for them. You can sign up for most pet insurance plans when your puppy or kitten is as young as 8 weeks old. It’s a great idea to enroll while your pet is young so they can have coverage for accidents and illnesses that may pop up over time.

Even if your pet is older, it still pays to get pet insurance as soon as you can so your pet has coverage if they get sick or hurt in the future. As pets age, they are more prone to certain health conditions, and pet insurance can help you get them the care they need to get better.

Is pet insurance worth it?

Yes, paws down! While no one wants to think about their pet getting sick or hurt one day, there’s a strong chance that a surprise accident or illness will occur at some point during your dog or cat’s life. Pet insurance can give you priceless peace of mind knowing you have help protecting your pet’s health when it matters most.

Not sure which is the best pet insurance plan for you? We created a no-frills comparison page to help you make the choice that’s right for you and your pet.


*Horch, AJ, “Most Americans own a pet, but not the insurance 1 in 3 faithful companions will need.” cnbc.com, last updated June 2019.


Pumpkin Pet Insurance policies do not cover pre-existing conditions. Waiting periods, annual deductible, co-insurance, benefit limits and exclusions may apply. For full terms, visit pumpkin.care/insurancepolicy. Products, discounts, and rates may vary and are subject to change. Pumpkin Insurance Services Inc. (Pumpkin) (NPN#19084749) is a licensed insurance agency, not an insurer. Insurance is underwritten by United States Fire Insurance Company (NAIC #21113. Morristown, NJ), a Crum & Forster Company and produced by Pumpkin. Pumpkin receives compensation based on the premiums for the insurance policies it sells. For more details visit pumpkin.care/underwriting-information and pumpkin.care/insurance-licenses.

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