Let’s face it, we all love our pets as if they are family. We celebrate their birthdays with great enthusiasm, buy them their favourite toys (for the fifth time), and monitor their health like the overbearing parents that we are.

Managing your pet’s health can be supported with pet insurance coverage. However, buying pet insurance can be onerous and complex. Our friends at Money.com have broken down the factors that drive the cost of pet insurance below and provide helpful tips on how to save money.

What factors affect insurance premiums?

According to the North American Pet Health Association (NAPHIA), the average cost for dog insurance in 2019 was $48.78/month in the U.S. and $62.31/month in Canada, and $29.16/month in the U.S. and $32.17/month in Canada for cats. These are just averages, however, and prices can vary.

U.S. average pet insurance premiums 2019 (NAPHIA)

Canada average pet insurance premiums 2019 (NAPHIA)

Whether you own a dog or a cat, there are six key factors that affect how much you will pay for pet insurance:

1. The deductible

2. Annual limits

3. Reimbursement rates

4. Location

5. Pet breed

6. Animal age

The insurance deductible

The insurance deductible is the biggest factor that influences premiums. A deductible is the amount of money pet owners have to pay before insurance providers will disburse payments, and deductibles can vary between $200 up to $1,000. The higher the deductible, the lower the monthly insurance premium, and vice versa.

Annual limits on expenses

Most pet insurance policies also have a cap on the amount of coverage provided in any given year. For example, if you have a cap of $5,000 annually, and the vet bill(s) surpass that amount, you are responsible for covering the costs in excess of that amount until the following year (when the coverage resets). The higher the annual coverage limit, the higher the monthly insurance premium, and vice versa.

Reimbursement rates

The reimbursement rate is the percentage of a vet bill that insurance companies will cover. Insurers generally do not cover 100% of your expenses and commonly offer coverage in the 70%-90% range. Insurers do not cover costs upfront; instead, you first pay out-of-pocket and then are reimbursed after. This can take a few days via direct deposit or up to a couple weeks with a cheque by mail. Like with annual limits, the higher the reimbursement rate, the higher the monthly insurance premium, and vice versa.

Where you live

You may not have thought about it, but location plays a role in determining your monthly insurance costs. According to a 2016 claims data report by PetPlan, California pet owners pay an average of $1,500 a year in veterinary costs while in North Dakota they pay a little less than $800. Rates may also vary between urban areas with higher costs or rural ones with lower costs. 365 Pet Insurance created a helpful breakdown using data for five cities per U.S. state.

Your pet’s breed

Some pet breeds are prone to hereditary diseases and have a higher cost of care. For example, toy and miniature dog breeds such as Chihuahuas, Pekingese, Pomeranians, Yorkshire Terriers and Boston Terriers have a higher risk of Patellar Luxation, a common dog kneecap problem.

Your pet’s size can also impact the cost of care, and, in effect, insurance premiums. The amount of medication needed to treat a Great Dane vs. a Chihuahua varies widely, unsurprisingly.

Finally, in the battle of dogs versus cats, cats come out the clear winner here with lower overall insurance costs.

Your pet’s age

Generally speaking, the older your pet, the higher your insurance premium will be. Some insurance companies have limited options as your pet gets older and may even reject covering your pet if it passes a certain age. Data from various insurance companies suggest prices begin to climb steadily after pets turn three.

Accounting for both dogs and cats, Money.com found that premiums climb about 25% between the ages of three and five and about 50% between five and eight-years-old.

The scope of coverage

Generally, pet insurance covers two main buckets of health expenses: accidents and illness. You can purchase accident coverage alone, but most policies cover both accidents and illness. Accidents include such things as motor vehicle accidents, ligament tears and poisoning, while illnesses include cancer, infections and digestive problems.

There are also more comprehensive policies or add-ons that include preventative care or routine “wellness”. Most pet insurance plans do not cover routine and preventative care such as vaccinations, tick and flea treatments and general exams. Unsurprisingly, the more comprehensive the plan you choose, the higher your premium will be.

According to NAPHIA, you can save almost $400 per year insuring a dog and more than $200 insuring a cat with an accident-only plan rather than a comprehensive one that includes illness coverage.

The term “comprehensive coverage” should also be examined carefully. One company’s definition of comprehensive can be very different from another’s. Read the fine print.

Choosing an insurance company

Finally, pet insurance prices vary by company, all other factors being equal. You should shop around and get quotes from different companies (most of which can be secured online via insurer websites) or consult an online pet insurance comparison guide.

Ultimately, you will need to balance the coverage with your budget and assess if some coverage is better than none at all.