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Is Cheap Pet Insurance a Good Idea?

If you are like most people you will probably begin your search for pet insurance by looking for the cheapest policy. And why not, this plan seems to work fine for other types of insurance: auto, life, homeowners, etc.

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However, simply looking at price alone doesn't usually end up working out too well when buying pet insurance. This is because pet insurance is not a commodity item like these other types of insurance policies. For better or worse, pet insurance is a complicated product where coverage can vary significantly depending on which company and plan you enroll with.

Compared to other types of insurance

Life insurance (at least term life insurance) is pretty simple. In exchange for monthly payments, the insurance company pays a specified amount to your beneficiary upon your death. There are no deductibles, exclusions or annual limits to worry about. The big issue is deciding how much life insurance you need. Once you have that decided, selecting a cheap policy usually works fine.

Auto insurance is a bit more complicated than life insurance, but not much. You are primarily buying protection in case your driving causes damage to another's person or property. There are some options you can buy: collision coverage, uninsured motorist, etc., but these are just extras to the main liabilty policy. The main issues for buying auto insurance are determining how much liability coverage you need and how high a deductible you want. Once these decisions are made, people then shop around for the lowest rates.

Pet insurance is much different than life or auto insurance. First off, the amount of coverage you get varies depending on your company and plan. Some companies pay 80% of your vet bill, some pay 90% and some don't even base the reimbursement on the amount of the bill (they have a set amount they pay for each procedure regardless of what your vet actually charges.) Imagine if each auto insurance company paid a different amount for the same accident: e.g., State Farm paid for 90% of the damage, Progressive paid for 80%, and Geico paid up to $2000 for a fender bender, regardless of the actual bill. This would certainly make buying auto insurance more complicated.

Another difference is that pet insurance plans have limitations on payouts: some companies have limits on how much they will pay per incident, some limit how much they will payout per year, and some limit how much they will payout over the lifetime of your pet. While auto and life insurance have payout limits, they usually are simpler to understand.

Bottom Line

As a general rule, cheaper pet insurance provides less coverage. This works fine until its time to actually file a claim.

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