Pet insurance can be confusing to understand. Not only do you need to consider the types of health conditions you want to be covered for your dog, but you also need to consider the financial limits of the plan. Your decisions on these items will impact how much assistance you receive if your dog experiences a covered accident or illness.
Let’s go in-deep on one of those items, deductibles. We explain what pet insurance deductibles are and how they impact the cost of pet insurance.
We also compare the two types of deductibles, annual and incident, and tell you how to avoid having a pet insurance deductible altogether. By the end of this short article, you’ll better understand the type of deductible you want for your dog’s insurance policy.
What Is A Deductible In Pet Insurance?
According to the National Association of Insurance Commission (NAIC), a deductible is the amount of money an insured has agreed to pay for pet treatment before the insurer begins paying out on provided coverage.
Most pet insurance companies let you customize your plan’s reimbursement percentage, deductible, and payout amounts. Generally, the lower the deductible, the higher the monthly premium, and vice versa (the higher the deductible, the lower the monthly premium).
Health conditions excluded from your policy’s coverage will not be covered, and the cost will not be applied to your deductible. Pre-existing conditions not covered by your policy will also be omitted from your deductible.
Annual vs Incident Pet Insurance Deductibles
The type of deductible you choose will affect your monthly premium and reimbursement amounts, so be sure to choose wisely. According to NAIC, coverage with an annual deductible routinely costs 4% to 6% more than a per-incident deductible plan.
Annual deductibles require you to meet your deductible once during the policy period. After you’ve met your annual deductible, your claim reimbursements for the remainder of the policy year will only deduct your copay. (The policy year is determined when you enroll your dog, not based on the first of the year.) When you renew your policy, your annual deductible starts back at zero and will need to be met in full before your coverage will kick in.
Per-incident deductibles require you to meet your deductible for each new health condition your dog experiences. This can be costly if your dog is diagnosed with a multitude of accidents and illnesses. However, if your dog suffers from new chronic conditions (e.g., allergies, diabetes, arthritis, etc.), you only pay for that incident’s deductible once over the lifetime of your dog as long as there’s no lapse in pet insurance coverage.
Examples Of Annual & Incident Deductibles
So how does an annual deductible differ from a per-incident deductible throughout a policy year? Below is an example of a plan with a $250 deductible, 80% reimbursement, and a $10,000 annual payout limit looks with an annual deductible and then a per-incident deductible.
| Annual Example | Claim #1 | Claim #2 | Claim #3 | Claim #4 | TOTAL |
|---|---|---|---|---|---|
| Accident/Illness | Diabetes | Diarrhea | Skin Allergies | Diabetes | |
| Vet Bill | $1,627 | $390.60 | $262.95 | $1,265 | $3,545.55 |
| Annual Deductible | -$250 | $0 | $0 | $0 | -$250 |
| 20% Copay | -$325.40 | -$78.12 | -$52.59 | -$253 | -$709.11 |
| Reimbursement | $1,051.60 | $312.48 | $210.36 | $1,012 | $2,586.44 |
| Per-Incident Example | Claim #1 | Claim #2 | Claim #3 | Claim #4 | TOTAL |
|---|---|---|---|---|---|
| Accident/Illness | Diabetes | Diarrhea | Skin Allergies | Diabetes | |
| Vet Bill | $1,627 | $390.60 | $262.95 | $1,265 | $3,545.55 |
| Per-Incident Deductible | -$250 | -$250 | -$210.36 | $0 | -$710.36 |
| 20% Copay | -$325.40 | -$78.12 | -$52.59 | -$253 | -$709.11 |
| Reimbursement | $1,051.60 | $62.48 | $0 (ded. not met) | $1,012 | $2,126.08 |
As you can see, an annual deductible can result in less out-of-pocket money from vet bills. However, had all the per-incident deductible claims been related to diabetes, the total reimbursement would’ve been the same as the annual deductible claims example.
Additionally, in the following policy period, you won’t have to pay any per-incident deductible for claims related to diabetes or diarrhea and only $39.64 towards skin allergies (because you’ve already paid $210.36 toward the condition’s deductible), should the dog reencounter these conditions. With an annual deductible, the deductible will reset to $0, and you will have to pay the $250 once, no matter what the claims are.
This example only shows you reimbursement over a policy year but does not consider how much was paid for the same year’s premium. So if your premium for the annual deductible policy was 4-6% higher (stat above), then the total costs move closer.
Both deductible types have advantages, so it’s up to you to choose the one you prefer. If chronic conditions worry you, a per-incident deductible may be the right choice. But if you’re more concerned about certain non-chronic health conditions, then an annual deductible may be a better fit.
Our First Hand Experience With Pet Insurance Deductible
Someone on our team has had multiple dogs that ended up meeting the deductible. Both were Cavalier King Charles Spaniels. One rescue was diagnosed with cancer at age 6. Georgie, our 2.5-year-old, has had multiple issues within the span of a year.
Having experienced several unexpected health conditions within the first year of Georgie’s life, we ended up getting pet insurance and a grooming session to celebrate his big day! Sadly, he got kennel cough at the groomer and ended up at the emergency vet, where they ran a number of different diagnostic tests and treatments, including anti-cough medications. We ended up with a vet bill that was over the $1,000 annual pet insurance deductible, so we ended up only paying 10% of the bill over that amount.
Within the same calendar year, he was at his annual vet visit when his primary care physician detected a heart murmer (which is inevitable given his breed, but shocking since he’s so young). That required us to go see a Cardiology specialist who performed an echogram and additional heart scans. It was a no-brainer to see a specialist since we knew his heart murmur wasn’t a pre-existing condition and the cardio doctor’s expensive visit would be covered by pet insurance. We ended up getting reimbursed for 90% of the bill and are so thankful we signed him up when we did.
– Dog Mom at LoveYourDog.com
Can I Avoid Having A Pet Insurance Deductible?
Some pet insurance companies offer $0 deductibles. However, opting for no deductible will likely result in a higher monthly premium. Trupanion is one of the few companies to offer a $0 deductible option.
Final Thoughts
There’s more to consider besides the deductible when buying pet insurance. Keep in mind the most common health concerns you have for your dog’s breed(s) and what type of coverage you want. The annual premium cost is an important component. Still, it shouldn’t be the sole factor in your purchase decision, especially since lower premiums often equate to lesser coverage when you need it most. Check out our top pet insurance picks if you’re ready to learn more about the companies and get quotes for a pet insurance policy.
