Is there a better alternative to pet insurance?

If your home is like 72.9 million others in the US, it is home to at least one pet. According to the 2011-2012 APPA National Pet Owners Survey, 62 percent of U.S. households own at least one pet. It’s not hard to imagine why. Pets, whether furry, hoofed or winged, bring so much into our lives. But in addition to unconditional love and unconditional devotion, they can also incur significant vet bills. In fact, the APPA (American Pet Products Association) estimates that pet owners in the US will spend $14.1 billion on veterinary care in 2011.

Some pet owners choose pet insurance as a method of reducing the cost of routine and emergency vet visits. However, Consumer Reports recently published an overview of several pet insurance policies. The review was not favorable. Their basic conclusion: “Pet insurance is rarely worth the price…Only in rare cases, when a pet needs very expensive care, would the coverage have more than paid for itself.”

Here are a few reasons why pet insurance may not be the best option for saving on your pet’s health care costs.

1. Lack of coverage

Most pet insurance companies promise to cover 70 to 90 percent of your pet’s veterinary costs. However, these companies have adopted much of the fine print used by the big human health insurers: cumbersome claim processing, deductibles, per-visit reimbursement limits, and per-incident limits. They may also deny coverage for common conditions, including those considered “breed inherent” and “pre-existing” conditions. As a result, their insurance rarely covers more than 50 percent of a pet’s annual medical costs. And since they charge $400-$1100 for a policy, the insurance typically costs the average pet owner a lot more than it saves.

2. Poor return on investment

In the aforementioned Consumer Reports review, they analyzed the lifetime vet bills of Roxy, a 10-year-old beagle in Dobbs Ferry, NY. For nine different pet insurance policies, the costs were added together and calculated how much would be paid out in reimbursements. During Roxy’s 10 years, none of the policies Consumer Reports evaluated would have paid out more than the cost of the plan. Even if treatments for several hypothetical serious conditions were added, the average policy would have saved Roxy’s family just $65 over her lifetime.

Consumer Reports concludes, “We believe most pet owners would be better off not purchasing pet insurance.”

So what should pet owners do to help cover rising vet costs? Here are a few alternatives to help:

1. Financial Aid

There are a number of financial aid programs funded by grants and private donations. While they all have different guidelines and requirements, your local shelter is a good place to start. Many shelters have updated listings and information about funding opportunities.

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2. Veterinary Discount Plans

Veterinary discount plans offer discounts on services at participating veterinarians, immediately reducing your spending on routine and emergency care. In Consumer Reports’ Roxy’s hypothetical case, the largest veterinary rebate plan showed Roxy’s family saved nearly $2,500.

3. Start a pet savings plan

Open a savings account with a high interest rate that you can use as an emergency fund. If you set aside just $25 a month for 4-5 years, the compounded amount will cover almost every procedure.

Be creative! Combine a pet savings plan with a vet discount plan and a financial aid plan. That’s something to crow (meow, bark, or chirp) about!