Understand co-pays, deductibles and caps.
Co-pays and deductibles are the amounts the policy requires you pay out-of-pocket for each claim. For example — keeping in mind that each insurance company has its own definitions for these terms — you submit a claim for a $500 ER visit that we’ll assume is covered. You have a per-incident deductible of $250. Your insurance covers 80 percent, so your co-pay is 20 percent. The insurance company will make the following calculation: (Claim x insurer’s copay)– deductible = insurance payment. So, altogether, you’ll pay $400 rather than $500 for that visit: ($500 x 80%) - $250 = $150; $250 + 150 = $400. Then, to complicate things, policies have caps. According to Adam Karp, an attorney specializing in animal law who agreed to analyze three sample pet insurance policies for me, those purchasing pet insurance “must be aware of the multiple-benefit caps, as an animal may reach one cap before another and lose out on further payouts. Generally, there are three caps in play at any one time: lifetime, period and per incident.”
The lifetime cap is the maximum amount the insurer will pay for the life of the insured pet. “Once reached, you may as well scrap the policy,” says Karp.
The period cap is the limit the policy will pay for that animal within a specified time frame, such as a year. Karp warns, however, that “because insurers can decide not to renew the policy for any reason before the end of the policy term, this makes the lifetime cap illusory”; after hitting one or perhaps two period caps, the insurance company may simply decline to renew that pet’s policy.
The per-incident cap limits how much the policy will pay for each “incident.” When reviewing policy terms, pay close attention to how this term is defined. As Karp notes, insurers tend to pool or stack conditions into one incident, which limits their exposure. Make sure your vet’s billing statements are very clear regarding what the various tests and procedures are for when you submit claims.
Know the policy’s exclusions.
The list of conditions and treatments not covered by individual policies is specific to each policy and each company, and too varied to consider in this article. Again, another reason to read policies carefully, with your pet’s particular needs in mind. Be aware that some policies have breed-specific exclusions, and according to Karp’s analysis, few, if any, cover dysplasia and ligament-tear repairs. In some cases, you must purchase additional coverage for cancer and other conditions.
Following are some of the terms included in policy exclusions that you should understand thoroughly before you purchase.
Congenital condition: A discoverable condition that the pet was born with. These occur in every breed, often from inbreeding, or can be caused by mutation. Examples include limb deformity, cleft palate and deafness.
Hereditary condition: An inherited condition that may or may not be obvious at birth. Indeed, in some cases, it may not manifest itself until the pet is elderly. Common examples include hip or elbow dysplasia, certain eye conditions, and OCD (osteochondritis dissecans), an abnormality in bone development often seen in large dogs.
Developmental condition: A condition resulting from a failure to develop normally in some way early in life. These are usually structural — for example, a kinked tail, cleft palate or a heart anomaly — caused by trauma, malpositioning, infectious agents (virus, bacteria, parasite) or reaction to drugs or toxins while developing in the womb.
(Note that some conditions fall into two categories. For example, cleft palate can be congenital or developmental. Deafness can be considered a hereditary congenital condition.)
According to Karp, in all policies, unless an additional rider is purchased, “congenital conditions are deemed preexisting and not covered. Some policies bar hereditary and developmental conditions as well, unless additional coverage is purchased.” Karp notes that a policy he recently reviewed was one of the few to define a “chronic condition” to mean “not curable.”