What Is a Pet Insurance Deductible?

By Sandra C. Mitchell, DVM, DABVP on May 9, 2022

So, you’ve taken the plunge and decided that you want to cover your newly adopted dog or cat with pet insurance. But, after you start researching and comparing plans, you find that you need to make some decisions as to what type and level of “deductible” you want.

You may be familiar with deductibles in human health insurance plans, and the same terminology is used for pet insurance plans.

Here’s how pet insurance deductibles work, plus tips for picking the right kind and level for you and your pet.

What Is a Pet Insurance Deductible?

In its most basic form, a deductible is the amount you will have to pay to your veterinarian before your insurance policy kicks in and starts making payments for claims. Typical deductibles range from $0 to $1000, but the average are $100, $250, and $500.

For example, if your plan has a $200 deductible, you will have to pay the first $200 out of pocket before the insurance company will start paying you back for vet bills.

Deductibles are typically applied annually. This means if your pet needs care on January 1 that is $200 or more (if you have a $200 deductible), the insurance company will pick up any covered costs (less your reimbursement percentages) for the remainder of the year.

However, whether your deductible is applied annually or not depends on the type of deductible you choose.

Deductibles vs. Reimbursement Percentage

It’s important to understand the difference between the deductible and the reimbursement percentage. Both refer to money that you pay out of pocket. First, you pay your set deductible amount. Then the reimbursement percentage kicks in after the deductible has already been met.

For example, if you have a 90% reimbursement percentage, that means the company will pay 90% of the vet bill after the deductible is met, and you will pay 10%. So, let’s say you have a policy with a $200 deductible and a 90% reimbursement rate, and you got a vet bill for $1,000. You would owe $200 for the deductible, so that brings the bill to $800. You will owe 10% of this, which is $80, and the company will reimburse you for $720.

Types of Pet Insurance Deductibles

There are three basic types of deductibles:

Annual Deductibles

This is the most common type of pet insurance deductible. These reset every year and apply to any covered condition in the policy. If the annual deductible is $200, you will be responsible for the first $200 in vet bills, and the insurance policy will kick in after that.

Let’s say your dog gets into the trash after a New Year’s party and spends a few days in the hospital, and you have a $200 deductible. Under this plan, you will likely have spent your deductible within the first hour or so at the emergency clinic, and the plan will pick up any covered costs (less your reimbursement percentages) for the remainder of the hospital stay and for the year.

For most pet parents, the annual deductibles are the most straightforward options. This way, the first time you make a claim in a policy year, you know you will have the deductible to pay first, and then you don’t have to worry about it again. For healthy pets, puppies and kittens, those looking for “catastrophic coverage” for their pets, this is probably the way to go.

Annual Per-Condition/Incident Deductibles

This type of deductible is applied per incident and resets each year. You will need to pay the deductible each time your pet has a different type of issue.

For example, in one year, you might have to pay a $200 deductible the first time your dog develops an ear infection, another $200 deductible the first time they get into the trash and get an upset stomach, and another $200 deductible if they tangle with a porcupine.

If you have a high deductible, it is possible the insurance will not even kick in until your pet is being treated for their third or fourth ear infection within one policy year.

Lifetime Per-Condition Deductibles

This type of deductible is designed to cover chronic, lifelong conditions and will apply year after year, as long as the insurance policy remains in force.

Lifetime deductibles are a good option if you are concerned that your pet may develop a chronic, lifelong condition like diabetes, hypo- or hyperthyroidism, or kidney disease. Older pets and those of a breed more likely to develop chronic conditions may benefit from this type of plan.

At the time of diagnosis, you will have to pay the full deductible plus your percentage of the reimbursement plan, but after that, you won’t have to worry about the deductible again for that condition, no matter how years your pet is in treatment.

Finally, some plans will lower the deductible every year you go without filing a claim, essentially rewarding you for not using the policy.

Should You Choose a Higher or Lower Pet Insurance Deductible?

In general, the higher the deductible on your plan, the lower your monthly premiums. So if you choose a $1,000 deductible, your monthly premium will likely be much lower than if you choose a $200 deductible.

Choosing the amount of your deductible comes down to what you can afford and balancing lower monthly payments against the possibility of higher out-of-pocket expenses for accidents and illness. This may be one of the biggest factors in determining the cost of your pet insurance policy, so it is something to consider carefully when choosing your plan. You should also consider your pet’s age and overall health.

For many pet parents with younger or healthy pets, a high-deductible plan with a lower monthly payment makes the most sense. This keeps the risk of a high bill relatively low, because puppies and kittens are rarely diagnosed with serious chronic disease, and you will have lower monthly payments.

However, if you have an accident-prone puppy or one that always eats strange things, you might consider a low deductible for those emergency visits. A lower deductible plan with higher monthly premiums may also make sense for older animals and those that are more likely to develop an illness or injury.

In the end, however, the choice of deductible comes down to your comfort level with risk and if you can manage a higher deductible if something happens.

Is Every Claim Applied to My Pet Insurance Deductible?

This is one of the most important parts of choosing an insurance plan for your pet. When you’re shopping for pet insurance, you need to understand what that plan covers and what it doesn’t, and then understand which things will actually be applied to the deductible and which won’t. Many plans will not count the following costs toward the deductible:

Vaccines
Wellness visits
Routine care
Some sick visits (if you have emergency-only coverage)

Deductibles are one of the most critical factors in determining the cost of the premiums for your pet’s insurance, second only to the type of plan you choose (e.g., comprehensive, accident-only, accident/illness, wellness plan, and so on).

Read through the fine print for the policy you are considering be sure you understand how much the deductible is and how it is counted (annually, per-incident annually, per-incident for a lifetime).

Featured Image: iStock.com/cyano66