Stepping back to survey the short, 30-year history of pet insurance tells us much about our relationship to animal companions. Veterinary Pet Insurance (VPI) correctly notes that it created the pet insurance market in 1982, selling its first policy for Lassie. That ten other companies now compete in the U.S. market against VPI evidences the existence of sufficient demand to sustain this vital paraindustry to veterinary medicine. At a time when human health insurance has caused tremendous, chronic upset among the uninsured and underinsured, leading Congress and now the U.S. Supreme Court to wrestle with varying plans to ensure medical care to the masses, it may seem a tad bit profligate to nitpick and head-scratch over nonhuman health insurance. That said, I see veterinary health insurance as an animal rights issue, since in the end it yields better quality of life (and avoidance of death due to economic convenience).
Chronic, Congenital, Developmental, Hereditary Condition, Disease, or Defect.
Policies typically define each word, and each has consequences. Generally speaking, a congenital condition is one extant and discoverable at birth, a hereditary condition is one genetically transmitted but may or may not be extant and discoverable at birth (in fact, it may not ever manifest till very late in life), and a developmental condition is one that results from faulty development of the body while aging that may not be genetically-triggered and could become extant and discoverable after birth during the formative stages of the animal. Universally, unless a rider is purchased, congenital conditions are deemed pre-existing and not covered. Some policies bar hereditary and developmental conditions as well, absent additional coverage. And VPI is one of the few to define "chronic" condition to mean not curable; thus, even if the condition went into remission for a year, where the initial onset precedes the effective date of the policy, it will be deemed an incurable and preexisting
The Meaning of "We"
You would guess that "we" means "you and me." But it doesn't. As used in the policies, "We" means the insurer. And when the policy requires that "we consent" or "we approve," it vests sole discretion in the insurer, meaning you have no say on that subject.
Limits and Nonrenewal
Astute insureds must be aware of multiple benefit caps, as an animal may reach one before another and lose out on further benefits. Generally, there are three caps in play at any one time -- lifetime, period, and incident. The lifetime cap is the maximum amount the insurer will pay for the life of the insured animal. Once reached, you may as well scrap the policy. The period cap is the most the insurer will pay for that animal in the one-year term; and because insurers can decide not to renew the policy for any reason within typically 30 to 60 days before end of the policy term, this makes the lifetime cap basically illusory. Then there is the per incident cap. And because many policies define "incident" so as to pool or stack, and therefore encompass, multiple conditions, the insurer can stop paying for those multiple conditions when the total amount claimed exceeds a single incident limit (instead of applying a per incident limit a la carte to each each discrete condition).
Occasionally insureds and insurers disagree about the interpretation and application of the policy, including the medical necessity of a procedure (i.e., challenging coverage of the procedure) and the usual and customary expense for same (i.e., challenging the benefit amount). For this reason, one must evaluate the dispute resolution limitations and remedies set forth in the contract. Almost all policies first require that you submit your animal to an "independent" veterinary examiner (IVE) or appraiser, selected and paid for by the insurer. If the examiner/appraiser disagrees with your primary vet/appraiser, an umpire may be recruited to break the tie, with the cost split between you and the insurer. Failure to cooperate with such a review process means you are barred from filing suit against the insurer, since the step-by-step review process is characterized as an exhaustion-of-remedies requirement.
In 1985, Congress passed the Consolidated Omnibus Budget Reconciliation Act to, among other goals, ensure that employees would not have to face new waiting periods and denied coverage for preexisting health conditions while between jobs. The rationale is that if you change insurance companies (because changing employers), the new insurer will not want to insure for conditions that, though they developed after the date of prior employment (and thus were not barred by the prior employer's health insurer as a preexisting condition), are preexisting from the perspective of the new employer's health insurer. COBRA provided stopgap coverage for up to 1.5 years in most cases. As you might expect, there is no similar COBRA protection for employees who change jobs (and thus, change pet insurance), a point worth considering should an insured obtain pet insurance through the employer.
The conditions not covered are too numerous to examine here, but insureds must pay close attention to breed-specific exclusions and almost universal noncoverage for dysplasia and ligament tear repairs. What I found redeeming from the standpoint of not contributing to a risk pool that pays out on cruel procedures is that all insurers whose policies I examined do not cover declaws, dewclaw removals, tail docking, and ear cropping. Healthy Paws will not cover dogs kept for commercial reasons, including "racing dogs." They also will not pay for injuries resulting from animal fighting. The policies also tend to universally bar any claims arising from intentional harm to an animal by the insured, the insured's family member, or resident of the insured's household.
Keeping pace with the changing landscape of animal care and publicized thanks to the TLC show I Cloned My Pet, is the cloning exclusion found in the Petplan policy.
Pets Best offers some bonus benefits such as mortality coverage for burial and cremation. PetPlan offers coverage for costs incurred to advertise and pay a reward for a lost dog or cat, and to cover boarding fees or certified pet sitter expenses if the insured is hospitalized and unable to care for the animal. PetPlan also offers behavioral therapy by a licensed veterinarian but not obedience training. And Trupanion offers similar additional benefits coverage for about $5 a month including third party property damage coverage up to $25,000. However, this $25,000 rider does not cover bodily injury (e.g., dog bites person), has a $500 or actual loss deductible, and serves as excess insurance to homeowners or renter's, and will not cover claims involving damage to property owned by you or a member of your family; whether the rider includes animal-on-animal injury is unclear as the term "property" is not defined.
AVMA v. HSVMA
PetPlan defines primary vet as a properly licensed veterinarian in the U.S. who is also a member of the AVMA. I challenge this membership requirement for the reason that vets do not need to join the AVMA to practice; further, the AVMA has taken very anti-animal positions (e.g., valuation limited to market, and no emotional distress damages for negligent harm; not taking firm position against declawing and debarking; not against mandatory spay/neuter; and other conservative, industry-protecting views concerning farmed animals). For this reason, many forward-thinking and humane-oriented veterinarians join the Humane Society Veterinary Medical Association ("HSVMA"), which I wholeheartedly endorse. If anything, members of the HSVMA better represent and live according to the ideals of good veterinary practice and ethics.
VPI will not cover diagnosis and treatment for "age-related changes" to eyes and ears. Healthy Paws defines "accident" as an unexpected and unintended event causing injury. My concern is that it appears not to cover intentional harm to your animal by a third party (e.g., neighbor shoots cat). Healthy Paws defines "medication" as only that which is FDA-approved, raising the concern that many veterinarians use medicines off-label (i.e., in a manner not expressly FDA-approved). Healthy Paws will not cover procedures outside the U.S. or while temporarily in Canada, so if you travel outside the U.S. or Canada, do not expect reimbursement.
Another concern is whether the duty to cooperate and share information with the insurer in disputing a claim may result in your statements being used against you in any later suit against your veterinarian, particularly where you allow the veterinarian to speak at length with the insurer. Absent an agreement by the insurer not to share your statements with the veterinarian, this may result in your waiving any anticipation-of-litigation privilege. In any event, you must exercise care in accurately and precisely communicating to your insured the details of a claim as those statements may prove self-defeating.
Consider each insurer's bedfellows and determine if their affiliates support or oppose your positions on important animal issues. For instance, the AKC markets Pethealth. Repeatedly in cases where animal guardians have sued those responsible for the wrongful deaths of their dogs and cats, asking for compensation properly calibrated to the intrinsic value and emotional distress suffered, the AKC has retained counsel to file amicus curiae ("friend of the court") briefs asking appellate courts throughout the nation to limit damages to fair market value and deny emotional distress damages (except in cases of intentional or malicious harm), in essence protecting those in the animal industries from ever paying more than the cost to just buy or adopt another dog or cat. The AKC also endorses irresponsible practices like breeding, debarking, tail docking, and animal research. See www.akc.org/pdfs/canine_legislation/GDLGB2.pdf.
Better Business Bureau Complaints
This nongovernmental organization rates businesses and offers dispute resolution services. It also evaluates each of the pet insurance companies. As of early January 2012, I found various BBB ratings, accreditation statuses, and complaint histories.
Financial Strength and Issuer Credit Ratings
Though not as critical a factor given that most policies will never pay more than $100,000, in addition to policy language one should examine the financial strength and issuer credit rating of the underwriter of the policy she or he intends to buy. As of January 2012, I found such ratings through A.M. Best. All are secure (FCR of B+ to A++) and investment grade (ICR of bbb to aaa). The financial strength rating ("FSR") estimates the ability of the insurer to meet its policy and contractual obligations; the issuer credit rating ("ICR") assesses whether the underwriter is investment-worthy. Only one underwriter, Trupanion's, was not reviewed by A.M.Best.
To those reading this article in Washington State, consider that Trupanion and Healthy Paws are headquartered in Seattle and Bellevue, respectively.
I applaud the advent of pet insurance for the reasons stated. As in any market, however, the best advice I can offer is caveat emptor. Below are links to each of the American pet insurance companies so you can conduct further independent review.
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