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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). According to MarketResearch.com, less than 1% of American animal guardians have insurance (compared to 18% in Britain and 48% in some Scandinavian countries), but economists forecast the market expanding to $800 million by 2012 due to increased spending habits on veterinary services, strengthening of the human-animal bond, and policy awareness.
Overview. Buyers must carefully examine and understand the nomenclature of insurance coverage, specifically the terms deductible, coinsurance/copay, caps, and premiums. In a nutshell, you pay a premium to obtain a payout (or benefit) on claims made against the policy. The benefit paid to the insured first considers whether the policy excludes the claim and then, if it does not, performs a simple calculation of ((Claim x Insurer’s Copay) - Deductible) < Limit, where Claim = the amount of the bill you want reimbursed, Insurer’s Copay = the percentage of the claim paid by the Insurer before a deductible is applied, Deductible = the fixed amount you must pay before pet insurance pays benefits, and Limit = the per incident/per term/per life ceiling payable under the policy. Sometimes, insurers subtract the deductible from the claim before calculating the Copay. For instance, if I claim $1000 for an MRI, my deductible is $250, and my copay is 20%, then my insurer will pay (($1000 x 80%) - $250) = $550.
Additional Considerations. In my review of various policies, I came across other matters worth evaluating aside from the above equation.
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 condition and, therefore, not covered.
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. Pethealth claims to distinguish itself by offering unlimited lifetime coverage for accidents, but still caps lifetime illness coverage at $72,000 for dogs and $60,000 for cats. You must pay attention to the distinction in covered peril, as an incident that may serve as the basis of a claim may arise from an accident, illness, or injury.
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. This is because a frugal insurer may allow you to hit one period cap (and possibly two), but would likely never continue to insure an animal who hits the period caps multiple years in a row since the premiums paid for the rest of the animal’s life will almost certainly not exceed the total benefits paid to date. Lastly, 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 individual condition).
Lastly, be mindful of the occasional procedure, condition, and breed-specific exclusions or caps, particularly where the afflictions suffered by different breeds frequently arise from genetic predisposition. In this respect, exercise care in identifying the breed(s) of your animal, and be sure to correct your veterinarian if she charts an incorrect breed composition. Indeed, veterinarians are not customarily trained in and do not necessarily possess any special skills or an accuracy rate better than the average lay observer when relying on visual observation only. Indeed, in one study, when even trained animal control professionals and shelter workers were asked to view videos and photos to identify mixed breed dogs, the correctness of their identifications were typically worse than chance and frequently wrong. The closest the state of science can presently get to a “gold standard” in breed identification is DNA testing, although with Heinz 57-type mixes, DNA results may prove of little utility due to an unacceptable margin of error. If your insurer decides to impose an exclusion or benefit cap based on the animal’s breed, be mindful of the above. The time to ascertain your animal’s breed composition is before (not after) applying for insurance, since your own breed identification in the application will likely be used against you should you attempt to retreat from it after a claim is denied.
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