The oft-repeated aphorism that pets are “part of the family” is more than just talk for many families. Pet owners are willing to seek out animal-friendly vacation destinations instead of kenneling their fur babies. They’ll provide special diets to match their personal food ethos. As their pets age, they’ll even shell out for the same kinds of treatments and surgeries common among two-legged senior citizens.

It’s no surprise the marketplace has stepped in to facilitate the increased attention pets receive. The online megastore Chewy.com boasts more than 2,000 brands for sale, ships fresh perishable pet food, and blogs about the 10 best dog-friendly winter vacation spots — Aspen, Colorado, was No. 1. Meanwhile, the U.S. Census Bureau estimates total revenue for veterinary services was nearly $51 billion in 2020.

Anyone with a pet that’s eaten something they shouldn’t have is familiar with the residual pain that a sudden vet bill can cause in humans. CNBC reported that one out of three pets needs to make an emergency vet visit each year; the average cost of unexpected veterinary care for dogs and cats is $800 to $1,500; and 56 percent of Americans can’t cover a surprise $1,000 expense with their savings.

Not surprisingly, many pet parents are opting for insurance to cover some of those sudden expenses. The North American Pet Health Insurance Association reports that approximately 3.45 million pets were insured in North America at the end of 2020. It says pet health insurance has been increasing at an average annual growth rate of 23.4 percent over the past five years. More than 80 percent of policies are taken out on dogs.

“We’ve seen a large shift in our values toward pets in the last couple of decades,” says Kristen Lynch, NAPHIA executive director. “This is about them being your companion and you taking care of their health.”

While “pet” insurance was first introduced in Sweden in 1890, early policies were structured as property and casualty insurance and geared toward horses and livestock. Coverage eventually made its way to dogs, then cats, but didn’t become commercially available in North America until the 1980s.

“We hit our 40^th anniversary in April,” says Heidi Sirota, chief pet officer with Nationwide Mutual Insurance Co. Nationwide was the underwriter for a company called Veterinary Pet Insurance, which launched in 1982. “They insured Lassie. That was their first customer.” VPI was acquired by Nationwide in 2008 and transitioned to the Nationwide brand in 2015. Nationwide recently went over the 1 million pet mark in pet health insurance policies.

Health insurance policies for household pets are still structured with a property mindset, although experts have varying opinions when it comes to explaining how it works. Online resource Canine Journal describes pet insurance as “the pet equivalent to human health insurance. Having your dog or cat protected by a good health insurance plan can put your mind at ease by knowing that unexpected medical bills will be covered.”

However, Embrace Pet Insurance Agency says on its website, “While many people try to compare pet insurance to human health insurance, it’s actually more like car insurance — it’s there to prevent financial upset in the event of something unexpected. Just like your car insurance doesn’t cover routine maintenance or any accidents you got into before purchasing the policy, pet insurance plans typically don’t cover routine care costs and preexisting conditions.”

Kristen prefers the term “mixed breed” in describing pet health insurance. It shares traits with auto insurance due to its property and casualty background, but unlike auto or homeowners insurance, it’s completely voluntary. Also, some insurance providers do offer pet wellness plans and rewards programs that can be added to pet insurance policies. These plans provide reimbursement for routine items such as deworming, microchipping, physicals, and vaccinations.

There’s also a non-insurance option called a veterinary discount plan. These plans include a network of vets that might offer 25 percent off for traditional services such as dental cleanings, vaccinations, or X-rays. Plan members pay a monthly fee in exchange for the discount. Some employers have added veterinary discount plans to the array of benefits they offer their workers. Heidi says that Nationwide has also teamed up with about half of the Fortune 500 companies to tailor pet health insurance policies to their benefits programs.

Like other types of insurance, a variety of pet plans are available. NAPHIA estimates an accident-only plan carries an annual premium of $218.13 for dogs and $133.61 for cats. An accident and illness plan, which would also cover things such as cancer, costs an estimated $594.15 for dogs and $341.81 for cats. Kristen says that a generation ago, pet accidents were the biggest concern.

“As our relationship with pets has evolved and as veterinary medicine has advanced, we now know we can treat illnesses that are a lot like what humans get,” she says. “Most pet owners buy an accident and illness plan.”

Whether or not a policyholder adds preventive care coverage falls somewhat along the lines of whether they consider themselves a pet owner or a pet parent, Kristen says. “A wellness plan is a way of funding the things you know you’re already going to do. A lot of plans will build in a preventive aspect. You can add the bells and whistles as you go.”

Typically, pet insurance plans operate on a reimbursement model. You pay the vet bill and then file a claim with your insurer. Reimbursements come with all the familiar insurance caveats such as deductibles, co-pays, annual maximums, and waiting periods. Some insurers offer multi-pet discounts.

“Most coverage is for all licensed veterinarians. With human health care, some plans require you go to a certain doctor,” Kristen says. Many insurers have a minimum age of around eight weeks for enrollment and some have a maximum age, often 14 years old. “The earlier you’re insured, just like with humans, the likelihood of illness is a lot lower.”

While preexisting conditions may not be covered, some insurers will cover testing for genetic conditions such as hip dysplasia. Prescription medications may also be covered. Cosmetic procedures and cremation/burial are usually not covered.

Approximately two dozen different insurers are in the market. Many offer coverage through familiar brands such as American Kennel Club, ASPCA, and GEICO, which either write policies or refer customers to partner insurers. The overwhelming majority of policies are written for dogs and cats. Nationwide is the only North American insurer to extend coverage to birds, rabbits, or exotic animals.

“The last I checked, about 15 percent of U.S. households had an avian or exotic pet,” Heidi says. Pets eligible for Nationwide’s coverage range from chinchillas to sugar gliders. “We’ll ensure any household pet — the list is endless.”

Not all pets have the same background or lifestyle. Does a pound puppy get different coverage compared to a purebred that works the dog show circuit or a hunting dog or a dog that’s owned by a breeder?

“Some are working dogs. You would have to indicate that in the coverage. For the show dog, it’s the same as a regular dog. It’s just a pure breed,” Kristen says. What about service animals, like Seeing Eye dogs? “If anything, they’re often very well cared for, so it doesn’t increase the cost of insuring the pet. There are coverage programs that allow the coverage to be more affordable.”

The owner of a household pet that also generates income through breeding or performance might take out coverage for the business side of the pet’s life on top of the health insurance policy. Horses are not considered household pets.

“Horses are definitely property insurance,” Kristen says. “Typically, people who breed horses to race or to show use them as working animals, not companion animals, and that is definitely a whole different kind of coverage because it’s a whole different kind of risk.”

Insurance costs come down to three key factors. The breed of the pet, and whether or not it’s purebred, can determine the likelihood of future health conditions. It matters where the pet lives because veterinary charges, and insurance rules, vary from state to state. The age of the pet is also considered.

The information site 365 Pet Insurance researched insurance rates in South Carolina. It found that for a 3-year-old, mixed-breed dog of 21 to 70 pounds, the average monthly rate in the Columbia metropolitan area was $28.63. Insurance for the same dog was more expensive on the coast — $36.92 in Charleston and Myrtle Beach.

Supplementing that information by getting quotes from five different insurers at petinsurancequotes.com reveals that for a 3-year-old, medium-sized, mixed-breed male dog, the rates for a $250 deductible, 80 percent reimbursement plan in the 29205 ZIP code range from $33.31 to $54.47. For a 3-year-old, female American shorthair cat in the 29063 ZIP code, the rates range from $12.72 to $26.33 for a $250/80 percent plan.

Is pet insurance worth it? A cost-benefit analysis would take into account how much risk a pet owner is willing to accept, and how much money a pet owner is willing to spend on their pet’s health. Emergency surgery for a cat or dog can cost $1,500 to $5,000. Cancer treatments can run toward the high end of that same range. One could take those potential costs and compare them to an insurer’s annual premiums, co-pays, and deductibles. Most insurers have “get a quote” functions on their websites.

Of course, pet ownership is an emotional bond, not a mathematical calculation. Some would spare no expense to care for a furry family member, while that is not an economic reality for others. The pet’s age and expected lifespan is another factor.

A marketing study conducted by Illinois State University for Figo Pet Insurance found that when it came to the perceived value of purchasing pet insurance, “Consumers think their pets will be healthier and have a better quality of life, while as pet owners they will be better able to predict their finances and have less conflict within their families when deciding on whether to care for a sick animal.” Consumers were cognizant of the peace of mind offered by pet insurance, but were also price-sensitive.

“Like anything, you get what you pay for,” Kristen says. “It’s not really what I can afford for my pet in the long run, it’s what I can afford today if a bill hits me. Emergencies never happen when you want them to.”

Kristen recommends that those without — or with — pet insurance visit NAPHIA.org for information about coverages and instructions on filing a claim. “The one thing that all insurance has in common is that nobody reads their insurance policy,” she says. “Insurers have sample policies on their websites that you can look at. Take some time to read it. Don’t wait until your pet’s sick or injured and then try to figure it out.”