Wilson was always \u201can expensive cat,\u201d Jenn Thoman said. \u201cHe was just one big pre-existing condition.\u201d<\/p>\n\n\n\n
Thoman, of the Philadelphia area, wound up going into debt for Wilson. Two of his health scares over the last few years left Thoman with around $14,000 in vet bills, which she paid with $3,500 from her savings and the rest with a pet wellness credit card. She still has $8,000 to pay off.<\/p>\n\n\n\n
She has since purchased pet insurance for Archie, the rescue dog she adopted in 2023, determined to avoid a repeat of her financial gauntlet with Wilson.<\/p>\n\n\n\n
\u201cI don\u2019t want to have to worry about it, and the insurance really makes it so that I don\u2019t,\u201d Thoman said.<\/p>\n\n\n\n
Most pet owners don\u2019t insure their animals. Of the nearly 90 million dogs and almost 74 million cats in the United States, both species\u2019 insured rates remain in the single digits<\/a>, the North American Pet Health Insurance Association (NAPHIA) estimates. But the market is expanding rapidly, with consumer spending on the policies having grown by at least 20% each year since 2020 to hit more than $4.7 billion last year, according to the trade group.<\/p>\n\n\n\n The growth of pet insurance coincides with a steep run-up in the costs of pet services \u2014 from grooming and kenneling to veterinary visits \u2014 relative to goods like food, leashes and toys. Prices for the latter are up 22% since 2019, while the former have surged 42%<\/a>, Bank of America Institute researchers noted in May.<\/p>\n\n\n\n The inflation gap points to lopsided demand as pet owners prioritize their animals\u2019 health, said Taylor Bowley, a Bank of America Institute economist.<\/p>\n\n\n\n \u201cMaybe you\u2019re not going to that premium, upper-line specialty pet store, and while you\u2019re at the grocery store, you\u2019re picking up a more \u2018value\u2019 brand,\u201d she said. Vet visits, on the other hand, feel like more of a necessity for many consumers, who simply pay whatever they\u2019re billed.<\/p>\n\n\n\n While vet costs are rising, the pace of price hikes for other types of pet services is hotter, leading Bowley and her colleagues to speculate that pet insurance is helping keep vet prices in check. Yet policyholders regularly run up against the limits of their coverage. As with many human health insurance plans, pet policies typically cover accidents and illness. But in a crucial difference, most pet plans don\u2019t cover pre-existing conditions, well visits or dental care.<\/p>\n\n\n\n That has kept many pet owners on the sidelines. There\u2019s no shortage of online debate over the relative worth of pet insurance, with consumers routinely trading notes on Reddit and elsewhere about rising premium costs<\/a>, unexpected cancellations<\/a> and other common shortcomings.<\/p>\n\n\n\n Thoman said she\u2019s happy with Archie\u2019s policy from Trupanion, which charges her about $50 in monthly premiums. She hasn\u2019t bought insurance for her 14-year-old cat, Swayze, however, since his existing medical conditions wouldn\u2019t be covered.<\/p>\n\n\n\n For Dallas-area dog owner Jeanine Galusha, pet insurance offers peace of mind when her three Belgian Malinois compete in dog sports, which can be \u201cpretty hard on their joints.\u201d<\/p>\n\n\n\n \u201cI know that if something goes sideways, if we tear an ACL or something happens, they can get fixed up and we can see specialists,\u201d she said.<\/p>\n\n\n\n Laura Bainbridge, senior vice president of corporate communications at Trupanion, said the industry has taken off since the pandemic, when pet adoptions surged<\/a>. As homebound consumers spent more time with their animals, many began to \u201cview their pets as part of their family,\u201d she said. \u201cThey want to be able to take care of them as they would any family member, and so they\u2019re willing to spend to ensure that their pet has a high access to care.\u201d<\/p>\n\n\n\n Pet insurance costs have increased, with popular \u201caccident and illness\u201d coverage premiums averaging about $62 per month for dogs (up 27% from 2019 to 2024) and $32 monthly for cats (up 10%), according to NAPHIA<\/a>. But since 2019, premiums have risen more slowly than prices in the broader pet services sector, the Bank of America analysts found. Indeed, industry experts continue to anticipate more pet owners will decide the policies are worth springing for in the years ahead.<\/p>\n\n\n\n \u201cI don\u2019t expect plateauing,\u201d said Yael Cohen, general manager of pet insurance at the insurance firm Lemonade. \u201cYou\u2019ll see more customers, and you\u2019ll see more competitors, and you\u2019ll see established competitors gaining more market share.\u201d<\/p>\n\n\n\n General insurance companies like Liberty Mutual, which began offering pet insurance<\/a> in 2017, and Lemonade, which launched its pet insurance<\/a> in 2020, have entered the sector, battling for market share with boutique, pet-focused firms like Healthy Paws and Trupanion, now America\u2019s largest pet insurer<\/a>.<\/p>\n\n\n\n The rising demand has also drawn private equity firms to invest in pet insurance carriers. The conglomerate JAB Holding Co., for one, owns more than 20 pet insurance providers<\/a>, including Pets Best, Spot and Pumpkin. (A spokesperson for JAB didn\u2019t respond to a request for comment.)<\/p>\n\n\n\n There\u2019s a risk that \u201cexcessive market power\u201d among a few pet insurance operators could limit options and raise prices for consumers, said Matt MacLachlan, a veterinary economist at Cornell University. But private equity\u2019s presence in the sector can also increase efficiency, benefiting policyholders, he said.<\/p>\n\n\n\n Whatever their downsides, many policies can help pet owners \u201cdisconnect their decision-making from the financial considerations\u201d of expensive vet care, MacLachlan said. As with other forms of coverage, he said, \u201cyou don\u2019t want to be in a situation where you really need that insurance and don\u2019t have it.\u201d<\/p>\n\n\n\n