Pet insurance still an unknown industry
A coughing companion beside her, Laura Lykins stared at a $6,000 medical bill, a steep estimation for an operation to remove a tumor in her friend’s thymus gland, the doctor asking the Santa Monican what her next steps will be.
“Of course I’ll pay this,” Lykins said, simply, without hesitation.
In the back of her mind she wondered whether the companion’s insurance policy would cover such an expensive undertaking, submitting her bill, which with the exception of the deductible, was paid in full.
Two years later, the companion — a cheerful shepherd/chow mix by the name of Latte — has a clean bill of health, the 14-year-old dog just one of many pets in Santa Monica covered by Veterinary Pet Insurance.
487,“Am I glad I did? Yes,” Lykins said about the insurance policy. “(The policy) has now paid me back.”
Still a relatively unknown concept, the pet health insurance industry has been experiencing growth in the past couple of years, pet owners signing on to policies with veterinary costs rising.
An estimated 3 percent of pets in the country are covered for medical costs, though companies like VPI are reporting rapid growth in the past few years.
Policies seem to be particularly popular in California where nearly 95,000 pet owners have policies with VPI, approximately 29,000 of which enrolled in 2007. In Santa Monica, considered a pet-friendly community with dog parks and specialty stores, approximately 850 pet owners have registered for VPI policies.
In fact so-called niche insurance products, which includes coverage for everything from pet health to weddings, has grown in popularity the past couple of years, according to the Insurance Information Institute.
“We see more companies introducing niche insurance products,” Insurance Information Institute spokeswoman Jeanne Salvatore said. “They are popular because they address specific needs.”
Policyholders say that pet insurance is similar to regular health insurance for humans, paying premiums that gradually increase as the animal gets older and are susceptible to more health problems. But unlike human health insurance, pet policies aren’t restricted to a network of doctors.
“Those who don’t know pet insurance don’t know enough to make a purchasing decision — what does it cover and how does it work,” Brian Iannessa, spokesman for VPI, said. “Some think it’s restricted to a network of veterinarians, but it doesn’t work that way.”
The average plan for a dog with VPI averages about $25 to $30 a month, cats averaging less with around $20 to $25 a month. The company also insures birds and exotic pets, such as hamsters, frogs, mice and potbelly pigs.
Policyholders say that while they have paid a significant amount of money into the pet insurance pot, the coverage has come in handy during crisis situations, averting costly medical bills.
Santa Monica resident Anne Geismann purchased a policy on her American shorthair cat about nine years ago, a recommendation by her former veterinarian in San Francisco.
There was a two-to-three year period when the 18-year-old cat required numerous visits to the vet, problems related to a bowel condition.
“It was costing a lot of money and I was able to get a majority of it reimbursed because of the pet insurance,” Geismann said. “That alone made it worthwhile.”
The co-owner of pet supply store the Healthy Spot, which opened on Wilshire Boulevard last weekend, Andrew Kim suspected that the pet insurance industry will grow to include health maintenance organizations (HMO) and preferred provider organizations (PPO), mimicking human health insurance.
“There is an interesting dynamic going on in the pet industry where the traditional local veterinarians are being bought out by the corporate industries like VCA, which makes pet insurance easier to use,” Kim, the owner of two adopted dogs, said. “Now you can go to a Kaiser or Blue Cross for dogs or cats.”
Neither of Kim’s dogs are insured, though he plans to find coverage for his boxer, which he rescued from a South Los Angeles shelter three weeks ago. His other dog, a shih tzu terrier, was adopted from its previous owner, Kim feeling the dog is less at risk.
“Boxers have a certain medical predisposition,” Kim said. “I feel pet insurance would be good.”
Pet insurance goes beyond medical coverage, some companies now folding the furry creatures into car insurance.
Progressive announced in September that it would include pets into its collision coverage at no additional costs, paying up to $500 if a client’s dog or cat was hurt or killed during an accident.
“We know how much our customers love their dogs and cats — many of us have pets too and we feel the same way,” Leah Knapp, spokeswoman for Progressive said. “So we’ve reworked our insurance policy to cover not only the people in the car accident, but also the dogs and cats.”
Some companies have begun offering life insurance policies for pets.
EnsureApet offers two forms of life insurance policies — one of which is folded into health insurance policies and will pay up to $500, the other a standalone policy that will cover up to $20,000.
The coverage is popular for service pets and competitive show dogs.
Nearly 14 years after Lykins first purchased a health insurance policy, Latte is healthy, despite the fact she recently went in for a check-up after coughing.
“If you love your pet and don’t want to be in the position of writing a check or putting your pet to sleep, (then) you should have insurance,” Lykins said.
Jump hedline: Pet insurance still a relatively unknown industry
Suggested pullquote: “If you love your pet and don’t want to be in the position of writing a check or putting your pet to sleep, (then) you should have insurance.”
Originally published in the Santa Monica Daily Press print edition on June 6, 2008. Read the original PDF.