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Polly Wanna Policy?

Pet health insurance carries a price but can head off financial shock at the vet.

Hollis Younger can't put a price on her love for the many dogs she's had. But she can tally up what she's saved on their medical bills by having pet health insurance.

"Over the past two decades, it's easily been in excess of $40,000," says the 65-year-old retired television broadcaster. Policies that Younger took out on her six Airedales have paid for spinal taps for encephalitis, surgery for a torn ligament, physical therapy and medication to restore sight.

"I am their caregiver, and I feel as responsible to them as I would for my children if I had them," says Younger. "My job is to take care of their health. And with pet insurance, I have been better able to do that."

Younger has done well through her policies, but that's not to say everyone would. Consumer Reports estimates that pet coverage can cost $2,000 to $6,000 over a pet's lifetime.

"There is a lot that pet insurance doesn't cover, and pet owners can pay a lot of money over time and never need it," says Tobie Stanger, a senior editor at Consumer Reports. "Our general view is that, for most pet owners, it's better to put the money they would spend on premiums into an emergency fund for veterinary costs."

Stanger practices what she preaches: Her own dog and two cats are not insured.

It wasn't so long ago that the idea of pet insurance triggered laughs from all but the most devoted Lassie lover. (The canine TV star, incidentally, was issued the first pet insurance policy in the United States, in 1982.) Today, about 1 million American pets, mostly dogs and cats, are insured.

That's a tiny fraction of the country's estimated 94 million cats and 78 million dogs, but the coverage numbers are rising steadily. "We expect to see double-digit growth this year," says Loran Hickton, executive director of the North American Pet Health Insurance Association, a trade group representing nine of the 12 pet-specific insurers operating in the United States.

Aetna recently became the first "people" insurer to enter this market, noting its "growth opportunities." And pet insurance is offered as a voluntary employee benefit by nearly 2,000 companies, including Google, Blockbuster and Colgate-Palmolive.

Veterinary costs are skyrocketing

Hickton's prediction for growth in the industry is not simply a hunch. The cost and sophistication of medical care for pets has been heading upward as quickly as care for humans, and pet owners are looking for affordable solutions.

"It used to be you would take your dog to the vet and he'd say, 'There is nothing we can do,' " says Younger. "Now there are MRI machines for dogs, laser therapy, all kinds of sophisticated tests and procedures, and you now hear, 'We can repair this.' But that technology costs money."

This year, pet owners will spend nearly $13 billion on veterinary care, the American Pet Products Association estimates. That's up from about $8 billion in 2004.

For many, the amount of the vet bill determines whether owners will follow through and commit to care for their pet, or just give up. According to an Associated poll released in June, 62 percent of pet owners say they are very likely to go ahead with vet care if the bill is $500; that drops to 42 percent when the cost hits $1,000. Only 35 percent say they would very likely seek care if the cost were $2,000, and 22 percent if the bill should reach $5,000.

One in five pet owners polled say they worry a lot about being unable to afford the vet. And 95 percent say they have no pet insurance.

For people who choose to insure their pets, monthly premiums range from $10 for no-frills, accident-only coverage to as much as $75 for policies that include such things as acupuncture and wellness checkups.

Most people end up with a policy that costs about $30 a month for a young to mid-life dog or cat and is primarily geared toward emergency care and common ailments. It often doesn't cover routine exams and treatment of heredity conditions that afflict certain breeds, such as hip dysplasia in German shepherds and retrievers. In such cases, riders can be purchased to cover those costs.

Some pet insurers won't insure dogs and cats older than 10 years. Other insurers may double the premiums when they reach that age. Because pet insurance is a form of property casualty insurance, coverage can be dropped for too many claims or simply not renewed at the insurer's discretion.

As with your own health insurance, a policy you purchase for your pet will often include strict limits on how much will be paid for particular procedures.

With most policies, says Hickton, pet owners have to pay veterinarians up front and be reimbursed, typically within two weeks.

To insure or not to insure

Dennis Drent, president and CEO of Veterinary Pet Insurance, the oldest and largest pet insurer in the United States, says three questions can help people decide whether insurance makes financial sense for them:

1. Are you able to pay your pet's vet bills yourself? Removing a cataract from a dog's eye, for instance, can cost more than $1,200.

2. What is your risk tolerance? "Do you want to roll the dice and hope your pet never has a $10,000 incident?" asks Drent.

3. What is your "stop-treatment" cost—the amount you are willing to spend before you choose to put down a suffering pet? For the typical pet owner, he says, it's $1,500.

Regan Blackwood, a veterinarian at the Clifton Centreville Animal Clinic just outside Washington, D.C., says "a couple of times a year" she sees clients who spend as much as $4,000 on a pet, usually because it requires emergency surgery.

Weighing insurance policies

Consumer advocates add some specific pointers if you are considering a policy for your pet:

  • Look beyond the monthly premium. Compare differences in copays, deductibles and caps, and how they are determined—by incident, annually or over the pet's lifetime?

The website of the North American Pet Health Insurance Association offers information from the industry. For independent sources, you can visit Pet Insurance Review, Your Pet Insurance Guide and DogTime.

  • Find out which company would be underwriting the policy you're considering and check its rating with A.M. Best. Look for ratings of B+ or better.

Sid Kirchheimer writes about health and consumer issues.