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November 20, 2012 at 6:00 AM

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Part 4: Shopping for pet insurance, the hunt ends

Pinky20days-5.jpgLidia at 20 days old. Photo by David Lipton

This is the final installment of our four-part series about shopping for pet insurance.

Shopping for pet insurance is much like shopping for a car, without the thrill of the drive or its intoxicating new-car smell. Once you lift the hood and stare at the parts, your brain spins. The messiness begins and you wonder what you've gotten yourself into.

I took a close look at the 11 insurers listed in attorney Adam Karp's post for policies for my two healthy, young dogs, Lidia and Hogan.

Some plans cover routine office visits, some only as add-ons to the policies at an extra cost. Some cover only accidents. Policies reek of exclusions. Some cover congenital and hereditary problems, some do not. Most will cover emergency surgery, but some won't cover the vet's exam that may lead to the emergency surgery.

Waiting periods -- before policy coverage will kick in for a given ailment -- are hidden like an annoying rattle in the front end of that new car.

The policy I want does not have to cover routine or wellness care, such as annual exams, vaccinations, dental cleanings or flea control. I should be able to pay for those basics myself. I'm more interested in covering the medical nightmares and the unexpected, because past experience has sadly and expensively proved that I am not immune.

But I have a few deal-breakers:

-- Broad coverage: The policy must cover all illnesses, accidents, cancers, catastrophic situations, chronic diseases, advanced testing, medications and hospital stays. This should include congenital and hereditary conditions, because some of these problems only become evident as the dog ages.

-- Big-ticket items must be covered. Take anterior cruciate ligament (knee) tears, for example. My two pups have healthy knees; the vet has checked. But Lidia and Hogan are young and daring. They run and roughhouse with a frightening zeal, and one wrong turn or leap could be disastrous.

-- No benefit schedule. The policy must pay a flat percentage of the bill, not an amount preset by the insurer. I've been stung by benefit schedules in the past that paid pennies on the dollar. Such schedules typically haven't kept pace with the speed at which veterinary care -- and its price tag -- are advancing.

I also want to avoid policies that specifically cover only "reasonable," "usual" or "customary" charges. Those vague words are like land mines in an insurance policy. They won't guarantee the actual charges will be fully covered.

-- The list of policy exclusions must be reasonable. No company covers pre-existing conditions, but it should cover things like cataract surgery, knee injuries, diabetes and other chronic conditions that can creep up as a dog ages.

-- I must be able to choose my vets and seek the care of specialists at my discretion. And the policy must also cover veterinary care in Canada, should the dogs become ill while visiting there with me.

These deal-breakers helped me weed out companies that didn't fit my needs, so I could concentrate on a narrower list of those that do.

hogan.JPGHogan, right, is 8 months old.

What did I find?

Pets Best won't cover congenital conditions or an ACL tear within the first year. Both are deal-breakers. It's off my list.

Veterinary Pet Insurance (VPI) pays according to a benefits schedule. A deal-breaker. It's off my list.

Pet Partners has a litany of conditions it won't cover -- congenital problems, diabetes, chronic renal failure, to name a few. All deal-breakers. It, too, is off my list.

Most of the premiums quoted were similar -- or at least in the same ballpark.

I did not run into any breed-specific exclusions for my dogs, but that doesn't mean a company won't take your breed into account when setting your premium.

For example, one company quoted a premium for a 7-month-old English bulldog -- a breed that has health risks that can drive up veterinary costs -- that was double the cost for Hogan at the same age.

Some per-incident reimbursement caps I deemed unrealistic. 24petwatch has a $3,000 per-condition limit and the ASPCA's is $3,500, both a pittance given how much surgeries, hospitalizations and cancer treatments can cost. Those are deal-breakers, and both companies are off my list.

PurinaCare won't cover veterinary care outside of the United States. That's a deal-breaker, so it's off the list.

Embrace has age limits that may eliminate some potential clients. It also only offers drug coverage as an add-on, a benefit for which I don't want to pay extra. That's a deal-breaker; it's off the list.

Exclusions and waiting periods were particularly maddening to track, and in many cases, exactly what would be covered and when could only be found in the policies' fine print.

Actually, I had to go into the fine print for just about everything.

There is much to like about Ballard-based Trupanion, one of two Pacific Northwest pet insurers.

The relatively young company will cover 90 percent of the actual vet bill for all accidents, illnesses and genetic and congenital conditions. It reimburses on medications, advanced testing and hospital stays. There is no cap -- lifetime, per-incident or otherwise. And there are no breed-specific exclusions for my dogs. It offers per-incident/condition deductibles levels from $0-$1,000. The combined monthly premium for my two dogs with a $100 deductible for each would be $70.67, with additional benefit packages available at an added cost.

The coverage sounds ideal, except for one big limitation buried in the policy. Animals that have not been spayed or neutered by their first birthday (or within 30 days of being adopted) must be insured as breeding animals, a category that has higher premium levels.

The coverage is not yet available in Washington state, a representative from Trupanion said, but the company will provide the coverage at no extra charge until the program is implemented in the state, at which time the premiums will increase, in my case, about $10 a month initially for each animal.

Although I am not a breeder, neither of my dogs has been spayed or neutered yet because they may be competing in dog shows, which requires the dogs be unaltered. Some owners don't want to be confined to that one-year limit or don't believe in neutering or spaying until the animal has fully matured because reproductive hormones play a role in a dog's bone development. It's a hot-button issue, especially among the owners of large-breed dogs.

If I tried to cover my dogs under Trupanion's policy without the breeding add-on, I would not be reimbursed if the dogs developed any reproductive organ or hormonal problems -- or were hit by a car or in a fight.

Given the medical limitations, this policy is not a good fit and is off my list.

lidiaadult.JPGLidia, right, is 16 months old.

My favorite vexation in the pet-insurance quest were the comparison charts most of the insurance websites used to tout how much better their policies are than their competitors'.

Most comparisons were masteries of spin, and some were not accurate.

Petplan says its policies cover all vet bills (save pre-existing conditions and knee injuries within the first six months the policy is in force.)

However, a competitor's website claims Petplan will pay only "reasonable costs," one of my automatic deal-breakers.

Looking a little closer, though, "reasonable costs" are defined in the tiny print of Petplan's policy as fees regularly charged by that specific clinic. So as long as the vet doesn't charge arbitrarily or out of the clinic's ordinary, the policy should cover the bill.

And don't believe everything you hear. Again, check the policy's fine print.

Three different Petplan sales representatives denied competitors' claims that the company will only reimburse a claim from vets who are members of the American Association of Veterinary Medicine (AVMA). Vets must only be licensed to practice in the state, they insisted.

However, that claim is only partially true. Its policy's fine print states the animal's PRIMARY vet must be licensed to practice in the state AND be a member of the AVMA.

It was enough to make my brain hurt.

Here's a look at the two finalists and why they made the cut:

Healthy Paws: This Bellevue-based company is new to the industry yet offers many elements I'm looking for. It will cover up to 70, 80 or 90 percent of the actual vet bill for all accidents, illnesses and genetic and congenital conditions. It covers medications, advanced testing and hospital stays. There is no cap -- lifetime, per-incident or otherwise. And there are no breed-specific exclusions for my dogs.

It offers three annual (not per incident) deductible levels, $100, $250 or $500.

It does not cover routine care and will not pay for vet exams or pre-existing conditions. It will not cover illnesses related to breeding, but it will cover such things as pyometra, a potentially life-threatening bacterial uterine infection in female dogs, or prostatitis in male dogs.

If the animal has injured one knee before it is insured, it will not reimburse for treatment if the other knee is injured after the animal is covered. It has a 12-month waiting period before it will cover treatment of hip dysplasia. Otherwise, the policy kicks in 15 days after signing up.

A.M. Best gives its underwriter -- Markel American Insurance, of Virginia -- an A-1 financial-strength rating and has determined it is stable. Markel has a relatively low loss ratio in the 2011 Washington state insurance commissioner's annual report, paying out $28 for every $100 in collected premiums. Compare this to Trupanion's underwriter, American Pet Insurance, which paid out $68 for every $100.

The downside: Healthy Paws is a fairly young company, having been in business since 2010, although underwriter Markel has been authorized in Washington since 1994, according to the Insurance Commissioner's Office.

Will it be able to keep its underwriter and stay in business over the long haul while keeping an optimal benefits package? That's my biggest concern.

If I were to set up $100 deductible (the lowest possible) on both dogs with 90 percent coverage (the highest possible), my premiums for the two would be $65.20 a month.
If I were to set up at $500 deductible (the highest possible) on both dogs with 70 percent coverage (the lowest possible), my premiums would drop to $44.16 a month.

Petplan : This company comes with a wealth of experience, being an offshoot of Petplan UK, the world's largest pet insurer, in business since 1976. It has been operating in the United States since 2003.

It covers illnesses, accidents, drugs, testing and vet exams as well as hereditary, congenital and chronic conditions, with 80, 90 and 100 percent deductibles offered. It will not cover routine care or pre-existing conditions.

It reimburses for a percentage of the actual vet bill per incident or condition, with three levels of care to choose from: bronze (pays $8,000 in vet fees a year), silver ($12,000) and gold ($20,000). Those limits are annual caps. There is no per-incident or lifetime limit.

This means if you select the bronze plan, for example, and you hit the $8,000 limit in July, your policy is out of gas for the rest of the year and, assuming you continue to pay your premiums, coverage won't kick in again until your annual renewal. However, its Gold Plan offers enough of a reimbursement to cover most worst-case scenarios.

Otherwise, the accident coverage kicks in 24 hours after signing up; the illness coverage begins 14 days later. There is a six-month waiting period for coverage of knee injuries, which can be waived. It will not cover pregnancy, but it will reimburse for reproductive-organ illnesses.

Its underwriter, AGCS Marine Insurance, has an A- financial-strength rating from A.M. Best, although its outlook is deemed "negative." The state insurance commissioner's 2011 annual report says it paid out $52 for every $100 in collected premiums.

The downside: The policy deductible is per incident/condition, not annual. And although Petplan allows an owner to choose a range of deductible, if the pet receives specialized treatment, or treatment in the emergency clinic for something not deemed life-threatening, the co-pay automatically goes to 20 percent (even if you signed-on for no deductible).

How many big-ticket ailments aren't treated by specialists? Every big incident I've dealt with has been.

If I were to set up $100 deductible on both dogs with 90 percent reimbursement under the gold plan, my premiums for the two would be $77.30 a month. If I were to set up $200 deductible (its highest option) with 80 percent reimbursement (its lowest option) under the gold plan, the premiums would drop to $49.62 a month.

What would these two companies' monthly premiums buy me?

I asked several local veterinary clinics for sample, redacted vet bills for three conditions that dog owners commonly face:

-- Gastric dilatation volvulus, also known as bloat, is a life-threatening condition that requires surgery. Cost: $4,291.90. With a $100 co-pay and reimbursement at 90 percent, Healthy Paws would pay $3,705.11 of the bill. (That's 90 percent, minus the cost of exams and deductible.) At the same co-pay and reimbursement levels, Petplan would pay $3,762.71.

-- Knee surgery to repair an animal's first ACL tear. The fee includes initial vet visits, an implanted plate and treatments. Cost: $6,097.74. With a $100 co-pay and reimbursement at 90 percent, Healthy Paws would pay $5,246.19 of the bill. (That's 90 percent, minus the cost of exams.) Petplan would pay $4,778.19, which is 80 percent reimbursement because the surgery was done by a specialist and was not life-threatening. (This is assuming the injury occurred after the six-month waiting period on ACL tears, or the waiting period was waived.)

--A cataract is removed from a 10-year-old dog's left eye and replaced with an intraocular lens. The fee does not include the exam, initial diagnostics or post-surgical medications, all of which could add hundreds to the bill. Cost: $2,256.25.
With a $100 co-pay and reimbursement at 90 percent, Healthy Paws would pay $1,930.67 of that bill. (That's 90 percent, minus the cost of exams.) At the same co-pay and 80 percent reimbursement (again, because the surgery is performed by a specialist and is not life-threatening), Petplan would pay $1,705.

My choice: I'm going with Healthy Paws.

Read our previous posts: The hunt begins for pet insurance, a vet weighs in, Q-and-A with animal-law attorney Adam Karp

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