What You Need To Know About Pet Insurance 

For many Americans, pets are more than companions, they’re cherished family members. In fact, 66% of households – 86.9 million homes – owned a pet in 2023.¹ Americans spend more on their pets than the citizens of any other country. It’s estimated that U.S. households spend over $147 billion annually on pet care, a number that has more than doubled in the past decade.² With veterinary costs on the rise, many pet owners are exploring pet insurance to help offset expensive medical bills. 

The growth of pet insurance 

Pet insurance is becoming increasingly popular among pet owners. In 2023, over 5.6 million dogs and cats in the U.S. were covered by insurance – a 17% rise compared to 2022.³ Pet insurance primarily covers dogs and cats, but specialized plans exist for birds, reptiles, and small mammals. Coverage typically falls into three categories: 

• Accident-only: Covers emergencies like broken bones or injuries. 

• Accident and illness: Includes conditions such as cancer, infections, and hereditary issues. 

• Wellness plans: Focuses on preventive care like vaccinations, dental cleanings, and flea treatments. 

Many policies allow you to combine coverage types, though most exclude preexisting conditions unless they’re curable. 

How much does pet insurance cost and is it worth it? 

The average annual cost for an accident and illness policy is about $676 for dogs and $383 for cats, according to the North American Pet Health Insurance Association.3 Insurers consider factors including the pet’s breed, age, and health history when setting premiums. Plans with higher deductibles or co-pays generally have lower monthly costs. 

You may want to consider pet insurance if: 

• Your pet is young and healthy. 

• You don’t have enough savings to cover a hefty vet bill. 

• Having insurance coverage provides reassurance. 

Pet insurance may not be worth it if: 

• Your pet is a senior or has health problems. 

• A big vet bill wouldn’t present a financial hardship. 

• You prefer to risk the possibility of an expensive diagnosis rather than pay for coverage you may never need. 

Pet insurance may not be necessary for everyone. If you’ve saved enough to cover potential emergency expenses, self-insurance could be a viable option. However, if a sudden vet bill would strain your finances, insurance might offer reassurance. 

Before selecting a plan, consult your veterinarian about common health concerns for your pet’s breed. Compare at least three insurance quotes, reviewing the fine print for exclusions and coverage limits. Websites like Pawlicy Advisors and Pet Insurance Review can help you weigh your options. 

If you’re not a Mercer Advisors client and want to learn more, let’s talk.   

¹ Bizouati-Kennedy, Yaёl. “Here’s How Much Americans Are Spending on Their Pets in 2023  How Do You Compare?” Yahoo! Finance, 3 November 2023.  

² Fuscaldo, Donna. “Should You Buy Pet Insurance?” Kiplinger, 6 December 2024. 

³ North American Pet Health Insurance Association, “State of the Industry Report.” NAPHIA, April 2024.