Get App
KEY POINTS
- A deductible (also called an excess) is the fixed amount you pay toward eligible vet expenses before your insurer contributes.
- You can choose the deductible amount when buying the policy.
- Depending on your policy, a deductible may apply annually or per condition/incident.
What is a deductible for pet insurance?
A pet insurance deductible, or excess, is the fixed amount you agree to pay toward eligible veterinary expenses before your insurer reimburses the remaining costs, up to the policy’s annual limit. You can choose the deductible amount when you purchase the policy, and it typically applies either per year or per condition, depending on your insurer.
How do pet insurance deductibles work?
Pet insurance can give you peace of mind, knowing that unexpected vet bills are taken care of (meaning the only surprises from your pet are the happy kind!). However, it’s important to understand that pet insurance doesn’t usually cover 100% of your vet expenses. How much you’ll end up paying depends on the deductible you choose and the policy’s reimbursement rate.
Deductibles can be structured in different ways. Some are annual, meaning you pay the set amount once per policy year, while others are per incident or per condition, requiring you to pay a deductible each time you make a claim.
For example, say you’ve chosen a $200 annual deductible. If your pet needs surgery that costs $1,000, you’ll pay the first $200 yourself. Your insurer would then cover the remaining $800, based on your reimbursement rate. If your policy reimburses 80%, you’d receive $640 from your insurer and your total out-of-pocket cost would be $360.
Depending on your insurer and vet clinic, you may either need to pay the full bill upfront and lodge a claim, or the vet may submit the claim on your behalf. In that case, you’d just pay the gap—the portion not covered by your policy.
Types of pet insurance deductibles
Pet insurance policies typically offer two types of deductibles: annual deductibles, and per-incident or per-condition deductibles.
Annual deductible
With an annual deductible, you only need to pay the deductible amount once per policy year. After that, no further deductible is applied to additional claims until your policy renews.
This type of deductible can help reduce your out-of-pocket costs if your pet needs regular veterinary care. However, how much you save will still depend on the amount of the deductible, the cost of treatments, and your policy’s annual limits.
Per-incident or per-condition deductible
If you choose a per-incident or per-condition deductible, you’ll pay the deductible amount each time you claim for a new condition or issue.
For example, if your pet is treated for a skin allergy that costs $600, and your deductible is $200, you’ll pay the first $200 and your insurer will reimburse the rest (based on your policy terms). If your pet later visits the vet for an ear infection, you’ll need to pay the $200 deductible again for that separate condition.
No-deductible
Some pet insurance policies offer a ‘no excess’ option, meaning you don’t have to pay any deductible when you make a claim. However, these policies generally come with higher premiums, as the insurer takes on more risk by covering the full eligible amount without an upfront contribution from you.
Irrespective of the deductible type, most pet insurance policies come with annual benefit limits. This means the total amount you can claim in a year is capped, and your payout could be limited once that cap is reached.
How to choose a pet insurance deductible
Selecting the appropriate deductible for your pet insurance policy is a personal decision based on your financial situation and your pet’s healthcare needs. In general, selecting a lower deductible can mean less out-of-pocket expense when you claim—but you’re likely to pay higher premiums. Conversely, a higher deductible can result in more upfront costs at claim time, but lower premiums overall.
Is a higher or lower deductible better?
It’s not possible to say whether a higher or lower deductible is better, as it depends on your financial situation and individual needs. A higher deductible can lead to lower premiums, which may make pet insurance more affordable in the long run, especially if your pet rarely needs vet care.
A lower deductible means less out-of-pocket costs during an expensive or unexpected treatment, offering peace of mind. But your premiums are likely to be higher for a lower deductible. For a healthy pet that rarely needs treatment, you may end up paying more in premiums than you save on claims.
In general, factors like your financial situation, your pet’s age and overall health, and your preparedness for financial risk can help you decide on the size of your deductible. You could also check average vet costs for your pet’s breed to understand what kind of expenses you may need to plan for.
Deductible vs Benefit percentage: How do they differ?
Both the deductible and benefit percentage affect your out-of-pocket costs for eligible veterinary treatment when you take out pet insurance. However, they work in different ways.
The deductible is a fixed amount you pay out of your own pocket before your pet insurance starts covering any costs. This could be applied annually or per condition, depending on your policy.
The benefit percentage, also known as the reimbursement rate, refers to the portion of the remaining vet bill (after the deductible) that your insurer will pay. You can often choose a reimbursement level, usually ranging from 70% up to 100%. The higher the reimbursement percentage, the higher your premium is likely to be.
In addition to comparing deductibles and benefit percentages, it’s also important to consider the annual limit on your policy. This is the maximum amount your insurer will pay in a year. There may also be sub-limits for specific treatments or conditions, which can further cap your claims.
Reading the Product Disclosure Statement (PDS) carefully can help you understand how much you may actually be reimbursed, and what you’ll need to pay yourself.
