Insuring your pet’s health only sometimes worth the cost

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Vicki Acevedo and her dog, Winni, who she has pet insurance at her Chicago home, Thursday, April 28, 2011. | John H. White~Sun-Times

Updated: June 18, 2011 12:18AM

Vicki Acevedo was stunned by a $400 veterinarian’s bill when she became a first-time pet owner nearly four years ago. She adopted her cockapoo, Winni, as a two-month-old puppy and quickly learned that the dog suffered from dry skin, a bacterial infection and other maladies.

Acevedo, a 25-year-old nanny, was still in college and was afraid she couldn’t afford to pay. Her mom had pet insurance, and advised her to do the same. Acevedo pays $34 a month for Winni’s coverage. The only additional expense was $20 that Acevedo paid for an “extra” — to have Winni’s teeth cleaned.

“I know that I can always go to the vet and not have to hesitate,” Acevedo said. “Winni is my world. I am obsessive about her. It’s the best decision I’ve made.”

Acevdeo is among a growing number of pet owners who lavish care on their dogs and cats while hunkering down in a tough economy, experts say. They’re expected to spend $50 billion nationwide this year — double that of a decade ago.

Pet owners comprise nearly 73 million households, or 62 percent of the nation’s total. They will spend this year $43 million collectively for dog toys, $21 million for cat toys; $70 million for dog treats, $41 million for cat treats; $73 million for dog grooming and $34 million for cat grooming, according to the American Pet Products Association’s pet owners’ survey.

Indeed, Martha Stewart has introduced a spring line of doggy raincoats at PetSmart. The fashions include a windbreaker, a raincoat and a belted trench coat in tan cotton poplin, each on sale for $22.99. Pet owners spent $300 million on cat and dog clothing and accessories in 2010, according to Packaged Facts, a New Orleans-based market research firm.

While pet owners save for the latest rainy-day styles, they should also set aside money for special pet medical care and carefully read the fine print when considering increasingly popular pet health-insurance policies, consumer experts say. Most pet-insurance policies start at $10 a month in premiums, can range up to $100 a month for older pets and usually reimburse pet owners after they file claims. Pet-insurance market revenues reached $348 million in 2010, up 15 percent from 2009, according to Packaged Facts.

More businesses are offering pet insurance as a voluntary benefit, including Kohl’s Corp., Boeing Co., Hewlett-Packard Co. and McDonald’s Corp., with as many as 3 percent of the nation’s 78 million dogs and 1 percent of the 93 million cats now covered, according to the American Pet Products Association.

Loran Hickton, managing partner of OurPetNetwork, said the national debate about providing mandatory health insurance for humans sparked an interest in pet insurance.

“The humanization of pets has become so profound,” Hickton said. “It is a passionate market, and the growth is great. I believe it’s still in the venture phase.”

Consumer Reports found that pet insurance isn’t worth the cost for a healthy pet, but could pay off when a pet develops a costly illness or chronic condition or when a puppy or kitten requires expensive care. But pet owners must watch closely for exclusions, unclear contract language, costly add-ons and maximum limits on treatment for illnesses or on reimbursements, said Tobie Stanger, a Consumer Reports senior editor who designed the pet-insurance evaluation and wrote the report in the September 2010 issue of Consumer Reports Money Adviser newsletter. The report reviewed policies from four of an estimated 12 pet-insurance providers in the United States.

“There are limitations, just as with human health insurance, on what these policies will pay,” Stanger said. “We liked policies that paid a percentage rather than those that referred to a long list of payments for certain conditions.”

Normal pet care, such as checkups and vaccinations, should be part of pet owners’ everyday budgets, Stanger said.

“That’s just part of good money management,” she said.

Routine vet care averages $248 a year for dogs and $219 for cats.

Veterinarians often offer their own payment plans for extraordinary medical care. Lombard Veterinary Hospital, for example, offers financing through CareCredit, which lets pet owners repay a loan with no-interest monthly payments for up to 12 months if they make their payments on time.

“Often, we find that this option helps people avoid making the awkward decision of euthanasia (putting the animal down) based on economics, which is always sad,” said hospital office manager Barb Wolf.

Hickton urges pet owners to obtain the insurance because they risk paying thousands of dollars in unexpected medical bills.

“Within the first year of pet ownership, it’s not inconceivable that you’ll get hit with several thousand dollars” in expenses, he said.