As veterinary care becomes more advanced (and more expensive) pet insurance is emerging as a serious consideration for many pet parents. According to industry data, average premiums, adoption rates, and veterinary cost inflation have all climbed.¹

We’re covering what pet insurance covers, what it doesn’t, when it makes financial and emotional sense, what questions to ask, and how to decide if it’s the right fit for you and your pet.

Pet industry trends and why insurance matters

In 2024, the average monthly premium for a dog under an accident + illness policy was approximately US $62.44; for a cat, about US $32.21.²
Despite growth, the U.S. adoption rate of pet insurance remains relatively low. Recent estimates place it under 4% of all pets insured, though year-over-year growth appears strong.³
Veterinary costs (surgery, diagnostics, treatment) have risen significantly in recent years , which is partly driven by advanced procedures and inflation in veterinary services.⁴
In short: as care becomes more expensive, the notion of “self-insurance” (i.e., saving for vet bills) becomes riskier, especially for more complex treatments.

What this means for you: If you’re a pet parent today, your financial exposure for an unexpected illness or injury is greater than it was a few years ago. The decision to purchase pet insurance isn’t just about premiums; it’s about risk, budget, and your comfort with uncertainty.

What pet insurance typically covers (and doesn’t)

Covered (depending on plan):

Accidents (ingestion of foreign objects, fractures, trauma)
Illnesses (infections, chronic disease onset, cancer)
Diagnostics / imaging / surgery in many cases
Some plans may include wellness add-ons (vaccinations, dental cleanings)

Excluded or limited:

Pre-existing conditions (conditions that existed before policy start) are almost universally excluded.
Routine care (unless you purchase wellness riders) such as spay/neuter, vaccinations, annual exams is not often not covered by default.
Some breed-specific or age-specific exclusions may apply.
Maximum annual limits, deductibles, and reimbursement percentages vary significantly across policies.

Key takeaway: Pet insurance is not “free care” or “everything covered.” It is best viewed as a tool to help manage large unpredictable veterinary expenses. How well it works depends heavily on policy terms.

When pet insurance makes the most sense

Here are instances when buying pet insurance may be especially advisable:

You have a young and healthy pet: Starting early can lock in lower premiums and ensure that coverage begins before costly conditions develop.
Your budget cannot absorb a large vet bill (thousands of dollars) without serious financial strain.
You feel more comfortable paying a steady premium to hedge risk rather than facing the full shock of a major treatment cost.
Your pet’s breed or type has known risks for expensive conditions (large-breed dogs with joint issues, certain breeds predisposed to cancer or hereditary disease).
You want peace of mind: the comfort of knowing that if something major happens, you won’t face the decision of “Can I afford this?” under pressure.

When it may less likely be worth it

Conversely, you may decide pet insurance is less attractive if:

Your pet is older and already has health conditions: Premiums may be high and many conditions may be excluded.
You have sufficient savings or budget to absorb major vet costs, and you are comfortable with the risk.
Your pet is low risk (e.g., indoor cat with minimal exposure to trauma) and expected lifetime costs are modest.
You do not understand the policy terms (deductible, reimbursement, coverage limits). Poor policy choice can lead to disappointment.

How to evaluate and choose a policy

When comparing plans, focus on the following core criteria:

Deductible: How much you must pay before reimbursement starts.
Reimbursement rate: What percentage of eligible expenses the insurer pays after deductible (commonly 70-90%).
Annual/lifetime limits: Are there caps on how much the insurer will pay in a year or over the pet’s lifetime?
Coverage exclusions: Pre-existing conditions, age or breed exclusions, waiting periods.
Claim process & speed: Do you pay first then submit, or is direct billing available?
Premium increases: Young pets have lower rates; rate hikes as pet ages are common. Recent data highlight premium increases over time.³
Fit with your budget & risk-tolerance: Calculate monthly premium + expected out-of-pocket vs. your alternative (savings + risk).
Wellness or routine care add-ons: You may choose optional coverage for preventive care, often at additional premium.
Provider reputation & veterinary network: Coverage acceptance at your preferred veterinary clinic or hospital.

Alternative strategy: self-insure and save

If you opt out of insurance, you should treat it as a deliberate decision to self-fund potential costs:

Estimate what a serious veterinary treatment may cost for your type/breed of pet in your area.
Set up a dedicated savings/higher interest account and contribute monthly (equal to or greater than what a premium would be).
Review annually how savings compare to what a typical policy may have offered.
Be aware: self-insurance requires discipline and the willingness to absorb the full cost if something major happens. Most experts caution that rising veterinary costs make this riskier than before.¹
Keep in mind that savings are available for any use, but paying an unexpected large bill may deplete your reserve quickly.

Recommendation and actionable steps

For many pet owners, especially those with young, otherwise healthy pets or moderate-to-high financial risk, pet insurance is worth seriously considering in 2025. But it’s not a one-size-fits-all answer—the right fit depends on your budget, risk tolerance, pet’s profile, and the specific policy terms.

Assess your pet’s current health status and risk profile (age, breed, indoor/outdoor, known conditions).
Gather data on typical vet treatment costs in your region for accidents and major illnesses.
Obtain multiple quotes from reputable pet insurers and compare terms (deductible, reimbursement, limits, exclusions).
Compare cost vs. savings strategy: What would you pay monthly for insurance vs. how much you would need to save for major vet expenses?
Choose a starting point. Many advisors recommend purchasing insurance while the pet is young and healthy to lock in coverage before exclusions apply.
Review annually: As your pet ages or if their health status changes, revisit whether the policy still makes sense or if you should adjust coverage.

As veterinary medicine advances and costs continue to climb, pet insurance has moved from a niche offering to a more mainstream consideration for pet parents. While it won’t make sense for everyone, when chosen with care it provides a meaningful way to manage financial risk and make decisions based on your pet’s health (rather than a budget constraint).

¹ Nerd Wallet

² PetMD

³ AAHA

⁴ Pawlicy