Faced with the increasing price of medical care, more pet owners are now pulling out insurance cards when visiting the veterinary's office.
Pet health insurance has been available in the United States for nearly 30 years, but expanded veterinary treatments and changing attitudes toward the family pet has bolstered the number of policies over the past decade, even during the economic downturn.
"The humanization of pets is driving it, as people are more likely to treat pets as four-legged members of their family," said Grant Biniasz, a spokesperson for VPI Pet Insurance based in Brea, Calif., the largest pet insurance provider in the nation.
The growth has drawn new insurance providers into the market in recent years, including St. Louis-based Nestle Purina PetCare. The company started its PurinaCare insurance subsidiary in 2008 and now covers all 50 states.
Pet insurance has grown at a glacial pace in the United States, but it has gained speed in the past decade. A recent American Pet Products Association estimate shows 3 percent of the nation's 78 million dogs and 1 percent of its 93 million cats are now covered. That's up from 1 percent of dogs and virtually no cats covered in 1998.
Insurance has gained wider acceptance in Europe, including the United Kingdom, where 20 percent of pets have policies, and Sweden, where it's estimated at least 30 percent of pets are covered, according to New York-based research firm Packaged Facts.
A growing market
VPI Pet Insurance issued the first pet insurance policy in the United States in 1982. VPI has dominated the industry, but it lost market share in recent years. VPI had 52 percent market share in 2009, according to Packaged Facts, down from 68 percent in 2005.
The number of pet insurance providers in the United States doubled over the last decade from six to a dozen in 2010.
Among the newcomers is Nestle Purina. After studying the pet insurance market for three years, the company felt it could be competitive by drawing on its experience and research in pet health.
"Other Purina subsidiaries around the world have expressed interest in pet insurance, but our current focus is limited to the North American market," said Dr. David Goodnight, a veterinarian and president of PurinaCare, which is based in San Antonio.
Its rivals include pet retailer PetCo and the financial services division of grocery chain Kroger. There's speculation that Wal-Mart will introduce a pet insurance product at its Canadian stores this year.
Consider the costs
Monthly pet insurance premiums start at about $10, but they can exceed $100 for some older dogs. Pre-existing conditions are typically excluded, and pet owners are reimbursed after submitting claims.
Providers' policies vary. Some of the higher-end preventive plans cover heartworm and flea medications in addition to vaccines and annual exams. Some of the lower-cost plans just provide coverage for accidents and illnesses.
Consumer Reports' Money Adviser newsletter did an analysis of four insurers — VPI, ASPCA Pet Health Insurance, 24PetWatch QuickCare and Trupanion — and concluded that for generally healthy animals, insurance isn't worth the cost. For most owners, having an emergency fund for unexpected pet bills is a better choice.