What Are Pet Insurance Deductibles & How Do They Work?

This content was reviewed by our licensed insurance agent, Michelle Schenker.

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What does it mean when a company says it offers an annual deductible vs an incident deductible, and why does it matter? How does a deductible impact the overall amount of money that you’re responsible for paying? Your pet insurance plan’s deductible directly affects the amount of money you’re accountable to pay. We explain everything you need to know about deductibles so you feel more confident when you choose your pet insurance policy.

White dog with face on table with financial documents and owners sitting

What Is A Deductible In Pet Insurance?

The deductible is the portion of the vet bill you’re responsible for paying before the provider will pay out or reimburse your claim. In most cases, the lower the deductible, the higher your monthly premium will be. The opposite is true as well; the higher the deductible, the lower your monthly premium is likely to be. 

Most companies let you customize your deductible to fit the premium into your budget. However, Nationwide is an exception here and has a set $250 deductible for all of its plans.

If your policy doesn’t state that a health condition is included in coverage, then you will be on the hook to pay this out-of-pocket expense and that money will not apply to your deductible either. This is why it’s crucial that you read your pet insurance policy entirely. Additionally, pre-existing conditions that are not covered by your policy don’t apply to your deductible.

There are two main types of deductibles, annual and incident, which we’ll discuss further.

How Does An Annual Deductible In Pet Insurance Work?

Pet insurance policies with annual deductibles state that you must meet your deductible once each policy period. After your deductible is met for the policy year (this is based on the date you enrolled – not a calendar year), your claim reimbursement amounts will only deduct the copay until your policy renews annually. When your policy renews, your annual deductible resets to zero.

Annual deductibles can be easier to budget for because you know you’ll only be required to meet the deductible once during your policy year. Policies that utilize annual deductibles are often less costly to the policyholder, making them a preferred choice for many versus per incident deductibles.

What Does An Annual Deductible Look Like In Action?

Here’s an example of how an annual deductible works. Let’s say this dog experiences three health conditions during the policy year that their pet insurance plan covers. The plan has a $100 annual deductible, 90% reimbursement, and $10,000 annual payout limit.

Claim #1Claim #2Claim #3TOTAL
Accident/IllnessGI IssuesAllergiesEar Infection
Vet Bill$550$529$180$1,259
Annual Deductible-$100$0$0-$100
10% Copay-$55-$52.90-$18-$125.90
Your Reimbursement$395$476.10$162$1,033.10

In total, the dog encountered $1,259 worth of unplanned vet bills during the policy period. But instead of paying all the bills alone, the pet parent only had to pay the annual deductible of $100 once and the total 10% copay of $125.90. At the end of this policy year, the pet parent had been reimbursed a total of $1,033.10.

How Does An Incident Deductible In Pet Insurance Work?

Pet insurance policies with per-incident deductibles require you to pay the deductible for each new condition your pet encounters. This means you could pay the deductible multiple times a year depending on how many unique accidents and illnesses your dog experiences.

The upside of a per-incident deductible is that once you pay the deductible for a condition, you never have to pay it again as long as you maintain coverage with the same provider. A chronic condition like skin allergies requires multiple treatments over the lifetime of a dog, and the owner would only pay for this condition’s deductible the first time and then never again, for the same diagnosis. However, this type of deductible can be more difficult to budget for because your dog could have bad luck and require a trip to the vet several times a year for non-chronic concerns.

Trupanion and Nationwide are the only pet insurance providers we review that have per-incident deductibles. However, once you’ve paid the deductible for a condition, it is covered over the pet’s lifetime as long as you have continuous coverage from the provider.

What Does An Incident Deductible Look Like In Action?

Here’s an example of how an incident deductible works. Let’s say this dog experiences three unplanned and new health conditions during the policy period that their pet insurance plan covers. The plan has a $100 per incident deductible, 90% reimbursement, and $10,000 annual payout.

Claim #1Claim #2Claim #3TOTAL
Accident/IllnessGI IssuesAllergiesEar Infection
Vet Bill$550$529$180$1,259
Incident Deductible-$100-$100-$100-$300
10% Copay-$55-$52.90-$18-$125.90
Your Reimbursement$395$376.10$62$833.10

In total, the dog encountered $1,259 worth of unplanned vet bills during the policy period. But instead of paying all the bills on their own, the pet parent paid the incident deductible of $100 three times (because they were all different conditions) and the 10% copay total of $125.90. At the end of this policy year, the pet parent had been reimbursed a total of $833.10. As you can see, this pet parent had to pay more out of pocket than the example in the annual deductible above.

However, if all three conditions had been ear infections in the same ear, they would only have paid for one deductible. So, as you can see, it really depends on whether your dog is more prone to chronic ailments or more unexpected, one-off concerns.

Is There A Way To Reduce The Deductible?

Some pet insurance companies offer diminishing deductibles, which means that each year your pet goes without a claim reimbursement, the company reduces your deductible the following year. Figo and Embrace are the only two companies that reduce your annual deductible by $50 for each year your dog doesn’t have a claim reimbursement. The deductible for both Figo and Embrace can drop all the way down to $0 for consecutive claim reimbursement-free years.

Is It Possible To Have No Deductible With A Pet Insurance Policy?

A few companies offer $0 deductible options, including ManyPets, Spokk, Trupanion, and TrustedPals. However, remember that choosing a pet insurance plan with no deductible will most likely increase your monthly premium.

Are You Ready To Buy Pet Insurance?

Person on computer checking pet insurance quotes (Caption: Save Money on Vet Bills, Button: Get Free Quotes)

You can read our companion article about the costs associated with pet insurance, including premiums, reimbursement, fees, and the average premium price. If you’re ready to select a pet insurance provider, we recommend our pet insurance reviews. It includes top-ranked, well-known companies with specific details about their coverage and exclusions, plan options, and other notable key features. You’ll also learn about our top companies for the best pet insurance this year.

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