Pet Insurance Renewal: Why Premiums Rise and When to Switch Providers

Most pet insurance policies renew automatically each year, and the premium usually goes up as your pet ages and as veterinary costs and insurer rates change. Switching providers can save money for a healthy pet, but it is risky for a pet with any diagnosed condition, because a new insurer treats every condition that appeared before the new policy as pre-existing and starts new waiting periods. The rule of thumb is simple: shop around freely while your pet is healthy, but think hard before cancelling a policy that is covering an ongoing condition.

Terms vary by insurer and by state, so read your renewal notice and policy. Examples are illustrative.

How renewal works

A pet policy generally runs for a policy year. At the end, it renews if the premium is paid and the insurer has not non-renewed it under the policy terms. At renewal, several things may change:

• The premium, based on the pet's new age, regional vet cost trends and the insurer's current rate filings.
• The deductible and limit, which reset annually under many policies, though per-condition or lifetime limits may continue.
• The policy terms, if the insurer changes the form, subject to state rules and notice requirements.

Insurers must file rates with regulators in many states, and rate increases can apply to a whole class of policyholders. If you receive a notice, read it for the new premium, the effective date and any changes to benefits.

Why premiums rise

Ask your insurer which factors applied to your increase. Some insurers say claims do not affect your individual rate, while others describe rating differently, so check your documents.

What to review in a renewal notice

1. The new premium and how much it changed from last year.
2. The effective date and payment due date.
3. Changes to benefits or exclusions.
4. Your deductible and limit for the new year, and how much of any per-condition limit you have used.
5. Deadlines for requesting changes.

When switching makes sense

• Your pet is young and healthy, with no diagnosed conditions.
• A competitor offers the same or better terms for a meaningfully lower price, at identical deductible, reimbursement rate and limit.
• Your needs have changed, such as wanting higher limits or broader coverage and your current insurer cannot provide it.
• Your insurer's service is poor and you can document problems, and the pet has no excluded conditions.

When switching backfires

• Your pet has a chronic or recurring condition. The new insurer will generally exclude it, so you would be paying for a policy that does not cover your biggest cost.
• A condition appeared recently. A new policy's waiting period may leave you uncovered for the next illness or orthopedic issue.
• Your pet is a senior. A new policy costs more at the older age, and some insurers limit enrollment.
• You would lose a benefit such as a long-standing arrangement for a curable condition that has been reconsidered.

A practical approach for a pet with an existing condition is to keep the current policy, even at a higher price, and reduce the cost by adjusting the deductible, reimbursement rate or limit, if the insurer allows it.

Worked example (illustrative)

Your healthy five-year-old dog's premium rises from $55 to $68 per month at renewal, from $660 to $816 per year, an increase of $156. A competitor quotes $58 a month ($696 a year) with the same terms. Switching saves $120 a year. Because your dog has no diagnosed conditions, the switch looks sensible, provided you verify that waiting periods and exclusions at the new insurer are comparable and that the new policy's waiting period risk is acceptable. Now suppose your dog was diagnosed with allergies last year. A new insurer would exclude allergies, and if allergy treatment costs $900 a year, 80% reimbursement under your current policy covers about $720 of it (before the deductible), so switching to save $120 loses more than it gains. Test other scenarios with the quote comparison tool.

A safe way to switch

1. Get quotes while your current policy is still active.
2. Compare identical settings and read the new policy's pre-existing and waiting period definitions.
3. Ask whether any waiting period can be waived for a vet exam.
4. Do not cancel the old policy until the new one is active and you have confirmed the start date.
5. Check the old policy's cancellation terms and any refund of unused premium.
6. Keep records from both policies, since they will matter for future claims.

Options other than switching

• Adjust the deductible, reimbursement rate or limit to reduce premium.
• Ask about payment options such as annual payment.
• Review add-ons and drop those you no longer need.
• Ask about discounts for multiple pets or memberships.

See how to lower your premium.

When to talk to a professional

For a pet with ongoing health issues, a licensed insurance agent can help you decide whether to keep or switch. If you believe a rate change was applied improperly, your state department of insurance can answer questions about what is allowed.

Frequently asked questions

Can the insurer cancel my policy because my pet has claims?

Policies set their own terms and states regulate what is allowed. Read the nonrenewal and cancellation provisions, and ask your state department of insurance if you are unsure.

Will switching reset my deductible?

Yes, a new policy starts with a new deductible and a new limit.

Is there a grace period for late payment?

Many policies have one, but terms vary. Check your policy and pay on time.

Do I get a refund if I cancel mid-year?

Often a refund of unused premium is available, sometimes with conditions. Check your terms.

Sources and further reading

• NAIC — information on rate regulation and your state department of insurance.
• NAPHIA — industry information on policy renewal practices.
• FTC — consumer protection resources for subscription-style products.