Insights on How Pet Insurance Helps Combat the Rising Costs of Pet Care

Pets bring joy, comfort, and measurable health benefits. According to a 2024 survey by Mental Health America and the Human Animal Bond Research Institute³, 79% of pet owners say their pet is a source of happiness, and 98% reported at least one health benefit from their pet —such as reduced loneliness or emotional support. A global HABRI-Zoetis study echoed these findings, with 98% of pet owners worldwide citing mental or physical health improvements from pet companionship². 

Yet, while the emotional value of pets is clear, many pet parents underestimate the financial responsibility that comes with care. Many simply choose not to adopt a pet due to uncertainty of the financial burden attached to pet parenting. In 2024, Independence Pet Holdings (IPH) processed over $1 billion in claims, supporting more than 2.7 million insured pets, with top claims reaching over $50,000. Veterinary costs have risen sharply—up 60% over the past decade⁷ —with lifetime care now averaging over $34,000 for dogs and $32,000 for cats⁵, figures that nearly 80% of pet parents underestimate⁶. These rising expenses have led 55% of pet owners to consider economic euthanasia when faced with a $2,500 veterinary bill¹. 

However, insurance can significantly ease this burden. The average claim submitted to IPH was $540, with reimbursements averaging $260. Notably, 65.3% of pet parents filed more than one claim per year, underscoring the recurring nature of pet healthcare needs. Among claims exceeding $2,500, 70.2% resulted in out-of-pocket costs below that economic euthanasia threshold—demonstrating how coverage can make critical care more accessible. As pet companionship continues to enrich lives, financial preparedness remains essential to ensuring pets receive the care they deserve. 

Understanding Pet Insurance and Rising Premiums 

Many pet parents—whether exploring insurance for the first time or already enrolled—are often surprised by the cost of premiums. This reaction is understandable, as premiums reflect the true cost of care, which is widely underestimated. The disconnect between veterinary cost expectations and reality can lead to skepticism about the legitimacy of pet insurance. 

To understand why premiums are rising, it’s important to look at how pet insurance works. At its core, pet insurance operates on the principle of risk pooling: many pet owners contribute to a shared fund, which is then used to cover the unexpected medical expenses of those who need care. The larger and more diverse the pool, the more stable and affordable premiums can be for everyone—similar to how health or auto insurance works. 

However, several factors are driving up what insurers call “loss cost”—the average amount paid in claims per policy—which directly impacts premium pricing: 

• Advanced veterinary care is becoming the norm. From MRIs and chemotherapy to regenerative therapies, today’s diagnostics and treatments are more sophisticated—and more expensive—than ever before. As pets are increasingly seen as family members, pet parents are more willing to pursue the highest quality care available. 

• Pets are living longer, healthier lives. While this is a positive trend, it also means pets require more frequent and complex medical care over time, increasing the total cost of care throughout their lifespans. 

• Coverage is expanding. Insurance plans now include a broader range of treatments and services, which increases the scope—and cost—of what’s reimbursed. 

• Veterinary labor shortages are driving up costs. A constrained workforce in the veterinary profession is contributing to higher service fees, adding further pressure to the cost of care and insurance pricing. 

Together, these dynamics explain why premiums are rising—and why a well-functioning, widely adopted insurance model is more important than ever to help pet parents manage the growing cost of care. 

Why Pet Insurance Matters More Than Ever 

Pet insurance plays a critical role in preserving the accessibility of pet ownership by making quality veterinary care accessible across income levels and communities. According to the North American Pet Health Insurance Association⁴, today, only about 4% of U.S. pets are insured, and the risk pool is disproportionately composed of older pets with higher medical needs. This limited participation contributes to higher premiums and uneven access to care. Notably, 43% of pet parents earn less than $50,000 a year, making unexpected veterinary expenses a significant financial strain².