What Is a Good Annual Limit for Pet Insurance? (2024)

If you’re a pet parent looking for insurance coverage, you’ve likely seen a lot of information about annual limits. But what exactly is an annual limit in pet insurance? We’ve broken it down below.

An annual limit is the maximum amount of money your pet insurance provider will pay per year once you’ve met your annual deductible. For example, if you have a pet insurance policy with an annual limit of $10,000 but you have $12,000 worth of expenses, you’re responsible for $2,000 of those expenses. You’ll be reimbursed for all covered items if you only receive $8,000 worth of services.

Remember that you’ll also need to pay the coinsurance and deductible amount. Let’s say you have a policy with a $250 deductible, a 90% reimbursement rate and a $10,000 annual limit. If your dog breaks its leg, it may have surgery, medication, exam fees, and follow-up checkups. These services total $7,000. First, you’ll pay the $250 deductible, leaving a $6,750 balance. If your insurer approves the claim, it will reimburse you $6,075, or 90% of the $6,750 balance.

The final bill for your dog’s broken leg would be $925. That includes the $250 deductible plus the remaining 10% co-pay ($675) of the $6,750 balance. Because the insurance company only paid $6,075 toward the claim, there’s still $3,925 left before you reach your annual limit.

Maximum limits vary by company. While there are many common maximum limits amongst providers, each has its own limitations. Below is a list of some of the more common pet insurance maximum limits.

• Maximum amount per incident: This is the maximum amount your insurance company will pay for a particular incident. If your dog gets a laceration and there are follow-up problems, such as infection or improper healing, vet bills may not be covered if you’ve already reached the maximum on laceration-related claims.
• Maximum amount per lifetime: This is the maximum amount the company will pay throughout your animal’s lifetime. For example, if your dog develops lameness due to spinal issues, it may need surgeries, treatments and medications. If your policy has a maximum amount per lifetime limit of $10,000 and your dog’s treatments exceed that amount, you’ll have to pay for the excess out of pocket.
• Maximum annual limit: This is a per-year amount. If the maximum annual limit is $8,000, the company won’t pay more than that per year. The limit starts over when the new policy year begins.
• Maximum limit of body systems: This is the total amount the insurance company will pay for a particular body part. For example, the limit for a paw may be $1,000. If the laceration your dog got costs $700 for stitches and medication, pet insurance covers only $300 in future paw-related claims.

While some pet insurance companies have no payout limit, others do. Both types have pros and cons.

Policies with annual limits are generally affordable, but if your pet is accident-prone or has congenital health conditions, you may end up paying a lot out of pocket for its care even with insurance coverage.

Some pet insurance companies offer policies with no payout limit. That means there’s no cap on how much your provider will pay for veterinary care covered under your policy; all eligible expenses will be reimbursed once you hit your pet insurance deductible. While these policies can offer peace of mind, they’re usually a lot more expensive.

Unfortunately, you may end up hitting your annual pet insurance limit. This can sometimes happen with cheap pet insurance companies with lower yearly limits. If you hit your limit, you’ll have to pay out of pocket for additional vet visits and treatment. Some vets offer financing options if you don’t want to pay with emergency funds or a credit card.

Another option is to upgrade your existing pet insurance plan. Suppose your pet has any chronic conditions or ongoing medical issues that your insurance company already covers. In that case, you may be able to switch to a plan with a higher maximum payout, though it may increase your monthly pet insurance premium. 

Switching plans rather than insurance companies is often the best option, as many companies have exclusions for preexisting conditions. Switching companies could also result in a waiting period after enrollment before you can access coverage again. If you stick with the same company but change your plan, your pet will remain covered.

It can be difficult to choose the right annual limit for your plan. While a lower annual limit means a lower monthly premium, it may leave your pet underinsured, resulting in high out-of-pocket costs for unexpected accidents or illnesses. You may save some money on your policy, but in these instances, having a low annual limit can be like having no insurance at all.

Here are some factors to consider when selecting an annual limit for your policy.

The most robust annual coverage limit is an unlimited option, but plans with unlimited coverage can cost significantly more than those with lower limits. Although major pet accidents or expensive chronic illnesses can occur, some pet owners may not need or effectively use unlimited coverage. However, these plans can offer peace of mind in knowing you have more financial protection than a plan with capped limits. 

We recommend an annual limit of $10,000 for most pets, offering enough coverage for a sudden emergency or illness. For reference, a single trip to an emergency care clinic can cost upwards of $375 to $965 for cats and $534 to $1,285 for dogs. In this case, your pet would have to experience multiple emergencies in a year or have an illness that requires extensive ongoing treatment to reach the $10,000 limit. 

Most pet insurance plans reimburse only 70% to 90% of covered veterinary fees after the deductible, so you would have to spend more than $10,000 on your pet’s care in a given year to reach the limit. For example, a plan with a $500 deductible and 80% reimbursement rate would pay out $10,000 total once your pet incurs $13,000 in expenses, assuming the expenses qualify for coverage.

Ultimately, the right annual limit should meet your pet’s current needs and your financial goals. Choosing a lower annual limit will save on monthly costs if you have some savings available to help cover costs that could exceed your pet’s limit. However, you may prefer a higher limit if you expect your pet could need more veterinary care or you want to avoid out-of-pocket expenses.