What is a Good Annual Limit for Pet Insurance?

by | 02/23/2023

It can cost a lot of money to keep your pet safe and healthy. Regardless of how well they’re taken care of, sometimes they still become ill or are injured. Pet insurance is a great way to get the financial help you need when you want and need it most. Pet insurance is generally offered with several options so pet owners can choose the pet insurance plan that will best meet their needs and the needs of the pet.

The amount you’ll have to pay on a claim depends on your deductible, your reimbursement rate, and the annual limit you have on your policy. While routine office visits and wellness checks aren’t that expensive, a serious accident or illness can run into thousands of dollars. The annual limit can often be the most important feature of pet insurance.

Different Maximum Limits

The amount an insurance company will pay on a claim depends on the maximum limit of the plan. Depending on the pet insurance company, the maximum payout amounts may be different. Every pet insurance company has its own limitation guidelines. Here are some common maximum limits you may find when choosing a pet insurance policy.

  • Maximum amount per incident – This is exactly what it states. If your pet breaks a leg, there is a limit on what they’ll pay for that service. If your dog continues to have issues with the leg six months down the road, the company may not pay if they’ve already reached the maximum amount on leg-related claims. However, the pet insurance will cover other services not related to the broken leg.
  • Maximum amount per lifetime – The company will pay this amount throughout the animal’s life. Let’s say you have a policy with a maximum lifetime amount of $10,000. Your dog develops cancer and has treatments, surgeries, and veterinary care that exceeds the $10,000, that’s all the company will pay. In this situation, your dog will not be covered for any vet services. This type of coverage can be concerning if your pet were to get any chronic conditions, such as diabetes. Once you reach your lifetime limit, you are on your own in terms of care and expenses.
  • Maximum annual limit – This amount is per year. If your policy has a $5,000 annual limit, that’s all it will pay that year. When the new policy year begins, the limit starts all over again. Typically, the cheaper a policy is per month, the more stipulations there can be on the policy. This is sometimes used as a way to lure in policyholders, so keep an eye out for policies with a very low monthly cost – you will end up paying one way or another.
  • Maximum limit of body systems – This amount is the total the insurance will pay towards a particular body part. If the limit is $5,000, and the dog’s broken leg cost more than $5,000, the insurance company will only pay $5,000 on that body part.
  • Predetermined benefit claim schedule – On a policy like this, the amount is set when you purchase the policy. An example of how this works can be found in the reimbursement amount. A policy with a predetermined schedule may only pay $2,500, whereas a standard plan might pay 80 or 90 percent of the bill, which could be higher than the $2,500. The majority of pet insurance companies do NOT use the predetermined schedule for insurance, but will use a benefit schedule when it comes to wellness care.

What is an Annual Limit in Pet Insurance?

Of all the limitations mentioned, the annual limit in pet insurance is the most popular and the one commonly offered by pet insurance companies. When a policy states that it has an annual limit, this means that amount is the most they will pay per year towards your pet’s veterinary bill. Keep in mind that you will have to pay the deductible and co-insurance.

For example, you have a $10,000 annual limit on your insurance plan. You have a policy with a $250 deductible and a 90 percent reimbursement rate. Your dog is hit by a car and requires surgery, medication, and physical therapy. These services add up to a total of $7,000. You will pay the $250 deductible first, which leaves a balance of $6,750. The insurance company will pay $6,075 (assuming they approve the claim), which is 90 percent of the $6,750.

Your share of the bill will be $925 ($7,000 – $250 = $6,750 X 90 percent = $675 + $250). Since the insurance company paid $6,075 towards this claim, you still have $3,925 towards left towards the $10,000 annual limit. The bill must be for services that are covered by the company.

When the policy year starts over or renews, the annual limit will go back to $10,000. If your bill happens to use up your annual limit, the balance is yours, and you cannot claim this amount when the $10,000 amount resets. If, for some reason, your dog has complications from the accident the following year, the company will pay for those covered services. They just won’t pay any of the leftover amounts from the initial claim from the previous year.

How to Choose the Right Plan Based on Annual Limits

Choosing the right annual limit on your plan can be tricky. Unfortunately, we can’t predict when our pets are going to become ill or if they’re going to have a costly accident. A lower annual limit will give you a lower monthly premium, but if your pet is underinsured, it’s almost as bad as not having any coverage at all. Keep in mind that even if you have a high annual limit, you will still have to pay deductibles and co-payments.

If money is not an issue, you can choose a policy with the highest possible annual limit. However, most pet owners want to save money any way they can, There are certain factors you can keep in mind when choosing an annual limit.

  • How old is your pet? Senior animals tend to be more prone to develop certain diseases, such as cancer, arthritis, and cataracts to name a few.
  • What breed is your animal? Some animals are more prone to certain conditions like hip dysplasia.
  • What is your pet’s personality? Young puppies are full of energy and tend to have more accidents than older dogs.
  • What can you afford? The overall cost of your policy is usually the deciding factor. Choosing a policy that you really can’t fit into your budget can result in cancellation or not having any insurance at all.

Plan Annual Limits

Every pet insurance company offers its own set of annual limits. Most of them offer a choice, such as $5,000, $10,000, or even an unlimited amount. Here are some examples from different companies.

Annual Limits from Top Pet Insurance Companies

Company Annual Limits
Embrace Embrace offers pet owners the choice of several different annual limits. These include $5,000, $8,000, $10,000, $15,000, and $30,000.
Pets Best Pets Best offers pet owners the choice of a $5,000 annual limit or an unlimited annual limit.
SPOT SPOT offers pet owners the choice of $2,500, $4,000, $5,000, $7,000, $10,000 or an unlimited amount.
Trupanion Trupanion offers pet owners pet insurance with an unlimited payout amount.
Pumpkin Pumpkin – Pumpkin offers pet owners the choice of $7,000, $10,000, $15,000, or $20,000 annual limits.

Choosing a policy is complicated, but hopefully this brings a little clarity to the concept of the annual limit in pet insurance, and answers the question, “what is a good annual limit for pet insurance?” Remember our words of caution on choosing an annual limit that is too low, and good luck!