Updated April 15, 2021 9:30am CST
Before we discuss what you need to do to sell pet insurance, let’s first look at what it is and how it works.
Pet insurance is a policy purchased by the owner of a pet to provide accident and illness coverage for family-owned pets. It is primarily purchased to cover cats and dogs, but some policies will cover other household animals.
Many animal medical procedures, such as surgeries and sickness, are very expensive to treat and must be fully paid by the pet owner. Pet insurance can help offset the costs of these out-of-pocket expenses by paying a yearly or monthly premium.
It is similar to health insurance except that it relates specifically to animals. The cost and coverage vary depending on the type of animal being insured. Since animals are considered property, pet insurance is regulated as a property and casualty product.
A pet health insurance policy reimburses the pet owner for specified veterinary care. These policies typically itemize covered treatments, deductibles, and lifetime or per illness maximums. The cost of the policy may vary based on the amount and type of coverage as well as breed and species.
A pet life insurance policy covers end-of-life costs for your animal. This can include burial or cremation expenses and even bereavement counseling.
Pet injury coverage may also be covered on your auto insurance policy if you carry collision insurance. It can help pay for the treatment of a pet injured in a car accident, up to a set limit, while riding in the insured vehicle. This is not a substitute for pet insurance since it does not cover sickness or injury not related to a car accident.
Not all policies cover the same conditions. Comprehensive pet health insurance policies may reimburse covered medical expenses for accidents, illnesses, surgeries, x-rays, prescriptions, hospitalizations, emergencies, or cancer treatments. Other plans may only cover specific losses due to accident and illness after a waiting period.
Certain hereditary and medical conditions may be considered pre-existing conditions. Depending on the condition, the insurer may impose a waiting period before coverage begins or may altogether exclude coverage for that particular condition.
Exclusions are treatments not covered by pet insurance and can vary by type of pet or breed. Common exclusions include preventive care, routine dental care, treatment for behavioral problems, breed-specific hereditary conditions, and elective procedures.
Even if a condition is covered, the pet-owner will likely be responsible for part of the expense. The policy will list, by dollar amount or percentage, how much the insurance company with pay or reimburse for each treatment. The owner of the policy may be responsible for deductibles and copays or coinsurance amounts.
State insurance regulators agree that pet insurance should not be sold by unlicensed individuals, but the level of licensure is still open for debate.
Most states require a full property and casualty (PC) license to transact pet insurance business. To obtain a full PC license, the candidate may be subject to insurance prelicensing education requirements in their home state and will be required to pass a state exam. Once licensed, the producer will be required to meet all qualifications of maintaining a license, including ongoing continuing education requirements. A benefit of having full PC licensing requirements is that producers are considered competent and qualified to sell to consumers, resulting in consumer protection. However, prelicensing programs and state examinations do not include topics specific to pets or pet insurance.
For this reason, a few states have adopted the limited lines model. Currently, Idaho, New Jersey, Rhode Island, and Virginia allow for the use of a limited lines license to transact pet insurance business.
A limited line of insurance is a line of insurance that covers only a specific subject matter. Unlike major lines licensing, limited lines producer applicants may obtain a license by submitting the appropriate application form and paying all applicable fees and receive a program of instruction or training on the specific subject matter, which is subject to review by the insurance department. They are not required to pass a state exam and there are no continuing education requirements to maintain the limited lines license.