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How Are Pet Insurance Rates Calculated

When looking at pet insurance, most pet owners realize that rates can vary from insurer to insurer. Let’s take a look at the factors that can affect a pet insurance rate.

How Are Pet Insurance Rates Calculated

Base Rates of Pet Insurance

A base rate is the amount of premium that an insurer will charge for its pet insurance product before taking into consideration other factors such as age, deductible or breed.

Annual Limits Rating

An annual limit is the maximum amount of money that an insurer will pay per year for expenses resulting from an illness or injury. Our plans do not have a per-incident limit. Make sure to check to see that with our higher dollar annual limits, what the impact is on the premium.

Per-incident Limits Rating

A per-incident limit is the maximum amount of money that an insurer will pay per incident for expenses resulting from an illness or injury. If a plan does not have a per-incident limit or has a high dollar limit check to see what the impact is on premium.

Age Rating

Pet insurance does factor in the age of your pet at enrollment and renewal. Pets, as they get older, tend to develop more illnesses and have more injuries. Once enrolled, keep in mind that as your pet ages, your pet’s premium will increase. Find more information here.

Breed Rating

Breed rating is an area of the premium in which your pets insurers look at your pet’s breed determine the risk associated with it. Breed rating is driven by claims exposure. An insurer will look at its historical data, such as premium collected and claims paid, to determine their potential risk for each breed and place it in a category.

Location Rating

Besides breed rating, location plays a large part in a pet’s premium calculation. Pet owners living in New York City understand that they pay on average more for pet care than a pet owner in Fargo, North Dakota and so does the pet insurance company. Cities and towns that have a higher cost of living will generally pay a higher premium.

Reimbursement Rating

Most carriers will talk about reimbursement at 70%, 80%, or 90% and will likely charge you less for the 70% reimbursement versus the 90% reimbursement. The higher the reimbursement, you will pay more premium. So if you would like to pay less in premium consider a lower reimbursement amount with a higher deductible.


There are two parts to deductibles that can affect your rate. The first and the one that most policyholders focus on is the dollar amount. A high deductible will likely reduce your payments and will reduce your premium. With a high deductible, you are shouldering more of the burden. Plans that have lower deductibles will reimburse more, but you will have to pay more in premium.

The second component about deductible is deductible frequency. Deductible frequency is the number of times during a policy year that you will be responsible for meeting your deductible. Most policies have either an annual deductible or a per-incident deductible. An annual deductible is a single deductible for the entire year, regardless of the number of incidents. A per-incident deductible is when you pay a deductible for each illness and injury.


In the pet industry as a whole, cats are rated cheaper than dogs. Why? Cats have lower utilization of benefits, plus cats do not go to the vet as much as dogs. (U.S. Pet Ownership & Demographics Sourcebook, 2012) If you want more information about the differences in cat and dog insurance click here.

Just like in auto and property insurance there are many factors that can affect your rates. When conducting a pet insurance comparison on rates, it is extremely crucial to review the benefits versus the cost. A cheaper plan might not provide enough coverage for your pet versus a more expensive plan.