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How Pet Insurance Works

You insure your car. You insure your health. But what about your pet?

Pet insurance is not new to North America and has been around for over 20 years(!) but surprisingly only 3% of Canadian pet owners have coverage for their pets. As pets become more and more a part of the family, it’s important to understand what pet insurance is, how it works, and why it’s the right fit for you and your pet.
Pet Insurance 101

Pet insurance typically reimburses a portion of your veterinary bills. The amount reimbursed varies depending on the plan you choose and what’s eligible for coverage. The super simple short of how pet insurance works is:

You research plans and get quotes.
You decide which coverage meets your and your pet’s needs.
Cue the confetti – you enroll!
File a Claim
Your pet goes to the vet and you submit an invoice to be reimbursed for eligible* claims.
Wag Happy
Your pet gets the help they need and you get to transfer the risk of any ailments to the insurance provider.

But, each provider is different so it's not quite that simple.

Now let's dig deeper into everything you need to know about how pet insurance works. Read on for pet guardians' ultimate guide on pet insurance.

*Keyword: eligible! Every pet insurance plan is different and what may be considered eligible with one plan may be deemed ineligible with another. As you read on, it is so important to read the full policy of any plan you’re considering and understand the information below is educational only.

Table of Contents

What is pet insurance and how does pet insurance work?

Ultimately, pet insurance is there for you when the kitty litter hits the fan

We all hope that our pets are lucky and never have a big accident or illness, but, if something does happen, treatment can cost pet guardians thousands of dollars. Pet insurance is there for your pet for the unexpected accidents or illnesses your pet may experience in their lifetime.


When you enroll in pet insurance, coverage is simple:

  1. You visit the vet
    Skippy has a limp, so you schedule an appointment and get an exam with your vet.

  2. You pay at the time of checkout
    Now that the exam’s complete, you’ll pay your bill at your veterinarian’s office.

  3. Submit your claim for reimbursement
    After reviewing your policy and understanding what’s covered and what’s not, you’ll submit a claim form and attach your invoice from your appointment for your pet’s eligible expenses.

  4. You get paid back!
    The Claims specialists will review your claim submission and reimburse you for your eligible expenses according to your plan’s coverage details (for instance, excluding any deductibles or co-insurance, or PHI Direct's New Condition Coverage).
PH-Bamboo Asset-Dog-Balloons

Think of pet insurance like travel insurance. You book your flights and hotel, and you’re certain your trip is happening. You may not need it, but it’s there for you ‘just in case’ you need to cancel your vacation, giving you peace of mind.



Why buy pet insurance


Rectangle 1 (7)Why buy an extended warranty on your washing machine? Often, it’s so that if something breaks, you can stress less knowing you’re protected and don’t need to feel the financial burden of the unexpected expense.

Similarly, you buy pet insurance because you want to transfer that unknown risk to someone else – in this case, the insurance company.

Pet guardians can reasonably budget for the expected costs of pet ownership – vaccines, annual exams, etc. – and, so, pet insurance is for the unexpected pet health expenses that may pop up over the course of a pet’s lifetime.


Pet insurance can help responsible pet guardians avoid making difficult decisions in emergencies. By paying a monthly fee, you ensure that you won't have to choose between your pet's health and financial stability.


Rather than viewing pet insurance solely as an investment, consider it as a way to secure peace of mind. While it's true that your pet may never require extensive medical care, having insurance means you're prepared if the unexpected does occur.

Pet insurance helps ensure that if your pet does require costly treatment, you'll have a better chance of being able to afford it.

It's all about safeguarding your furry friend's well-being and your own financial stability.


"Pet Insurance is a SCAM"

giant mastiff in a small room - like an elephant in the room

Let’s address the elephant – or the Mastiff – in the room. “Pet insurance is a scam.” We hear that A LOT. And we get it. When insurance doesn’t pay out, it’s understandable to think that it’s not legitimate and that the pet insurance company is just trying to make money.

But this is where it’s critical to understand the coverage and policy of any pet insurance plan you’re considering. 

Oftentimes, claims get denied – and therefore people feel duped and think pet insurance is a scam – for four (4) main reasons:


balloon-1Waiting periods: prior to coverage beginning, pet insurance plans will often have specified periods of time that must pass prior to coverage becoming eligible. Typically, there are waiting periods for accidents, illnesses, and cruciate ligament conditions. 

For instance, PHI Direct has a 48-hour waiting period for accidents, 14-day waiting period for illnesses, and 60-day waiting period for cruciate ligament conditions.

balloon-2Pre-existing conditions & Associated conditions: this is perhaps the most confusing and least apparent or understood for pet owners. Many pet owners understand the concept of pre-existing conditions, but ailments like allergies (where a pet may be chewing their paws previously, but now has an itchy ear) can often be a point of confusion. You can learn more about pre-existing conditions and associated conditions in our sample policy.

balloon-3Preventive care, routine care, or wellness: Vaccines, spaying, and neutering typically aren't covered by pet insurance because they're expected routine expenses. For an extra cost, some plans offer "Wellness" coverage as an add-on, but it's important to understand what's included.

phi-4 balloonLucky vs. unlucky pets: You might wonder why you're paying for insurance when your furry friend never seems to need it. But remember, you're paying for peace of mind. It's about being prepared for the unexpected—‘just in case’ your pet gets diagnosed with a critical illness, such as cancer—so that you won’t have to make a healthcare decision because of your finances. 

In short (TLDR;), read the sample policy of any plan you’re considering to understand what’s covered with pet insurance and what’s not covered with pet insurance. Scams begone!


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Pet Insurance FAQs

Who accepts pet insurance?

The great thing about pet insurance is that you can use it anywhere! There is no “in-network” group of veterinarian offices you need to go to in order for your coverage to be eligible. For instance, PHI Direct members can use any licensed veterinarian in Canada or the United States.

What are the different types of coverage?

Pet insurance coverage options vary between providers, and many plans bundle Accident and Illness together. There are many health issues covered under pet insurance but let’s dig into the different types of coverage.

Accident-only coverage: this type of coverage protects you against things like an ACL tear or broken toe. This type of coverage doesn’t cover illnesses such as diabetes or allergies.

Accident and Illness coverage: this is the most popular type of coverage. With Accident and Illness coverage, you’re protected for both injuries and illnesses. PHI Direct, for instance, provides coverage for accidents and new illnesses each year. 

Wellness: Wellness is not insurance, as pet insurance is for unexpected pet health expenses. Wellness plans are often add-ons to insurance coverage and include things like wellness exams, vaccines, spaying and neutering, and other routine care. These Wellness plans often cost extra.

Regardless if you have accident-only or accident + illness coverage, surgery is often covered accordingly to the terms and conditions of your specific policy.

Does pet insurance cover pre-existing conditions?

As pet insurance is there for you for the unexpected, most plans don’t cover pre-existing conditions—those are health problems your pet had before getting coverage or during any applicable waiting periods. However, specific coverage may vary depending on the insurance provider and plan so it’s always important to read the full policy of any plan you’re considering.

What isn't covered with pet insurance?

Typically ‘expected’ health conditions aren’t covered. These are things like routine care and pre-existing conditions. However, each policy is different and offers varying levels of coverage. Some plans only cover dental as a result of an injury whereas other plans include dental, without restriction, in their plans. The level of coverage a plan offers can also cause those premiums to be higher than a more direct plan.

No two policies are the same. With PHI Direct, there’s an added layer to our policy that helps us keep premiums 35% lower, on average, than other Canadian Pet Insurance providers (you can even see how much lower our premiums compare). This is our New Condition Coverage, where any condition experienced in one year becomes pre-existing the next.

When to get pet insurance?

With most providers, the answer is early. That’s because age is often a factor of premium pricing, plus, your pet is less likely to have experienced any conditions so they are eligible for coverage without worry of being denied due to pre-existing conditions. 

However, with PHI Direct, the benefit is that no matter when you enroll, your pet’s premiums stay lower as they age thanks to our new condition coverage.

The right time to get pet insurance is when you’re ready to get pet insurance. You may want to consider is pet insurance worth it for a puppy or an indoor cat, or what might happen if you don’t insure your pet.

How much does pet insurance cost?

Pet insurance premiums vary based on a number of factors such as:

  • Your pet’s age, breed, gender, or location
  • What the plan covers
    • Your annual policy limit
    • Your deductible
    • Accident coverage vs. Accident + Illness coverage, for instance
    • Dental vs. no dental

All of these factors, plus more, go into determining your pet’s monthly premium cost. Oftentimes, it is more affordable to enroll your pet when they are younger as age is a factor in premium prices. However, with PHI Direct’s New Condition Coverage, premiums stay lower over the lifetime of a pet compared to other insurers. 


How PHI Direct Works
Most pet insurance providers penalize the many because of a few.
Not PHI Direct.


PHI Direct is designed to put affordable pet insurance in pet guardians' hands for the ‘just in case.’ Like most pet insurance providers, you simply visit the vet and pay your bill, submit your invoice to us, and then get reimbursed for eligible claims.

Most providers’ monthly premiums are impacted by the claims made year-over-year by its members overall. PHI Direct's policy resets annually, preventing past claims from affecting premiums, and providing financial stability for pet owners. This allows us to be there for pet guardians for the big financial hits of initial diagnosis and treatment and for any new illnesses.

See why people choose us
Reviews by real PHI Direct members
Rebecca-Review (1)
Ottawa, Ontario
Such a painless process. The stress of taking my kitty to the emergency vet was enough and PHI gave me peace of mind and made the claims process so easy. Rosco and his mum and dad thank you!!!
Samantha-Review (1)
Orleans, Ontario
My claim was quick and easy to process and really made the difference after an emergency vet visit!
Eric Review
Scarborough, Ontario
The claims process was very easy and I didn’t wait to get the cheque. I was very pleased with the online service. I will highly recommend PHI Direct.
Bradford, Ontario
I am very impressed with the efficiency and speed in which PHI processes and pays claims. Unfortunately, we had to take our beautiful Kodi, a 2-year-old Australian Shepherd for a visit to the vet. I am so happy that we decided to go with PHI insurance. We have peace of mind because of this excellent pet insurance.
Port Franks, Ontario
Excellent Customer Service! The agent was kind, thorough and caring during the conversation.
Edmonton, Alberta
The service is excellent. I always get emails from PHI Direct for updates on my claim. I am very satisfied with my pet insurance that I recommended it to my friend. Further, my friend got her pet's insurance as well and she is very happy.
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