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Pet Insurance (Page 2 of 4)

Pet Insurance Peeves: Considerations for the Discerning Companion Animal Insured.
By Adam P. Karp, Esq. © 2012

Pethealth provides an example of a condition cap, limiting reimbursement to $6000 in certain illness categories.

Dispute Resolution. Occasionally insureds and insurers disagree about the interpretation and application of the policy, including the medical necessity of a procedure (i.e., challenging coverage of the procedure) and the usual and customary expense for same (i.e., challenging the benefit amount). For this reason, one must evaluate the dispute resolution limitations and remedies set forth in the contract. Almost all policies first require that you submit your animal to an “independent” veterinary examiner (IVE) or appraiser, selected and paid for by the insurer. If the examiner/appraiser disagrees with your primary vet/appraiser, an umpire may be recruited to break the tie, with the cost split between you and the insurer. Failure to cooperate with such a review process means you are barred from filing suit against the insurer, since the step-by-step review process is characterized as an exhaustion-of-remedies requirement. For example, Pets Best has three levels of dispute resolution: first, sending the claim to a claim representative not involved in the initial decision; second, sending to an external review (an impartial vet selected and paid for by the insurer); third, to binding arbitration conducted according to the AAA rules with shared costs and fees. A concern with binding arbitration under AAA is the cost. The current fee schedule for a consumer dispute under $10,000 is typically $1000.

In addition to the escalating review process, most insurers attempt to invoke a statute of limitations of one year from the date of first treatment for the condition identified in any legal action. Unless your state’s insurance laws prohibit such attempts to shrink the statute of limitations (in Washington you have six years for breach of non-sale written contracts), this limitation could prove fatal, particularly if the mandatory review process does not toll the period in which to file suit. PetPlan adds a 60-day waiting period to filing suit to the three-year statute of limitations, meaning that the window for filing suit is 60 days to 3 years – but not before or after. The Pets Best policy tried to impose Connecticut law on all disputes, but then changed it to Washington law in the addendum to the policy (perhaps a function of Washington’s insurance laws). Interestingly, I found no prevailing party attorney’s fee clause. That said, in Washington, the Olympic Steamship decision provides for fees to the prevailing insured in any declaratory judgment action where the court finds the insurer wrongly refused to defend or pay the justified action or claim of the insured, even if suit is never filed against the insured. Olympic S.S. Co., Inc. v. Centennial Ins. Co., 117 Wn.2d 37, 52-53 (1991).

COBRA. In 1985, Congress passed the Consolidated Omnibus Budget Reconciliation Act to, among other goals, ensure that employees would not have to face new waiting periods and denied coverage for preexisting health conditions while between jobs. The rationale is that if you change insurance companies (because changing employers), the new insurer will not want to insure for conditions that, though they developed after the date of prior employment (and thus were not barred by the prior employer’s health insurer as a preexisting condition), are preexisting from the perspective of the new employer’s health insurer. COBRA provided stopgap coverage for up to 1.5 years in most cases. As you might expect, there is no similar COBRA protection for employees who change jobs (and thus, change pet insurance). Note that many policies offer employer discounts should they decide to provide pet insurance to their employees. And, of course, animals do not have their own right to demand such interim coverage when changing plans or their guardians change employers. This is a point worth considering should an insured obtain insurance through the employer.

What is Excluded. The conditions not covered are too numerous to examine here, but insureds must pay close attention to breed-specific exclusions and almost universal noncoverage for dysplasia and ligament tear repairs. What I found redeeming from the standpoint of not contributing to a risk pool that pays out on cruel procedures is that all insurers whose policies I examined do not cover declaws, dewclaw removals, tail docking, and ear cropping. Healthy Paws will not cover dogs kept for commercial reasons, including “racing dogs.” They also will not pay for injuries resulting from animal fighting. The policies also tend to universally bar any claims arising from intentional harm to an animal by the insured, the insured’s family member, or resident of the insured’s household.

Keeping pace with the changing landscape of animal care and publicized thanks to the TLC show I Cloned My Pet, is the cloning exclusion found in the Petplan policy.

Bonuses. Pets Best offers some bonus benefits such as mortality coverage for burial and cremation. PetPlan offers coverage for costs incurred to advertise and pay a reward for a lost dog or cat, and to cover boarding fees or certified pet sitter expenses if the insured is hospitalized and unable to care for the animal. PetPlan also offers behavioral therapy by a licensed veterinarian but not obedience training. And Trupanion offers similar additional benefits coverage for about $5 a month including third party property damage coverage up to $25,000. However, this $25,000 rider does not cover bodily injury (e.g., dog bites person), has a $500 or actual loss deductible, and serves as excess insurance to homeowners or renter’s, and will not cover claims involving damage to property owned by you or a member of your family; whether the rider includes animal-on-animal injury is unclear as the term “property” is not defined.

AVMA v. HSVMA. PetPlan defines primary vet as a properly licensed veterinarian in the U.S. who is also a member of the AVMA. I challenge this membership requirement for the reason that vets do not need to join the AVMA to practice; further, the AVMA has taken very anti-animal positions (e.g., valuation limited to market, and no emotional distress damages for negligent harm; not taking firm position against declawing and debarking; not against mandatory spay/neuter; and other conservative, industry-protecting views concerning farmed animals). For this reason, many forward-thinking and humane-oriented veterinarians join the Humane Society Veterinary Medical Association (“HSVMA”), which I wholeheartedly endorse. If anything, members of the HSVMA better represent and live according to the ideals of good veterinary practice and ethics. Another concern that arises from AVMA favoritism is that almost all policies will not cover experimental, investigative, or non-generally accepted procedures, as determined by the veterinary medical community. The question is – which community? Allopathic or naturopathic? AVMA or HSVMA members?

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