A sick or injured pet can take a significant bite out of an employee's bank account. An increasing number of businesses are helping out by offering pet insurance as a voluntary benefit.

“A lot of pet owners who have pets suffering from an illness or injury don't realize that many other pet owners are dealing with the same issue,” says Kristen Lynch, executive director of the North American Pet Health Insurance Association (NAPHIA) in Raleigh, North Carolina. “Insurance helps the pets, and owners, by allowing them to access the best care possible without breaking the bank.”

Only about 1.4 million of the 179 million pets in North America are covered by insurance, according to the association. However, that number is expected to grow as veterinary costs rise and more employers offer insurance benefits.

“As an employee benefit, it's growing by leaps and bounds,” says Bill Skubovius, vice president of North American markets for Petplan Health Insurance in Newtown Square, Pennsylvania. “Today, it's a really important product. One in three Fortune 500 companies—including Disney, Walgreens and Google—offers pet insurance. Many companies share in the cost of premiums.”

As he points out, many younger workers may opt for less-comprehensive coverage for themselves, but at their stage of life, their pet is family.

“The typical workforce demographics include people who are close to retirement, middle-aged and people just out of college and into the workforce, where their first child is a pet,” Skubovius says. “They don't need a high level of coverage for themselves and would rather allocate benefits to pay for the pet.”

When faced with paying thousands of dollars for treatment, many owners have no option but what Skubovius calls “economic euthanasia.”

Karl Jandrey, a professor at the UC-Davis School of Veterinary Medicine, says pet insurance can affect the decisions that owners make when faced with their pet's injury or illness.

“Pet insurance is really helpful in the owners' minds when they meet a financial challenge with their patients or their animal has a diagnosis that may be much more intense or more expensive than anticipated,” he says. “Pet insurance may make it easier for the owner to decide to move forward with therapy, versus doing substandard therapy or euthanizing the patient because of financial concerns.”

What's covered?

Before deciding whether pet insurance is a smart benefit option, it helps to clarify what it is and is not. Most U.S. policies limit coverage to cats and dogs, although it is possible to find coverage for more exotic pets. It also does not cover routine office visits.

“Insurance is not for preventive care,” Skubovius says. “It is for the unforeseen, such as accidents, illnesses, diabetes, cancer, behavioral therapy and acupuncture.”

Just as in human health, veterinary medicine is making major strides in offering lifesaving diagnostics and treatments, such as MRIs, advanced surgery techniques and chemotherapy. However, these gains come at a cost, which is why the price of veterinary care has more than doubled over the past decade, according to the American Veterinary Medical Association.

This is why pet insurance has become a more attractive option. About a dozen companies offer coverage, and the market is valued at more than $660 million, according to the National Pet Owners Survey.

As with every other benefit, the decision to offer or purchase pet insurance comes down to weighing benefits versus costs. According to 2014 numbers from the NAPHIA, underwriters look at three factors when determining premiums: the owner's location, the age and the breed of the animal.

Comparison shopping

Skubovius recommends that employers do their due diligence, ask questions and compare responses.

“A lot of times, employers get confused about the differences in policies and how different companies rate,” he says. “Always consider the benefits schedule or annual limits. With a benefits schedule, you are paying 'X' for a specific treatment, and when you reach your limit, you have to pay out of pocket.

Additional questions Skubovius suggests asking: “Are chronic conditions covered? Will the amount of coverage be reduced when the pet reaches a certain age? Does the policy cover pre-existing conditions? Does the carrier provide good customer service and deliver on what they promise?”

He recommends the website www.petinsurancereview.com as an objective source for plan comparisons and customer reviews. The NAPHIA offers these additional tips:

• Shop around for the policy that best meets your needs.

• Get a free, no-obligation quote from a few reputable providers and compare types and levels of coverage.

• Always read your policy and insurance documents for details about the benefits and significant exclusions of the policy. Most companies present policy documents in plain English, rather than “legalese.” You can even review them in advance of enrollment.

• Always answer the insurer's questions honestly. Failing to do so is considered fraud, and the insurer may refuse to pay your claim.

• Veterinarians are ethical professionals who may be able to help you understand the benefits of pet insurance coverage and the costs of veterinary medical care.

Finally, consider a few of the tangible and intangible benefits to your business. An employee dealing with a sick or injured pet can lose as much productivity as one who is taking care of a family member. For many employees, offering coverage shows the company cares about them beyond just 9 to 5.

“Pets are family members, and many people see them that way,” Skubovius says. “They appreciate it when you demonstrate that you care for their pet as well as them personally.”

Cats and Dogs Living Together

As with every other benefit, the decision to offer or purchase pet insurance comes down to weighing benefits vs. costs. According to 2014 numbers from the NAPHIA: