California

California changes the way pet insurance works in the state, what owners need to know

2025-01-28

A new law in California is set to transform the pet insurance industry by requiring greater transparency and consumer protections. Senate Bill 1217 (SB 1217), which took effect recently, mandates that pet insurers clearly disclose details about coverage, costs, and conditions. The law also ensures that “pet wellness programs” are not marketed as insurance.

California, home to 18% of the 5.6 million insured pets in the U.S. in 2023, is a key market for pet insurance. Rising pet care costs were cited as a primary reason for the reform.

Key changes

Officials emphasized that the legislation responds to increasing pet care costs and the need for improved transparency in pet insurance policies.

The law introduces several changes aimed at improving transparency:

  • Mandatory disclosures:
    Pet insurers must clearly state any policy exclusions, such as preexisting conditions, hereditary disorders, or congenital conditions. Unlike human health insurance, pet insurers can exclude preexisting conditions, but SB 1217 ensures these exclusions are explicitly disclosed. Conditions covered when a policy is purchased cannot be reclassified as exclusions during renewal.
  • Policy details:
    Insurers are required to disclose waiting periods, deductibles, coinsurance, and policy limits. Waiting periods cannot be applied to policy renewals.
  • Premium and coverage changes:
    Any potential changes in premiums or coverage based on factors like the pet’s age, prior claims, or a change of address must be disclosed to policyholders.
  • Claim payment calculations:
    Insurers must explain the formulas or methods used to calculate reimbursements for claims.
  • Veterinary exam requirements:
    If a veterinary exam is needed before a policy takes effect, insurers must disclose this requirement and its specifics. Exams cannot be mandated for renewals.
  • Benefits schedules:
    For policies that rely on a “benefits schedule” to define covered illnesses or diagnoses, insurers must provide a written list of covered conditions.

Under SB 1217, “pet wellness programs,” which typically cover routine or preventive care like annual check-ups, must be clearly distinguished from standard pet insurance. Insurers are prohibited from marketing wellness programs as insurance and cannot require participation in a wellness program as a condition for purchasing regular pet insurance.

Impact on consumers and industry

California’s significant role in the pet insurance market is evident, with 18% of the nation’s insured pets located in the state. Across North America, the pet insurance industry has experienced rapid growth, with total premiums reaching $4.27 billion in 2023—a 21.9% increase from the previous year. SB 1217 aims to further empower California pet owners by providing clearer information, enabling them to make more informed decisions about their pets’ insurance coverage.

SB 1217 sets a new standard for transparency in pet insurance and could serve as a model for other states with growing pet insurance markets. With clearer policies and consumer protections, the law addresses the challenges of rising pet care costs and ensures that pet owners are fully informed about their coverage.

As the largest pet insurance market in the country, California’s changes are expected to benefit millions of pet owners who prioritize their pets’ well-being.


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