NAIC Makes Progress on Definitions and Burdens Under Pet Insurance Model Law

Faegre Drinker Biddle & Reath LLP

The NAIC’s Pet Insurance Working Group continues to moo-ve1 ahead with the development of a Pet Insurance Model Act (Model). The Model is based in large part on California’s existing pet insurance law.

On its March 6 call, the Working Group adopted the following definition of pre-existing condition:

“Pre-existing condition” means any condition for which any of the following are true prior to the effective date of a pet insurance policy or during any waiting period:

  1. A veterinarian provided medical advice.
  2. The pet received previous treatment.
  3. Based on information from verifiable sources, the pet had signs or symptoms directly related to the condition for which a claim is being made.

Under the current draft of the Model, pet insurers may issue policies that exclude coverage on the basis of one or more preexisting conditions, provided that appropriate disclosures are made to the consumer.

On its March 26 call, the Working Group approved language which places the burden of proving that a pre-existing condition exclusion applies to the condition for which a claim is made on the insurer. The Working Group also approved language that would prevent a condition for which coverage is afforded on a policy to be considered a pre-existing condition on any renewal of that policy.2

The Working Group continues to consider issues related to waiting periods and “wellness plans” being offered to pet owners.

Pet insurance, first offered in the U.S. in 1982, is a limited line of Property & Casualty insurance that may cover accidents and illnesses for family-owned pets. Generally, pet insurance carriers offer two main types of coverage: accident only or accident and illness coverage. Recent data shows nearly all policies written were for accident and illness, likely because carriers may offer wellness and preventive coverage as an add-on. Coverage options vary widely by carrier — some carriers write coverage only for dogs and cats, while others write policies for exotic pets, such as reptiles and birds. As for reimbursement methods, some carriers offer a benefit schedule based on illness or injury and coverage level, while others require a waiting period. Across the industry, generally, preexisting conditions are excluded by the policies.

On a broader scale, the pet insurance industry is marked by continued growth. Although the product is fairly new, the market for pet insurance grew by an average of more than 20% from 2015-19, according to a recent survey from the North American Pet Health Insurance Association (NAPHIA). NAPHIA says the total number of pets insured reached 2.52 million in 2019, up by 16.7 percent from 2018. The average annual growth rate of insured pets in the U.S. is 16 percent (2015 to 2019), with dogs making up the majority of insured pets followed by cats. With approximately 85 million U.S. households owning at least one pet (according to a National Pet Owners Survey from the American Pet Products Association), it is no wonder attention is being focused on this s-pet-acular industry.


  1. We promise we will limit the number of animal-related puns.
  2. Most, if not all, pet insurance products in the U.S. are issued on a continuous basis and therefore likely would not run into issues related to renewal. Industry representatives have requested the ability to review language related to renewals.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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