The questions to ask before deciding how much pet coverage, or cash, you may need

Pet insurance or a dedicated savings account can provide a necessary financial cushion in case your pet experiences an illness or injury.

I've been wanting to get a dog for a while now, but a few things have been holding me up: How much will it cost? Will the pup be OK while I'm at work for eight hours? Who will watch it when I go out of town?

Sign up to get Don't Short Yourself in your inbox weekly.

One other key concern: the cost of unexpected illness or injury. Monthly pet insurance premiums average $70 for dogs and $36 for cats. Would pet insurance protect me from a large vet bill, or would I be better off building a dedicated savings account?

Here's what I learned after speaking with pet experts and crowdsourcing info from my pet-owning friends.

Big money idea of the week: Pet insurance or a dedicated savings account?

First, I asked my Facebook friends about their experiences with pet insurance - and their responses varied wildly:

Facebook friends share their experiences with pet insurance.

Keeping your fur baby healthy can take a big bite out of your budget. The average household spent $560 on vet care in 2025, according to an American Veterinary Medical Association report. And emergency vet bills can run into the thousands of dollars, according to Jennifer Quammen, president of the AVMA.

'Insurance doesn't necessarily make the care itself less expensive. It's changing how that financial risk is distributed.'Jennifer Quammen, American Veterinary Medical Association

But an insurance policy for your pet doesn't simply wipe those costs away, noted Quammen, a practicing veterinarian. Because policies vary widely in cost and coverage, she said, you need to understand exactly how pet insurance works - and your animal's needs.

"Insurance doesn't necessarily make the care itself less expensive," she said. "It's changing how that financial risk is distributed."

What you need to know before buying pet insurance:

Consider your pet's health risks: Breed, age and medical history can affect both the likelihood of needing care and what coverage costs. Certain breeds are predisposed to heart or orthopedic issues, for example, that can be expensive to treat. Meanwhile, conditions like allergies often don't show up until a pet is 2 or 3 years old, Quammen said. So talk to your vet. Knowing what health conditions you might expect your pet to develop and the potential lifetime costs can help you decide what needs to be included in your policy.

What is (and isn't) covered: Pet owners may be surprised that pre-existing conditions like arthritis or diabetes, or services like annual checkups or vaccinations, are often not covered by pet insurance. My friend Tamia Boyd said she didn't know that mild tartar buildup on the teeth of her 11-year-old Maltese-Yorkie-poodle mix, Piper, counted as a pre-existing condition. So, despite having insurance, she had to pay $1,000 out of pocket for a dental procedure.

Piper needed a dental procedure that cost $1,000 out of pocket.

Decide what kind of coverage suits you: Some plans cover accidents and illnesses, while wellness coverage may help pay for routine care such as checkups, dental cleanings and vaccines. So consider whether you want help with routine expenses, protection from unexpected bills or both.

Be prepared to pay out of pocket: With most pet insurance, you pay the vet before seeking reimbursement from your insurer.

When pet insurance works

Angela Tran, a public-relations account executive in the New York City area, pays $165 a month to insure her dog and two cats. Her policy covers sickness and surgeries and death, and she pays extra to cover regular exams and annual vaccines.

Angela's dog Leila and cat Kai are both covered.

Earlier this year, when one of her cats got sick, a trip to the emergency vet resulted in a $1,600 bill. Tran's insurer reimbursed her about $1,350, leaving her responsible for $250 of the bill, equal to her deductible.

When her pets' annual checkups roll around, Tran said pet insurance will help cover some of the costs. "Having a monthly bill for their insurance is worth it in the end, knowing if anything were to go wrong I can just go to the vet without worrying that I'll be out thousands of dollars," she said.

Quammen said people with puppies or kittens might consider getting insurance, because younger animals are less likely to have pre-existing conditions that might not qualify for coverage. Animals nearing the end of their lives, meanwhile, are likely to need more medical attention.

"Those tend to be where we're seeing them more medically. On the front end, with puppies, we're doing all their wellness and vaccinations," Quammen said. "And, as they get older, we're often talking about pain management, mobility and things of that nature."

Build your own emergency pet fund

Nicole Higginbotham, a bookstore owner in Rock Hill, S.C., and her husband, Luke, have a high-yield savings account earmarked for pet expenses.

The Higginbothams' two dogs, Attie and Rue, were previously insured for $50 a month each. After the $250 annual deductible for each dog, the policy was supposed to reimburse up to 80% of covered veterinary expenses.

In 2023, Nicole realized one of her dogs had eaten a battery, but she wasn't sure which, so she took them both to an emergency vet. The treatment and monitoring resulted in a $1,700 bill. (It was Rue.)

Pet insurance wasn't as helpful for Attie and Rue.

"We fulfilled our $500 deductible and assumed 80% after that would be covered," Higginbotham said. "But there were all these loopholes with medicine, and we ended up receiving a check for $253.34 for both dogs as a 'reimbursement' " - significantly less than the roughly $960 they expected to receive to cover both dogs' treatment.

So the Higginbothams canceled the coverage and opened up a high-yield savings account, to which they contribute $65 a month. It now has a balance of $3,171, including $246 in earned interest. They pay about $90 out of pocket for annual checkups for both dogs and have peace of mind knowing they have a dedicated emergency fund should they need it.

A savings account can be a solid alternative to insurance, Quammen said, but she added that you never know when an emergency might happen. For example, your pet might need $3,000 in care just a few months after you open an account, before you've had time to build up a sizable fund.

So if you already have enough money to absorb a major veterinary bill and can keep contributing regularly, a dedicated savings account may be an option. Insurance may offer more protection if any unexpected expense of several thousand dollars would force you into debt or affect the veterinary care you can afford.

Are you following the new playbook?

America's financial playbook may be tattered, but Generation Z is taking matters into its own hands. MarketWatch's New American Playbook series explores how young people are navigating an increasingly expensive world.

And one final call for Gen Z investors for an upcoming New American Playbook story: If you're under age 30 and an investor - anything from contributing to a workplace 401(k) to active day trading counts here - please take our survey. It's anonymous, unless you choose to share your name at the end.

Key money reads

- Inflation is eating up your high-yield savings account's returns. Here's one way to fight it.

- Ever been charged to attend a dinner party? My colleague Aditi Shrikant addresses how to handle this situation in a Dollar Signs column.

- Want to land more job interviews? Stop letting AI write your résumé.

- Speaking of AI, doomsday fears about the technology have been driving the stock market recently.

Reader tips

Send us your favorite way to save or grow your money to dontshortyourself@marketwatch.com and we'll share it with our readers.

About Genna

I'm Genna Contino, an award-winning journalist on MarketWatch's personal-finance team. I'm 27 years old, originally from South Carolina, and currently splitting the rent on an overpriced apartment in New York City with my fiancé. When I'm not writing about my hack for saving hundreds of dollars on airfare, or the four must-have money conversations before moving in with your partner, you can find me reading a celebrity memoir, overanalyzing reality TV, junk journaling, borrowing DVDs from the library or getting thoroughly humbled in an adult ballet class after a 10-year hiatus.

-Genna Contino