Pet Insurance Bill Provides Important Consumer Protection For Rapidly Growing Market

Pet Insurance Bill Provides Important Consumer Protection For Rapidly Growing Market

Pet insurance industry to reach $750 million by 2015 as Americans increase spending on veterinary care.

Within California's economy, the pet insurance market is rapidly growing and expected to reach $750 million by next year. AB 2056 (Matt Dababneh), [enhanced version available to lexis.com subscribers], sponsored by California Insurance Commissioner Dave Jones, will add important consumer protections to pet insurance by bringing uniformity to policy language and disclosures increasing transparency in pet insurance policies. California Assembly member Dababneh and Commissioner Jones held a joint press conference at an off-leash dog park to discuss this important pet insurance legislation.

"California has the largest number of insured dogs and cats in the nation," said Commissioner Jones. "It is essential that consumers purchasing pet insurance understand what they're getting for their money. When policy terms are more easily understood, consumers are better able to select a product that meets their needs. AB 2056 will help pet owners who want to limit the financial risk associated with the pet's veterinarian bills, while providing important consumer protections that are currently absent from pet insurance."

The California Department of Insurance receives nearly 100 complaints regarding pet insurance coverage every year. After investigation, the majority of complaints result in findings for the consumer. One of the most common issues pet insurance consumers face is coverage of pre-existing conditions. Pet owners often purchase policies either not knowing that pre-existing conditions are not covered or the policy language is unclear as to what constitutes a pre-existing condition, which leads to coverage denials by the insurer. AB 2056 will require pet insurers to standardize definitions and disclose important information regarding their policies such as reimbursement benefits and pre-existing condition limitations.

Policies would be required to contain a clear explanation of limitations of coverage including coinsurance, waiting periods, deductibles and annual or lifetime policy limits. The bill adds a 30-day free-look period where consumers could return their policy for a full refund as well as stronger enforcement provisions in case of a violation of any policy provisions.

"AB 2056 is an important first step into protecting consumers participating in this rapidly growing industry," said Assemblymember Matt Dababneh. "By requiring standard disclosures for all pet insurance policies and including a 30 day free-look period for consumers, this bill allows pet owners to choose the most appropriate pet insurance product to fit their needs, and increases confidence in their purchases." This year Americans will spend more than $15 billion on veterinary care. The pet insurance industry has more than doubled in size since 2008 and more pet owners are purchasing pet insurance to ensure that they can afford the proper veterinary care for their pets. In California alone, there are more than 200,000 pets insured. If AB 2056 is signed into law, it would be the first consumer protection legislation for pet insurance consumers of its kind in the country.

•   There are approximately 1.2 million dogs and 1.65 million cats owned in Los Angeles County.

•   AB 2056 is supported by animal welfare organizations such as the Humane Society of the United States, American Society for the Prevention of Cruelty to Animals, Social Compassion in Legislation, Actors and Others for Animals and the Pet Industry Joint Advisory Council as well as Consumers Action and Consumer Federation of California.

•   AB 2056 unanimously passed the California State Assembly.

•   California legislature Link to AB 2056

•   Pet insurance infographic

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