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3 ways to insure your pet for injuries suffered in a car accident

Imagine this scenario: You’re in a nasty car wreck. Your beloved Labrador Retriever, Buster, is riding in the back seat. You’re injured and your car is totaled. Buster is badly hurt, too, to the tune of $17,000 in veterinary bills.

Your auto insurance pays to fix your car and covers your medical bills. But you still end up in the red, because your auto insurance policy doesn’t cover Buster's vet bills.

Not so long ago, this was how car accidents played out for pet owners. Most auto insurance policies didn’t cover pet injuries, and pet health insurance policies weren’t common. It was a major gap in insurance coverage, given how common pet ownership is in the United States. The American Pet Products Association reports more than 60 percent of U.S. households have a pet.

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In the past few years, though, new insurance policies have come on the scene. The overall pet insurance market has boomed – provider Embrace Pet Insurance estimates the U.S. market alone represented $332 million in premiums in 2009 and forecast it would hit $400 million last year.

Now, there are several ways to insure your pet in case of a car accident. But shop carefully. For instance, some policies won’t cover exotic pets. Other policies cover your pet only if it's hit by a car, not if it's injured while riding in one (and vice versa).

Here’s a look at three insurance options for motorists and their pet passengers.

1. Add-on to your auto insurance policy. Progressive pioneered this concept, adding $1,000 of free pet-injury coverage to its policies for cars, boats and RVs starting in 2007.

“If a customer’s dog or cat is injured as a result of a collision or comprehensive claim while inside any covered vehicle or vehicle the customer drives, Progressive will pay up to $1,000 for vet costs,” Progressive spokeswoman Brittany Senary says. There's also a $500 death benefit.

The Chubb Group upped the ante in February 2011, adding $2,000 of free coverage for pets to its auto insurance policies. So far, though, Chubb is offering the pet coverage only in four states: Arizona, Maryland, New Jersey and Texas.

While the price of such pet car-accident coverage can’t be beat, there are a few drawbacks to relying on this type of insurance to cover pets in car accidents, Embrace CEO Laura Bennett says.

For starters, exotic pets are excluded from auto insurers’ coverage. Probably the biggest drawback is that the payout amounts are fairly low. If you’ve ever taken a pet to the vet, you know that medical expenses for treating a major injury easily can exceed a couple of thousand dollars.

Furthermore, Bennett says, if your pet runs into the street and is hit by someone else's car, your auto insurance company won't pick up the tab.

2. Accident-only coverage. Many companies that provide pet health insurance won’t offer their full coverage to families with an older pet, as these pets tend to have the most medical problems. As an alternative, some providers offer accident-only policies.

Providers of accident-only coverage include pet insurers Veterinary Pet Insurance, PurinaCare and Embrace. A typical accident-only plan for a traditional pet such as a dog can range from $12 to $40 a month, says Michael Albo, sales and marketing director at PurinaCare.

The advantage of an accident-only policy compared with relying on the coverage provided by an auto insurer is that your pet would be covered both for injuries sustained while driving with you, and for hit-and-run accidents as well as any other mishaps. Albo says PurinaCare’s accident-only plan has a $20,000 annual limit – a far higher maximum than you'll get with an auto insurer.

3. Accident coverage through a comprehensive pet health insurance policy. The most complete type of coverage for your pet is a health insurance policy that covers your pet for any medical problem, including car accidents and hit-by-a-car situations.

These policies provide complete coverage. Here’s the eye-opener: The premiums aren’t much more than the cost of accident-only policies.

For instance, Embrace’s accident-only policy costs about $15 a month for dogs. By comparison, a typical premium for a dog for a complete health insurance plan, including accident coverage, is $34 a month.

Given the thousands of dollars in medical care that an ill pet can incur, it may make more sense to simply get complete medical and accident coverage, since the extra cost is less than $200 a year, Embrace’s Bennett says.

One twist on the issue of covering your pet for car accidents: If you get coverage through your auto insurance company but you also have a pet health insurance plan, the health plan won’t pay for car accident injuries suffered by your pet until after the auto insurance plan meets its limit.

“We don’t double-pay,” Bennett says.

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