Why Two Pet Insurers Pay Different Amounts on the Same $1,200 Bill

The three numbers everyone compares

Start with what the quote does tell you. The deductible is what you pay out of pocket before the insurer pays anything; commonly offered amounts are $100, $250 and $500. The reimbursement percentage is the share of the eligible amount the insurer pays after that; 70%, 80% and 90% are the usual choices, with some carriers offering 50% at the low end and 100% at the high. The annual limit is the ceiling on total payouts in a policy year.

Those three move the premium in predictable directions. A lower deductible, a higher percentage and a higher limit all cost more per month. Industry averages for accident-and-illness cover give you a starting point, and we walked through what pushes a quote away from them in the monthly premium breakdown. What that article did not cover is the part below.

Deductible first, or percentage first? The difference is real money

Take a $1,200 covered bill, a $200 annual deductible and 80% reimbursement. There are two ways to run it.

Deductible first: $1,200 − $200 = $1,000, then 80% of $1,000 = $800.
Percentage first: 80% of $1,200 = $960, then $960 − $200 = $760.

Same three numbers, $40 apart. Embrace publishes its method openly — it subtracts the deductible first and then applies the percentage — and points out that some other carriers apply the percentage first, which produces the smaller figure. The gap is not fixed at $40, either. It scales with the deductible: run the same two methods with a $500 deductible and the difference becomes $100, because the percentage-first method effectively charges you the full deductible while also shaving the percentage off it.

This is the single question most worth asking before you buy, and it is answerable. The policy has to describe the basis on which claim payments are determined, and most carriers put a worked example on their claims page.

Annual deductible or per-incident deductible

A second structural fork. An annual deductible is met once per policy year and then stops applying, no matter how many separate problems come up. A per-incident deductible resets for every new condition. On paper the per-incident version often looks cheaper per month, and for a pet with one bad year and one bad problem it can be. For an older animal with three unrelated issues in the same year, it means paying the deductible three times.

The way to test which one you are looking at is to imagine two claims in the same year for unrelated things — a torn ligament in March and a swallowed sock in August — and ask how many deductibles you would pay. Chronic conditions make this sharper, because a per-incident deductible on a condition that recurs across policy years may reset annually for the same problem.

What counts as a covered expense before any of this starts

All of the arithmetic above runs on the eligible portion of the invoice, not the invoice total. Lines that carriers commonly treat differently include the exam or consultation fee, sales tax, waste-disposal and biohazard fees, prescription diets, supplements, and anything classed as preventive or wellness care rather than accident or illness. An exam fee of $65-$100 excluded from every claim is a recurring reduction that never shows up in the premium comparison.

On top of that sit the exclusions that generate most complaints: waiting periods and pre-existing conditions, which decide whether the claim is eligible at all. Those have their own rules and their own timelines, and we covered them separately in the waiting periods and pre-existing conditions guide.

Actual cost, benefit schedule, or usual and customary

Here is the part quote tables never show. There are three different things a reimbursement percentage can be a percentage of.

• Actual cost — a percentage of what your veterinarian actually charged. What most people assume they bought.
• Benefit schedule — a fixed table of maximum payouts per condition or per procedure, written by the insurer before your pet was ever sick. If the schedule says $600 for a fracture repair and the bill is $2,400, the percentage applies to $600.
• Usual and customary fees — a cap based on what the insurer determines is the prevailing charge for that service in your area. Bills above that benchmark are trimmed to it first.

The NAIC Pet Insurance Model Act addresses this directly. An insurer using a benefit schedule must disclose the applicable schedule in the policy and publish all of its schedules through a clear and conspicuous link on the main page of its website. An insurer using usual and customary fees must include a provision in the policy that describes the basis for determining them and how that basis is applied in calculating claim payments, and disclose that basis on its website too. In both cases the information exists in public before you buy — you have to go looking for it.

The annual limit caps the payout, not the bill

An annual limit of $5,000 does not mean $5,000 of veterinary care. It means $5,000 of reimbursement. At 80% reimbursement, hitting a $5,000 limit takes roughly $6,450 of eligible spending after a $250 deductible — and everything past that point is yours. This matters most in exactly the scenarios people buy insurance for: an emergency admission, where intensive hospitalization runs into four figures per day, or a surgical dental where the estimate and the final bill diverge once radiographs reveal what needs extracting.

Unlimited annual benefits exist and cost more. Whether the extra premium is worth it is a question about the tail, not the average: the average claim year is comfortably inside any limit, and the year that isn't is the reason the policy exists.

What the model act says you are owed in writing

The NAIC adopted its Pet Insurance Model Act in August 2022, and as of the Summer 2025 state pages, sixteen states had adopted it: California, Delaware, Florida, Hawaii, Louisiana, Maine, Maryland, Mississippi, Montana, Nebraska, New Hampshire, Ohio, Pennsylvania, Rhode Island, Vermont and Washington. Where it applies, an insurer must disclose exclusions for pre-existing, hereditary, congenital and chronic conditions; any provision limiting coverage through a waiting period, deductible, coinsurance or annual or lifetime limit; and whether it reduces coverage or raises premiums based on claim history, the pet's age or a change of address. All of it has to be summarized in one separate document titled "Insurer Disclosure of Important Policy Provisions."

The model also provides a 15-day free look: unless you have filed a claim, you can return the policy within fifteen days of receiving it, without giving a reason, and the company refunds the full premium within 30 days. That window is the practical time to read the claim-payment basis and the deductible order — with the actual policy in hand rather than a marketing page.

How to read a quote in six steps

1. Find the claim-payment basis: actual cost, benefit schedule, or usual and customary. Stop here if it is a schedule and you were expecting actual cost.
2. Ask whether the deductible is subtracted before or after the reimbursement percentage, and get the worked example.
3. Check whether the deductible is annual or per incident.
4. List what is excluded from the eligible amount — exam fees first, then tax and disposal fees.
5. Convert the annual limit into bill dollars at your reimbursement rate, not payout dollars.
6. Read the "Insurer Disclosure of Important Policy Provisions" inside the free-look window. If the numbers do not match the quote, that is what the window is for. Then budget the predictable half separately — dental work and routine care mostly sit outside accident-and-illness cover anyway.

Sources and date: NAIC Pet Insurance Model Act (Model 633), adopted August 2022 — Section 4 disclosure requirements, Section 4(C) on disclosing the basis or formula for determining claim payments, 4(D) on benefit schedules, 4(E) on usual and customary fee limitations, 4(B) on the 15-day right to examine and return, and 4(H) on the "Insurer Disclosure of Important Policy Provisions" document; NAIC Model 633 state pages, Summer 2025, for the list of adopting states; Embrace Pet Insurance's published explanation of deductible-then-percentage versus percentage-then-deductible calculation, including the $1,200 bill, $200 deductible and 80% reimbursement worked example. Verified August 2026. Deductible options, reimbursement rates and exclusions vary by carrier and by state, and the figures used above are illustrations of the arithmetic rather than quotes. This article covers policy mechanics and cost only. It is not veterinary advice, and it is not insurance advice for your specific situation — read the policy documents and confirm terms with the insurer and your state insurance department before buying.