Dog insurance can help reduce the costs associated with your pet's accidents and illnesses, but it's not all-encompassing. Preexisting conditions, preventive treatments and routine care are usually not covered. A typical plan costs $45 per month on average, and you may pay more for older dogs and larger breeds.

How does dog insurance work?

Dog insurance policies come with a monthly premium. When you need to use the insurance, you'll foot the vet bill upfront and then request reimbursement from the insurance carrier later on. Depending on the policy, you may also pay a deductible and a percentage of the bill.

Here are some key terms you should understand when comparing policies:

When choosing your deductible, reimbursement level and annual max, weigh the cost against your risk tolerance. Lower monthly premiums typically correspond with lower payouts when you make a claim, and you'll be on the hook for any balance that your insurer doesn't cover. But if you carry a lot of coverage, your premium might be too expensive—especially if you have an older or larger dog. Below are sample quotes for a 4-year-old Labrador retriever.

How much is dog insurance?

The cost of dog insurance usually ranges from $25 to $100, depending on the dog's breed and age. Without exception, all insurance companies charge higher premiums for larger breeds and older dogs. This is because large breeds tend to have more issues with their joints, ligaments and bones as a result of their weight. Older dogs also tend to have medical complications that arise with age.

Dog insurance costs by breed

To find out how much the most popular breeds cost to insure, we obtained quotes across 20 breeds from a leading insurer. The quotes are for a 4-year-old dog and for a plan with a $250 deductible, 80% reimbursement level and $5,000 annual maximum. Smaller dogs, such as a Yorkshire terrier or Shih Tzu, are the least expensive to insure. Plans typically cost $32.54 per month for these smaller breeds, while larger dogs such as the Rottweiler and great Dane are the most expensive.

Dog insurance costs by age

Generally, older dogs are more expensive to insure because they are more likely to get sick or injured. The graph below shows monthly dog insurance premiums for a German shepherd with a plan with a $250 deductible, 80% reimbursement level and $5,000 annual maximum.

Dog insurance coverage

A pet insurance policy will cover many — but not all — medical issues. Policies typically exclude:

The preexisting conditions exclusion often comes as a surprise to pet owners, as some insurers have broad definitions of "preexisting."

However, many common conditions are indeed eligible for coverage. Below are some of the most commonly treated and reimbursed ailments and illnesses, according to Pets Best's claims data.

Puppy insurance vs. senior dog insurance

Because older dogs typically have more health problems, some insurance companies won't let you sign up for coverage after your dog hits a certain age. Among companies that do insure seniors — usually defined as dogs who are 8 and older — monthly premiums can cost more than double compared to younger dogs. Additionally, the most common exclusions tend to be the ones that affect senior dogs, such as hip dysplasia and dental disease. If you're looking to get insurance for an older pet, it's best to find an insurer that has a plan specifically for seniors, with minimal exclusions and reasonable premiums.

Pet insurers will generally begin covering puppies when they reach 8 months old. For younger dogs, you'll have to pay for any accident and illness treatments out of pocket. Once they reach the eligible age for insurance, you can secure a plan at a low monthly cost. Over time, your premiums will likely rise. The good news is that some insurers, such as Healthy Paws, will cover ailments like hip dysplasia if you enroll your dog when they're still young.

Pet insurance for dogs: Is it worth it?

If your dog is relatively young and healthy with no preexisting conditions, then it's a good idea to get dog insurance. For younger dogs, monthly premiums are much lower and there's a lower risk that an injury or illness will be considered preexisting. In these cases, having a policy will likely be worth it financially if your dog ever needs an expensive procedure.

For older dogs or for those with a history of illness and injury, the monthly premium will likely cost $60 to $70 per month. On top of that, insurers may deny coverage if your dog has had previous illnesses and injuries. However, if your dog does need an expensive, life-saving treatment that's eligible for reimbursement, then your policy more than pays for itself.

Ultimately, the decision about whether to purchase dog insurance is an emotional as well as financial one. Dog owners who don't have insurance will face a tough decision if they get a large vet bill. If you don't have enough in the bank to pay for a major treatment — and you can't fathom the thought of putting your dog down — then you should get a dog insurance plan.