People love their pets, and so when Sparky gets sick or injured, many pet owners are ready to do and pay almost anything to help them get better. Last year alone, the American Pet Products Association estimated that consumers spent $38 billion on vet care and product sales.

To try to avoid steep vet bills, some pet owners are paying a premium to insure their furry friends. But pet insurance isn’t always what it’s cracked up to be. Emily Stewart, senior correspondent at Business Insider, wrote about the business of pet health insurance recently. She joined “Marketplace” host Kristin Schwab to talk more about her reporting. Below is an edited transcript of their conversation.

Kristin Schwab: So we can buy insurance for a lot of things, ourselves, our homes, our computers, but I didn’t realize how similar pet insurance is actually structured, at least at face value, to health insurance. Can you tell me about how it works?

Emily Stewart: Yeah, so like you said, pet insurance is fairly similar to health insurance for humans. You pick out a policy, you pay a monthly premium on that. And then let’s say Fluffy gets hurt at the dog park or swallows a toy. You go to the vet, you pay whatever the cost is of the treatment, and then you submit your claim to the pet insurance company, and they reimburse you a certain amount depending on your plan.

Schwab: And how popular is pet insurance among pet owners?

Stewart: You know, it’s growing. I think an important stat to note is it’s not as big as you would think. But it’s getting bigger. So, 6 million pets in the United States were insured as of the end of 2023. That is a small fraction of all the pets in the U.S., considering that there are 80 million dogs and 60 million pet cats in the country. So, it’s not a lot, but it’s growing. According to the American Pet Products Association, Americans spent $147 billion on their animals last year, and you know, about $4 billion went to health and pet insurance premiums in 2023. So that’s a lot.

Schwab: Yeah, $4 billion is a lot. But how much does it cost an individual to cover their one pet, say?

Stewart: It really depends. If you have a young, healthy puppy, it can be pretty cheap. I made up my own pet, which I called Dan, to kind of game this out. So, when Dan was a young, healthy 6-month-old puppy, it was like $25 a month. When I decided Dan was 10 and had some health conditions, all of a sudden it was $150, $200, $300. I think what people sometimes don’t realize is that every year your premiums are going to go up. And one expert I talked to for this story, the one thing he emphasized over and over is that pet insurance is quite expensive. And it is a math problem that people really should kind of give a think to before they sign up.

Schwab: Well, let’s talk more about that math, because the whole point of insurance is to save you money in an emergency. But it didn’t seem like that was the case for everyone you talked to.

Stewart: Yeah, so I think the rub for me with pet insurance is that it does not cover preexisting conditions. I talked to one woman who had a dog who had signed up. And you know, when you’re signing up, it says, “Has your pet had any problems?” And she says, “He’s had some stomach issues.” Cut to a year later, she’s gone to the vet multiple times with his dog with stomach issues, and none of the treatments have ever been covered. Now, people have different levels of experience, right? And it really depends. I think with pet insurance, what it comes down to a lot of the time is that you really do need to read the fine print. So, if your dog has diabetes, if it’s ever had cancer — I talked to one woman whose dog had a leg problem. And her vet actually told her, “Listen, I’m not going to document this leg problem. You go get pet insurance right now, because you will be back having to deal with this.” And they did a little bit of insurance fraud.

Schwab: Oh, because of the preexisting condition thing?

Stewart: Exactly. Yeah. And so basically, her vet said, “I will not document the problem, because it will be a preexisting condition. And the minute it’s written down, it will not be covered by your insurance.”

Schwab: Wow. Last question. I assume you don’t have a pet since you made up Dan, but after all this, if you were to get a pet someday, would you consider getting insurance?

Stewart: You know, I think I would depending on the price, but I don’t know that it would be the first on my list. And I think the minute you get to a little bit more expensive, that’s tough. If it’s $100 a month, that’s $1,200 a year. That’s a tough math problem for me.