by **Caitlyn Driehorst**

Caitlyn Driehorst is a financial advisor at RightWise Wealth, as well as the firm's founder and CEO. Caitlyn began her career at the Boston Consulting Group and held strategy roles at MGM Resorts, Capital Group American Funds and two venture-backed wealth startups. She holds a B.A. from the University of Chicago and an M.B.A. from UC Berkeley's Haas School of Business.
Published: August 2025

Tail Risk: Why Pet Insurance?

One of the scariest things I’ve ever seen? A small pile of torn wax paper scraps.

My little dog, Amelia, is a twelve-pound Havanese. When I was traveling frequently for my first job out of college, I’d wistfully dream of owning a dog. She was one of my first post-consulting decisions, and we’ve been a pair since 2013. She’s fluffy and feisty, full of snuggles and tricks – including stealing snacks from the tops of tables.

That wax paper, now shredded on the floor, had contained some premium ultra-dark chocolate fudge, a Pandemic baking present. Amelia had snatched it from a table and eaten a toxic dose.

Panicked, I rushed my precious pup to the nearest emergency animal hospital. The veterinarian gave me the gentle, difficult speech she must give multiple times a day:

“We have many things we’re going to try, but Amelia may still die. Knowing that, what’s the dollar amount where we should stop trying to intervene?”

*Our puppy, Buddy, was the ringbearer at our backyard wedding*

Weighing Insurance and Risk

In finance, we think about risk on two dimensions:

Probability: How likely is it that something bad could happen?
Severity: If something bad happens, how bad would it be?

When I planned for Amelia’s healthcare, I wasn’t worried about “low severity” risks. My cash reserves could cover small events.

But I was worried about “high severity” risks: the medical bills that could pile up quickly in an emergency. Friends had told me stories of paying thousands to help their pet in an emergency. I knew that in a crisis, I’d pay almost any price to keep Amelia safe.

So, when Amelia and I first moved to Los Angeles and I realized how many more risks would come with urban life (and that the nearest emergency vet to my apartment was literally in Beverly Hills), I researched pet insurance.

Here’s what I found out:

Consider self-insuring first: “Self-insuring” means setting aside extra funds for an uncommon emergency, rather than purchasing an insurance policy. Pet insurance isn’t cheap, so setting aside a similar amount each month could add up to a meaningful sum. On one hand, you may save money by not paying out to the insurance company more than you’ll need in coverage, and the cash could be helpful for other types of emergencies, as well. On the other hand, any veterinary emergency could still require more funds than you’ve saved.
Select your deductible carefully: The deductible is the amount of insurance you’ll pay before your insurance coverage kicks in. If you choose a lower deductible, you’ll pay a higher amount each month; if you choose a higher deductible, you’ll pay a lower amount each month. My goal with insurance was protection for emergencies, so I chose a high deductible for Amelia’s policy.
Understand what’s covered: Amelia’s insurance does not cover regular care and does not cover exam fees. When I got Amelia’s bill from the emergency vet, they had charged me $250 for their intake exam; this charge was not covered by my policy and did not contribute towards my deductible. Read your policy carefully so you’re not surprised the first time you use your coverage.
Consider the age to insure your dog: Amelia was five years old when I first bought her insurance policy. Because she was fairly young, I was less worried that she’d have a health problem; since we had just moved to Los Angeles, I was more worried that she could be hit by a car or eat poison left out for pests – calamities that can affect a city dog at any age. But later, I realized her age impacted her insurance because of its pre-existing conditions exceptions. Her insurance had requested Amelia’s prior health records, and they denied a claim related to a bad skin rash by pointing to a years-old doctors’ note regarding seasonal allergies. When you insure your dog at a younger age, you make more payments while there is a lower risk of health problems, but you may get ahead of chronic conditions that could disqualify later coverage.
Know how the insurance company provides reimbursements: There’s two ways your pet insurance may pay out for your pet’s care: they can pay the vet office directly, or you can pay the vet and then submit for reimbursement. One reason I chose Amelia’s provider is because vet’s offices can bill this insurance company directly; I knew I wouldn’t want the hassles of collecting bills and waiting for reimbursement. (I also found out that vets often prefer this type of coverage.)
Document your insurance: Amelia’s insurance information is on her home vet’s records, on her dog tag and on her microchip. My hope is that if something ever happens, that information could help her receive care more quickly than otherwise.

“So knowing that, what’s the dollar amount where we should stop trying to intervene?”

The vet paused for me to think, but my answer came quickly.

“Amelia is insured,” I replied. “So as far as I’m concerned, there is no dollar limit. Give her everything she needs.”

“Fantastic,” the vet replied. “We’ll take excellent care of Amelia, and we’ll call you in an hour or two with an update.”

Amelia required an overnight stay, and even with substantial kick-in from her insurance coverage, the bill was still eyebrow-raising. But, as my little dog squirmed in my lap on the car ride back home – healthy and happy – I knew I’d never been more glad to pay an invoice.

A different occasion in my dog’s medical history, in which I paid for a physical and neurological assessment to receive an ultimate diagnosis of “light muscle sprain plus drama-dog.” Look at those eyes. She was completely fine.

**Should you get pet insurance?**

At RightWise, we believe that questions about money are not questions with right answers – they are questions with the best answers for you.

You should ask yourself questions like:

Do you have the discipline to maintain a separate, dedicated savings account for a vet emergency? If so, you may prefer to self-insure.
Is your dog elderly, such that if they had a serious health problem, you’d consider comfort care over a major intervention that could reduce quality of life? If so, you may assume your dog would not require significant financial resources in an emergency, and you may not need extensive coverage.
Do you know that you’d agree to pay more than you could really afford, if there was an emergency? If so, you may benefit from a pet insurance policy to protect against such a scenario.

Regardless of your situation, asking these questions early – before a time of crisis, with a level head – can help you prepare to make better decisions later on.