Definition: A dollar amount used to calculate the maximum the insurance company will pay you. It usually refers to the total of the checks the insurer has paid you and doesn’t include all your deductibles and copays that you have paid but be sure to check with your insurer. At least one applies the deductible and copay after the maximum, which reduces the amount of claim you get paid out.
The maximum can be calculated in a number of ways:
Per incident: The maximum is applied for every incident (illness or accident). For example, if your maximum is $2,000 per incident and your pet has an accident, the insurance company will reimburse you up to $2,000 for the medical care for the accident no matter how many vet visits you have. Your claim total is reset for different incidents to zero and the calculation starts afresh.
Per annum: The maximum amount is applied every policy year. For example, if your maximum is $5,000 per annum, the insurance company will reimburse you up to $5,000 in each policy year. Your claim total is reset to zero after every policy year and the calculation starts afresh.
Per body system: The maximum amount is applied to every body system. For example, if your maximum is $3,000 per body system and your pet has a skin infection and then gets burnt in an accident, the insurance company will reimburse you up to $3,000 for all skin medical care. Your claim total is reset to zero for different body systems (e.g. eyes, skeleton, etc.) and the calculation starts afresh; however, once you have reached the maximum for a body system, you are not covered for any more conditions involving those body systems for the remaining life of your pet.
Per lifetime: The maximum amount is applied over the life of the pet. For example, if the lifetime maximum is $50,000, the insurance company will reimburse you up to $50,000 over the life of your policy. Once the maximum is reached, your policy coverage and premiums are discontinued. This type of maximum is usually combined with one of the other maximums such as a per incident plus a per lifetime.
What else do I need to know?
The maximum is important in setting your policy premium. For example, for the same maximum method (per incident, per annum, or per body system), the lower your maximum, the lower your premium. This is because if you have a low maximum, the insurance company reimburses you less when your vet bills get very high, which translates into a lower premium.
Comparing maximum types across different policies can be complicated. A rule of thumb is that if the amount of your maximum is the same, then per annum maximum policies are less expensive than per incident maximum policies, which are less expensive than per visit maximum policies. Unfortunately, the maximums are rarely the same across different types of maximums so comparing becomes difficult.
