Claims can cost you later: claim-based premiums and deductible resets

From Pet Insurance Wiki · last updated 19 Oct 2026
One of the most dangerous traps. Every example below comes from an insurer or regulator document, linked next to the quote. All traps

The more often you claim, the more your insurance may cost you next year. Some insurers say in their disclosures that they may raise the price, or even cut your cover, because of your claims. At Figo, a paid claim (other than for wellness) sends the deductible back to its original amount at the next renewal, and the reduction you earned over claim-free years is gone.

How it works

You buy insurance to use it. But in some policies a claim can cost you money even after it is paid. The documents show two mechanisms tied to claims, and a third that is not tied to claims but can also raise the price.

  • Price or cover depends on your claim history. The insurer may take your claims into account when it sets the price. Nationwide (in Pennsylvania, only its Modular Pet Insurance plan), Fetch, Pumpkin (in some states) and Embrace say so in their disclosures; Fetch also says it may cut cover. No document says how much the price will rise, and none uses the word “surcharge”. Every one says “may” or “could”. So you have no guarantee that claims will not raise your price.
  • The deductible shrinks while you don’t claim. At Figo the annual deductible drops by $50 for each claim-free year, down to zero. After a paid claim it goes back to the original amount from the next term, and the countdown starts again. Wellness claims do not trigger the reset.
  • A discount can be withdrawn. Figo reserves the right to change or end any premium discount. The clause is not tied to claims, but when a discount goes, the price goes up.

The pet insurance laws of Pennsylvania and Washington do not ban this. On this point they require only disclosure: the insurer must say whether it raises premiums or cuts cover based on claim history. Pennsylvania also requires the same statement in advertising. We did not check the laws of the other states on this page, or whether general rate-filing rules limit such increases.

So where the premium depends on claim history, a pet with a chronic illness, which needs claims paid every year, can become steadily more expensive to keep insured. Moving to another insurer usually does not help: the new insurer would treat the illness as pre-existing and exclude it (see the pet insurance trap). Some owners may end up dropping cover. That is our conclusion; the documents do not say it.

How claim history enters the price through discounts (for example, IAIC’s “healthy pet” discount in Florida) is covered in how pet insurance is priced.

Examples

Nationwide: the Modular Pet Insurance plan in Pennsylvania

At each renewal the price may depend on the number and cost of claims paid in the previous 18 months. The disclosure for the Modular Pet Insurance plan, item 5: “At each renewal, your premium amount may be affected by medical claim paid counts and amounts from the previous 18-month period.”

This applies only to Modular Pet Insurance. The disclosures for Nationwide’s other Pennsylvania plans (Whole Pet, Major Medical, VB and Wellness) have no claims item. They name only age, breed and location, and the Wellness disclosure names only location. Whole Pet, item 5: “Your policy premium may increase based on the age and breed of your covered pet and changes in your geographic location.”

The Modular Pet Insurance disclosure is marked SAMPLE and dated September 2024, before the law took effect on 7 December 2024. But it is the one Nationwide’s forms page lists for Pennsylvania today.

Source: Nationwide, Insurer Disclosure of Important Policy Provisions — Modular Pet Insurance, IDIP-MPI-PA (9-24), item 5, p. 1. For comparison, disclosures IDIP-POI-PA, IDIP-MM-PA, IDIP-VB-PA and IDIP-PW-PA (all 9-24) on Nationwide’s forms page with Pennsylvania selected.

Fetch: price up, cover down

Fetch says claim history may lead to both a higher price and less cover: “Premiums may be increased and coverage may be reduced based on your pet’s individual claim history.” It does not say how cover would be reduced or by how much the price would rise.

The same sentence appears in Fetch’s notices for Delaware, New Hampshire, Maryland, Louisiana, Mississippi, Nebraska, Rhode Island and Vermont.

Source: Fetch, Notice for Pennsylvania residents — Pennsylvania Insurer Disclosure of Important Policy Provisions, as of February 12, 2026, the paragraph after the first-exam provision.

Pumpkin: depends on the state

In Pennsylvania Pumpkin says: “Insurance plan premiums may increase or decrease due to claims history.” The wording cuts both ways: the price could also go down.

The same sentence is in Pumpkin’s notices for Delaware, New Hampshire, Louisiana, Mississippi, Nebraska, Rhode Island and Vermont. Its notices for Washington, Maine and Maryland say the opposite: “We will not reduce coverage or increase premium due to claims history.” The underwriter alone does not explain the difference. The Washington notice names United States Fire Insurance Company, but the Maine and Maryland notices name Independence American Insurance Company, the same insurer as the Pennsylvania notice.

Source: Pumpkin, Notice to Pennsylvania Residents, PET-PA-Notice-1125-PUMPKIN, section “Premium Increases Due to Pet Age, Geographic Location, and Claims History”.

Embrace: a national disclosure

Embrace’s disclosure says: “Your premium may be impacted and could result in a possible increase based on your claim history, the age of the covered Pet or if you change your geographic location.”

This is a national form that names no state. Embrace’s site links it as “Policy Disclosure” in its navigation, so it also appears on the Pennsylvania page.

Source: Embrace, Insurer Disclosure of Important Policy Provisions — Pet Health Insurance Policy, INDPP (01/23), p. 1, “Coverage Disclosures”.

Figo: the deductible comes back after a paid claim

Figo’s “Diminishing Deductible” is built into the policy itself; it is not an optional add-on. For each claim-free year the deductible drops by $50 at renewal: “For each year that You are Claim free while continuously covered by Our Policy, Your current Policy Annual Deductible will be reduced by $50.00 upon Policy Renewal until it results in a $0.00 Policy Annual Deductible.”

A paid claim wipes out the reduction: “If a Claim is made and You receive payment, the Policy Annual Deductible will be returned to its original Policy Annual Deductible amount for the following Renewal term and the process will start over.”

Details:

  • The reset applies from the next term, not immediately.
  • Wellness claims do not count. The Pennsylvania and Washington policies and the national sample say “Claims for Wellness”; the 1025 forms (Arizona, Illinois, Indiana, Texas) say “Claims for Preventive Care”.
  • The reset returns the deductible to its original amount, not higher. You lose only the reduction you earned.
  • In the policy a “Claim” is any request for payment: “Claim means Your request for payment…”. On our reading, even a denied or unpaid claim costs you that year’s $50 reduction. But only a paid claim sends the deductible back to the original amount.

The same clause, word for word apart from the name for preventive care, is in Figo’s policies for Arizona, Illinois, Indiana, Pennsylvania, Texas, Washington and in its national sample policy. Of these states, only Pennsylvania and Washington have a pet insurance law based on the NAIC model, which requires a separate disclosure document.

A mismatch with the disclosure. Figo’s Pennsylvania and Washington disclosures say: “We do not reduce coverage or increase premiums based on the policyholder’s claim history.” They say nothing about the deductible reset. On premiums the policy is consistent with this: nothing in it ties the premium to claims. But a deductible that goes back up after a paid claim is, in our view, a reduction in cover based on claim history. That is what the Pennsylvania law (40 Pa.C.S. §4705(a)(6)) and the Washington law (RCW 48.205.040(1)(d)) require insurers to disclose. We found no regulator ruling on this. It is our reading, not an established violation.

Sources: FIGO Pet Insurance Policy, IAIC FPI POL PA 0424, Part III item 4 “Diminishing Deductible”, p. 7; FIGO Pet Insurance Policy, IAIC FPI POL WA 0724 AI2, Part III item 4, p. 7; FIGO Pet Insurance Policy, IAIC FPI POL IL 1025, Part III “Cost Shares”, “Diminishing Deductible” paragraph; definition of Claim in Part I; Figo, Pennsylvania Insurer Disclosure of Important Pet Insurance Policy Provisions, p. 3; Figo, Washington Insurer Disclosure of Important Pet Insurance Policy Provisions, IAIC FPI ML NOTICE 0124 WA, “Required Disclosures”, p. 2.

Figo: a discount can be withdrawn mid-year

In Figo’s Pennsylvania policy, premium discounts can be changed or ended at any time at the company’s discretion, with 30 days’ notice: “These discounts may be altered, changed, modified, revised, discontinued, or terminated at any time by the Company at its discretion, upon thirty (30) days written notice to You.” Without the discount the premium goes up.

The same clause is in the policies for Arizona, Illinois, Indiana and Texas. Washington’s is narrower: discounts can be changed only at renewal, with 20 days’ notice: “…at Policy Renewal by the Company at its discretion, upon twenty (20) days written notice to You.” The 20 days match Washington’s general rule on notice of changes at renewal (RCW 48.18.2901).

The policy does not link this clause to claims. It is a general right of the company. But Figo’s Pennsylvania disclosure names only the pet’s age and a move as reasons the premium may rise. It says nothing about withdrawing a discount.

A discount lost because of claims is a different clause, at Fetch: in several of its state policies, such as Texas, once it has paid more than 50 claims for your pet, you may lose a promotional discount. Its Pennsylvania policy has no such clause. See dropped or downgraded after the pet gets sick.

Sources: FIGO Pet Insurance Policy, IAIC FPI POL PA 0424, Part VI “Premium Discounts”, p. 12; IAIC FPI POL WA 0724 AI2, Part VI “Premium Discounts”, p. 11.

A worked example: a small claim at Figo

The figures are illustrative, not Figo prices. The mechanism is from the policy.

  1. You bought a policy with a $250 deductible and 90% reimbursement. Three years without claims: the deductible is down to $100.
  2. A vet bill comes to $200. Under the policy’s “Cost Shares” clause, Figo applies the reimbursement percentage first, then the deductible: 90% of $200 = $180, minus the $100 deductible = an $80 payment.
  3. For the next term the deductible goes back to $250. Without the claim it would have dropped to $50.
  4. If next year’s bills are large enough to use up the whole $250 deductible, you pay up to $200 more than you would have without the claim. You got $80 and lost up to $200.

If next year’s bills are small, the loss is smaller or there is none. That a small claim can cost more than it pays is our conclusion from the arithmetic; the policy does not say it.

What to do

  • Before you buy, ask in writing: “Do you raise premiums or reduce cover because of claim history? By how much, and over what period do you count claims?” Check the answer against the “Insurer Disclosure of Important Policy Provisions”. In Pennsylvania and Washington the law requires that document to state this.
  • Look at the plan, not just the brand. In Pennsylvania, Nationwide’s claims item is only in Modular Pet Insurance, not in Whole Pet, Major Medical, VB or Wellness.
  • Read the notice for your own state. Pumpkin’s notices in Washington, Maine and Maryland say it will not raise prices or cut cover because of claims; in Pennsylvania and seven other states they say claims history may change the price.
  • Compare with brands that have no such clause. Our Pennsylvania page lists MetLife, Spot, ASPCA, Figo, Lemonade and Pets Best as disclosing no claims-based price increase there. Figo’s disclosure says outright that it does not raise premiums or cut cover because of claims, but Figo still has the deductible reset.
  • At Figo, do the sum before a small claim. Compare the payment with the cost of losing your deductible reduction. Remember that, on our reading, even an unpaid claim breaks the claim-free year. Wellness claims do not count.
  • Ask which discounts you have and whether they can be withdrawn mid-year. Figo’s policies for Pennsylvania, Arizona, Illinois, Indiana and Texas allow it at any time with 30 days’ notice; in Washington only at renewal.
  • At renewal, compare the new premium with the old one. If it went up, ask in writing why. If the reason is your claims and the disclosure did not say so, complain to your state’s insurance department; in Pennsylvania that is the Pennsylvania Insurance Department.

Brand pages: Nationwide, Fetch, Pumpkin, Embrace, Figo.

Sources

History

  1. First published