Pet Insurance Firm Takes Too Long to Pay, State Says


A Santa Ana company that sells health insurance for dogs and cats was accused by the state insurance commissioner’s office Wednesday of taking too long to pay claims and of misleading advertising.

Insurance Commissioner John Garamendi said a random survey of 256 claims made to Veterinary Pet Insurance Co. showed that only five claims were paid within 30 days, the insurance industry standard. The remaining claims took 90 days or more to process.

A commission spokesman said one pet owner bought a policy from the Santa Ana firm expecting it would cover 80% of veterinary bills. After filing a claim, the policy holder was told that only 80% of the first $180 was covered.

The two alleged violations of the state Unfair Claims Practices Act carry potential fines of $10,000 each.


Jack Stephens, president of Veterinary Pet Insurance and a former veterinarian, said the charges “came totally out of the blue. I think we have a logical answer to these charges.”

Stephens said insurance inspectors visited his company in May in response to customer complaints about slow claim settlements. He said his company worked out a plan with the state to speed up the claims process, including installation of a computer system to handle the 50,000 policies it has sold in California.

Believed to be the only company of its kind in California, Veterinary Pet Insurance has been selling policies for $40 to $100 a year per pet since 1982, Stephens said. It is owned by a group of 750 veterinarians, he said.

“I can’t account for his (Stephens’) surprise,” said Tom Epstein, a spokesman for the state insurance commissioner. “Our people thought they were quite clear. We feel perfectly justified in this action.”

Garamendi’s office also cited insurers headquartered in California and Tennessee. It cited the California State Automobile Assn. Inter-Insurance Bureau, one of the biggest auto insurers in Northern California, for “unreasonable” delays of up to eight months in paying 18 claims. Provident Life & Accident Insurance Co. of Chattanooga, Tenn., is accused of failing to pay interest on a number of California death claims.