Pet insurance is the equivalent of health insurance for humans. You pay an annual premium for certain types of coverage that will help reduce your overall pet expenses.  In some cases, you will pay the healthcare provider directly, such as when you visit a hospital, you pay your deductible and the insurance providers works out the rest with the hospital. In other cases, you need to submit a claim, which means you pay out of pocket, file the claim online and get reimbursed.