Insurance, by way of a crude definition, is a Risk Mitigation and management tool which would compensate the 'Insured' with a particular amount of money, as the 'Insured' would have believed is worth, in the event of an unforeseen or sudden peril. In case of "Animal Insurance' , it would necessarily mean that the Insurance policy would be taken on the health of the animal in question. In the U.S it primarily means 'Pet Insurance' where the pet guardian would feel that it is worth taking a 'Pet Insurance' against the prohibitive costs involved with respect to treatment of various diseases and ailments their pets might latch on to, leading to very expensive veterinary bills.

Pet Insurance  Policies are gradually evolving as an important tool for most pet lovers since the pets are regarded as a part of the family and the responsibility with respect to the health and safety aspects of the pets lie with the pet guardian or owner. In addition to this, the increasing costs of veterinary care, surgery and veterinary medication, have all led to the growing importance of this class of Insurance product portfolio.

However, In some developing countries where agriculture happens to be a crucial component of the country's GDP and happens to be the means of livelihood for many people within that country, the governments of such countries have rolled out novel Insurance schemes like 'Cattle Insurance' , 'Poultry Insurance' etc, that essentially involve risk compensation for a whole class of animals like cattle and poultry, which might be exposed to risks like contracting diseases or epidemics and even sudden climatic changes. For example, there have been cases of 'Foot & Mouth" disease and other such epidemics which have the potential to wipe out and entire class of respective animals due to sudden climatic changes or for any other unknown reason whatsoever.  

The extent of cover on either a pet, a class of pets, certain classes of special breeds of animals like those kept in zoological parks and Animal husbandry might vary with different requirements based on their respective risks involved for each class. However,in each policy, Special exclusions, normal exclusions and other terms and conditions are explicitly mentioned. Preventive medication for pets and most other Insurable animal classes are generally not covered under the Insurance policies and are to be borne by the Pet or animal guardian.

In some cases, there can even be a Third party Liability Insurance. For Instance, In U.K, Dogs ought to have a third party liability Insurance. These policies are designed to compensate for any losses caused by the dog, in any car accidents or any such untoward incidents.

Most Insurance companies do not cover any pre-existing diseases that the pets might have been infected with, before taking the policy. The onus is hence on the owner to get the animals insured as early as possible to avoid any such policy complications.