For horse owners, insurance offers a form of protection and security. Liability, mortality, shipping, major medical, surgical, loss-of-use, stallion infertility – whether a horse owner has fifteen racehorses at the track, a band of broodmares, a few show horses at a training stable, or a pleasure horse at a boarding barn or in the backyard, some form of insurance is needed.
The owner of a stable will want to be covered in case something happens to a horse in his care. The owner of an expensive racing or breeding animal will want some protection for his investment. The owner of a back-yard pleasure horse may want to know that he will be able to buy another horse if something happens to the horse he has now, or he may want to know that his horse is protected in case necessary surgery must be performed. Anyone who owns a horse, leases a horse, boards a horse, or teaches a lesson will want the protection provided by liability insurance.
Horse ownership at any level creates risks. Insurance is more than just another expense connected with horse ownership; it is a way for horse owners to protect themselves while exercising responsibility toward the horses that they own.
Table of Contents
What is Full Mortality Insurance (Life Insurance)?
Full Mortality covers the horse’s death by infection, disease, injury, or accident. This form of insurance also covers euthanasia in cases where keeping the horse alive would cause inhumane suffering. Full Mortality insurance generally includes theft coverage.
What are the limits of mortality insurance?
The owner is responsible for providing suitable veterinary care for that horse. If any injury or illness should occur, the owner must not only provide veterinary care, but must notify the insurance company immediately. For this reason, horse owners should keep the toll-free telephone number of the insurance company on hand at all times, and make it available to anyone else who is handling or keeping the horse. Many insurance companies now provide horse owners with a card to place on their horse’s stall, so that the telephone number will be accessible to stable staff. It is the horse-owner’s responsibility to ensure that the custodians of his horse(s) are made aware of the need to notify the insurance company immediately if the owner is absent when an injury or illness occurs.
What causes of death are covered by Full Mortality Insurance?
Full Mortality insurance covers the horse’s owner for the fair market value of that horse if it dies. Under the terms of most Full Mortality policies, the insurance will be paid if the horse dies during the policy period or within thirty days after the expiration of the policy period, if the death is the result of an accident that occurred during the policy period, or the result of an illness or disease that the horse contracted during the policy period. This includes euthanasia under certain circumstances; the company must agree to the destruction of the horse; a company-appointed veterinarian must issue a certificate certifying that the horse’s destruction was necessary for humane reasons. Euthanasia may also be covered in the absence of a company-appointed veterinarian, if a licensed veterinarian called by the horse’s owner certifies that the horse had to be destroyed immediately to avoid incurable and excessive suffering.
How is a horse’s value determined for insurance purposes?
Mortality insurance pays for the “cash value” of the horse at the time of death but not more that the “insured value.” The “cash value” and the “insured value” are two different things and are a distinction that must be understood. If a horse has an insured value of $50,000 (and the owner has been paying premiums based on that amount), this does not mean the owner will receive $50,000 if the horse dies. The owner will receive the “cash value” of the horse at the time of its death which could be significantly less than its insured value.
Traditionally, it has been difficult to determine the actual cash value of an insured horse. The owner of the horse has generally determined the horse’s “value” and insured him accordingly, but the terms of most policies require that the insurer pay out the “actual cash value” of the horse at the time of his death.
This requirement represents an attempt on the part of the insurance companies to guard against two scenarios: first, that in which the value of the horse drops considerably during the term covered by the policy, and second, that in which an owner intentionally “over insures” a horse with the intention of killing it to collect on the policy.
Since the owner’s estimate is not always reliable, insurers look for some form of objective data to help them determine the actual cash value of a horse. This could be the price paid for the horse at auction, or the estimated value of the horse based on its original value plus the added value of its training, produce, or show record. The services of an equine appraiser are often used to arrive at an objective value for an individual horse. An equine appraiser does not have to be licensed, but he should be well-informed about horses and he should be conversant with the current market.
Some policies specify that the horse’s value be determined at the time of death – by the appraiser, if the owner can’t prove the horse’s value.
Some policies require that the owner prove the value of the horse every quarter.
Some policies have an agreed-upon price, or an “agreed value,” which means that the insurance company commits to pay that stated amount if the horse dies.
It is possible to insure a horse for more than its worth, but it is becoming more difficult to do this, because that worth is generally based on the purchase price. If an owner believes that his horse is worth more than the purchase price, he will need to produce evidence of increased value based on training, breeding records, show records, and appraisals. Then the insurance company must agree that the horse’s value has increased to a specific amount. A homebred horse is generally insured to twice the value of the stud fee.
One of the best ways to avoid this situation from the beginning is for the company to have knowledgeable agents who can help horse-owners purchase appropriate coverage for their animals. If the agent was involved in the initial purchase of coverage, and substantiated the value at which a horse was insured at that time, the insurance company may be more likely to pay any claim in full. But even this is not a guarantee of full payout. Agents are sometimes unwilling to compromise their relationship with the owner, or risk their expected commission, by placing a lower value on a horse than that placed upon it by its owner.
Under what circumstances may an insurance company refuse to pay anything if the horse dies?
If the insurance company finds that the owner has provided the company with false information, coverage can be denied. If the horse’s owner fails to meet specific policy requirements, or fails to notify the insurance company of any illness or injury suffered by the horse, coverage can be denied. In all cases, it is the owner’s responsibility to know and meet the terms and conditions of the policy, including notifying the insurance company and, in the case of the destruction of a horse, providing a veterinarian’s certificate to prove that the destruction was necessary. If the conditions are not met, or are not met in a timely fashion, the coverage may then be voided.
The horse-owner should also be aware of other common exclusions in equine mortality policies. If the horse died from poisoning, it must be proved that the poisoning was accidental. If the horse was stolen (assuming that theft is covered by the policy), the owner must notify the company and the local law enforcement agencies immediately, and the horse must have been stolen by someone who was not related to the owner. If the horse dies during, or because of, some types of surgery, the owner must be able to prove that the surgery was performed by a qualified veterinarian, that the surgery was necessary, and that it was done to save the horse’s life.
Finally, since a person is not allowed to take advantage of his own wrong, the insurance company will not pay if an insured horse is deliberately killed by its owner or its owner’s agents, or if it dies as a result of abuse, mistreatment, overwork, or failure of the owner to use ordinary care.
What are the different types of coverage?
Loss of Use Insurance
Loss-of-Use insurance is, in effect, a disability policy for a horse. This is generally quite expensive, whether it is purchased as an extension of the mortality policy or as separate coverage, and is therefore most appropriate in those cases where the horse earns income when performing its stated use, and where the horse’s owner would suffer loss of income if the horse became unusable for its purpose as described in the policy.
This insurance will pay if the horse sustains an illness or injury that makes it unfit to perform the use that was stated when the policy was acquired. This applies when the horse is injured and effectively disabled, but can be saved, and does not qualify for humane destruction under the mortality policy. The typical payout would be approximately 60% of the horse’s worth.
An example of loss-of-use would be a horse whose owner insures it as a jumper, and who may then collect payment if the horse sustains an injury that makes it unable to gallop and jump. The horse may be retired to pasture, or perhaps recover enough to be hacked out. The same would be true of a successful racehorse, if an accident ends the horse’s racing career.
Breeding Stallion Infertility Insurance
This covers the loss of the stallion’s ability to breed because of infertility. Such policies are commonly used when a new, young stallion is purchased by a breeding farm. If this new, unproven stallion is not fertile, the farm would have purchased a worthless animal, and would therefore suffer a great financial loss without such coverage. Although these policies are extremely complicated, it is generally safe to say that under the normal terms of such a policy, the stallion will be considered “fertile” during his first breeding season if, no later than 45 days following the last breeding, sixty percent of the mares bred are determined (upon examination conducted by a licensed veterinarian) to be in foal.
For a proven breeding stallion, there is also a policy called an AS&D stallion infertility option. This means that the insurance company pays if the stallion becomes totally and permanently infertile or impotent because of accident, sickness, or disease.
In-Foal Insurance/Broodmare Barrenness Insurance
“In-Foal” or “Unborn Foal” insurance is becoming steadily more popular within the racing/breeding industry, as more and more stallion seasons are being sold as “no guarantee.” Such insurance was not necessary when seasons were sold on a “live foal” basis, but now mare owners need to protect themselves financially against the possibility of the mare (a) not being impregnated, or (b) slipping the foal. Without a guarantee of a live foal or a free return, the mare owner must pay the fee whether or not the mare produces a foal from the breeding.
In-Foal insurance generally covers the foal to a date thirty days after birth; for an increased premium, the coverage will continue throughout the first year of life. The company pays if the foal is aborted because of natural causes.
Workman’s Compensation Insurance
If a stable or other horse operation has employees, it is likely to be required to carry Workman’s Compensation Insurance. All racing operations must carry such coverage, although other horse-related operations may be classified as “agricultural” and are therefore exempt from the requirement.
For those operations where this insurance is not mandatory, it is still an excellent idea to carry it for protection in case an employee is injured on the job. Many horse farms, in fact, find that such coverage is attractive to potential employees. Actual requirements vary by state, so business owners should check with their state’s Department of Labor for more specific information.
Extended Perils Insurance
“Extended Perils,” “Limited Perils,” or “Restricted Perils” insurance is a form of Mortality insurance that costs less and offers less comprehensive coverage. Although the price may be tempting, horse owners should be aware that this form of coverage only pays if the horse’s death is accidental and due to natural planet causes, not to illness. This form of insurance is popular among horse-owners with one or two pleasure horses, as it applies to horses of any age, and does not require a veterinary examination. The insurance would pay if the horse drowned or were struck by lightning, for example, but not if it died of colic.
What should I consider when choosing an insurance company
The two most important considerations are the company’s history of paying claims, and the financial soundness of the company and its underwriters. Horse-owners should look for a stable, established, financially secure company with a good track record. The company’s financial rating should be at least B+ and preferably at least A-, and horse-owners should avoid purchasing insurance from an unrated company.
Horse-owners should also look for an admitted company, which does business under the regulations of their particular state and with the protection of their state’s guarantee fund. If a horse-owner deals with an insurance company that is not admitted and licensed in his state, that horse-owner will have no protection from the state in the event of a disputed claim. A horse-owner may call his State Commissioner of Insurance to verify that a particular insurance company is licensed.
If possible, horse-owners should also look for a company that will pay Agreed Value (the horse’s value according to the policy in force) rather than the current market value, which may be significantly less. And horse-owners at any level – whether they own a racing stable or one back-yard horse – should read their policy carefully and ask their agent to explain anything that they do not understand.
What are the costs of equine insurance?
The cost of equine insurance can vary widely. Since there is a good deal of competition among insurers, rates are flexible. In many cases, discounts are offered as incentives for larger owners to insure their horses with a particular company. “Quantity discounts,” “experience discounts,” and “experience refunds” are all part of the new insurance options offered by national and international companies.
The only safe prediction is that any coverage involving racehorses will continue to be more costly than coverage involving horses of any other type.
Insurance can be a costly part of a horse business, but it is a necessity. Any individual in search of equine insurance should shop around, take notes, and invest some time and thought before selecting an insurance company.
What are the limits to the types of surgeries that are covered by Major Medical and Surgical Insurance?
Major Medical insurance covers most of the costs involved with a horse’s care due to accident, injury, or illness. Like similar insurance for humans, there is usually a deductible involved, and certain financial limits. This coverage will pay for necessary surgical expenses, but not for the travel expenses of the veterinarian or of the animal – a horse that needed to be transported to a specialty hospital for surgery, for instance.
Surgical coverage pays for any surgical costs due to accident, injury, or illness, and for associated costs such as X-rays and CAT scans, laboratory tests, medication, and hospitalization.
Nether Major Medical nor Surgical insurance will pay for elective surgery such as castration, spaying, Caslick’s, or any form of cosmetic surgery. Nor will they cover the costs of routine veterinary care, or any other treatment that could be considered regular maintenance for a healthy horse – including elective “alternative” treatments such as chiropractic, massage, and acupuncture.
Some types of horses are excluded from major medical and surgical policies, just as they are from some mortality policies – racehorses, for instance.
And some horses that have undergone certain types of surgery, notably colic surgery, may have to wait a certain number of months before they may be reinsured.
When does an insurance company require notification?
Most companies require notification immediately, whenever there is a change in the horse’s situation or condition. This means that the horse’s owner would be expected to call the company and alert them immediately upon detection of an injury, upon diagnosis of illness or disease, and before surgery of any kind. The owner would also be expected to notify the company immediately if there is a change in the use of the horse, when there is a change in ownership of the horse, before the horse is transported out of the country, or out of the range covered by the policy, and when there is a change in the value of the horse.
Although most horse owners and insurance companies agree that it should not be necessary for the owner to call each time a horse gets a tiny scrape or scratch, there are no clear guidelines in place, and so it is clearly preferable to be safe than sorry.
For this reason, it is best for the horse’s owner or bailee to notify the company whenever there is even the slightest chance of a problem condition or illness. The insurance company’s toll-free number is usually manned twenty-four hours a day, and although not every scratch and dent will need to be called in, the horse’s owner or custodian should certainly notify the company of anything that could possibly lead to a problem; for instance, lameness, fractures, colic, fever, any eye problem, and any lacerations requiring sutures.
Who makes judgment calls on insurance?
In the event of an insured horse’s death, the cause of death must be determined before any claim can be adjusted. This determination may require only a certificate from the horse-owner’s veterinarian, or it may require the presence of a company-appointed veterinarian. A necropsy may be called for – each situation is different, and the depth of the company’s investigation will depend on the conditions of the death, and on the amount for which the horse was insured.
If an insured and injured horse is covered by loss-of-use insurance, the decision regarding his future use will usually be made by the owner’s veterinarian. If that veterinarian gives an opinion that the horse’s injury is career-ending, the insurance company will generally pay out. In the event that a veterinarian designated by the insurance company disagrees with the opinion of the owner’s veterinarian, an arbitrator will be appointed and the case will be resolved by arbitration.
How do premiums relate to age, type, and use of horse?
Insurance rates vary by age, by breed, by discipline, and by classes of horses within each breed and discipline. It may not be possible to insure a horse in its mid-teens, for instance, whereas it would be comparatively simply to insure a younger animal. Type makes a significant difference in availability and cost of insurance: halter horses, for example, cost much more to insure than do performance horses, because their physical condition is generally very poor. Another factor is the use of the horse: a horse used exclusively for pleasure riding will cost less to insure than the same horse used as a show horse. A horse that competes in a discipline with a higher statistical risk will cost more to insure: a horse used for three-day-eventing or for steeple chasing, for instance, will be more expensive to insure than that same horse used exclusively for dressage or other flatwork.
Is there a short-term coverage for travel or shipping?
Limited Mortality insurance is often referred to as “shipping insurance.” It covers death due to accident during the period contracted for the coverage.
Is Liability Insurance Important?
An often-overlooked category of equine-related insurance is liability insurance. Today’s society is litigation-happy – lawsuits are commonly seen as the answer to any situation involving damage or injury, no matter how slight, and no matter what the cause. There is an epidemic of frivolous lawsuits, in which someone brings suit for the purpose of acquiring an out-of-court settlement for a much lesser amount of money. The equine industry is not immune to such lawsuits – some type of liability insurance is a “must” for any professional in the horse business.
All commercial horse operations, whether concerned with boarding, breeding, or riding, need liability insurance coverage to protect the assets of those operations. Most horse farms make use of a standard, farm owners and ranchers policy that offers broad coverage. This policy can be customized to include the farm home and its contents, farm structures and buildings, portable structure and buildings, motorized farm vehicles, farm personal property, loss of income, and farm and personal liability exposures.
A Farm and Ranch Owner’s policy will not cover horses belonging to others while those horses are on the property, but there is additional insurance (Care, Custody, and Control) available to cover these animals.
The value of the facility itself, and of the horses, will determine the amount of insurance needed. Some large operations, such as racetracks, will also need a commercial umbrella policy.
Racehorse trainers generally arrange liability insurance for the horses in their charge, whether at the racetrack or at a training stable. The premiums are paid by the horses’ owners.
Racehorse and show horse owners often carry their own liability protection, and there are special policies designed to protect people who own horses but are not involved in the commercial business of training, racing, or breeding.
Should I have Commercial or Personal Liability?
Horse owners should not assume that their homeowner’s policy covers the horses they own – even if those horses are literally in the backyard. Each horse owner should determine whether he or she is liable for a horse-related claim, and then should add appropriate insurance (farm or livestock liability coverage).
An individual leasing a horse should also take out such a policy, because the legal implications of a lease expose the leasing party to the same liability that affects the actual owner of the horse.
What is Professional Errors and Omissions Liability Insurance?
This form of insurance covers the insured in the event that the insured makes an error or omission. If a riding student falls from her horse during a lesson and breaks her arm, she might blame the instructor. This insurance would cover the instructor in that situation – but not in the event that the student’s horse becomes injured. In order to be covered in that situation, the instructor would need additional insurance in the form of a “Custody, Care, and Control” policy.
Owners of stables, horse trainers, instructors, and owners of breeding farms all need this sort of insurance coverage: a commercial equine liability policy. Care, Custody, and Control Insurance covers the horses that are not owned by the facility, and pays in the event of their injury or death. This protects stable owners, trainers, and instructors in the event that something happens to an animal in their care. A liability policy should also provide legal defense costs in the event that the individual is involved in a claim or lawsuit.
What is Commercial Horse Operations Liability Insurance?
This policy is designed to protect commercial horse operations, but not only large facilities that train or board many horses. For legal purposes, a “commercial” operation does not have to be a large, specific-purpose facility with full-time staff; any individual who boards anyone else’s equine – even a neighbor child’s pony – can be legally regarded as “commercial,” and needs to be insured accordingly.
Do I need Riding Club Insurance?
This provides liability coverage for riding club meetings, shows, clinics, seminars, workshops, and miscellaneous activities that are conducted by and for the sole benefit of club members. If club members conduct an open show or clinic, however, the club would need additional coverage in the form of special event insurance.
Do I need Horse Show Insurance?
Any riding club, organization, stable owner, or other party holding a horse-show, clinic, open house, seminar, or any other event that would bring many people onto the property, would be well advised to purchase special insurance coverage that can be in place only during that particular event. Such insurance may include spectator liability and coverage for show judges and officials.
Do I need additional Property Insurance?
Property insurance may cover such things as a horse-owner’s tack and riding equipment; tack is often not covered under a homeowner’s policy. But in order to be covered by property insurance, the tack may have to be kept at home, rather than at a boarding stable or in your trailer. Horse owners who wish to have their tack covered while it is kept off their own property will need a policy that specifically endorses the second premises in which their property resides.
Can I get Tack Insurance?
Some companies offer a maximum protection tack insurance policy that covers all of a horse-owner’s tack against damage or loss from theft, fire, flood, and other perils. Such a policy can be quite costly, but it may be worth it to know that stolen or ruined tack is covered to current replacement value without a deductible.
Is there general Equestrian/Equine Insurance?
There also exist policies that offer blanket protection for both horse and rider. Such policies are good value, providing comprehensive coverage for owners who use their horses for pleasure or personal (not professional) sport. These policies include Equine Mortality, Tack, Saddle, Animal Legal Liability, Accidental Death, Medical Reimbursement, Surgical Expenses (equine).
Horse ownership at any level creates risks. Insurance is more than just another expense connected with horse ownership; it is a way for horse owners to protect themselves while exercising responsibility toward the horses that they own.