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Equine Insurance—Who Needs it? Jane is a former claims adjuster for Fireman’s Fund Insurance Company, and has also served as a litigation supervisor and Assistant Claims Manager within the insurance industry. Horse owners should understand that in order for their rights to be fully protected, they are required to give their insurance companies immediate notice should an injury arise (despite their concerns regarding future exclusions), or for property damage, and most especially in the case of potential liability. The latter is critically important if someone is injured on your property. They should also understand that mortality policies are for one year. Whatever happens is considered pre-existing, and underwriters have the option to exclude coverage in the following year. Failure to disclose an illness or injury will cause the policy to be voided if it is discovered when the vet records are examined if a major claim is made—then all money spent on premiums will have been wasted. Major medical policies are for unexpected and/or catastrophic problems—if they were to be expanded to cover routine illnesses, or pre-existing conditions, then horse owners could expect to pay as much or more for them as they do their own health insurance. Mortality and Major Medical Insurance Policies When you buy an insurance policy on your horse, examine the policy for:
Mortality: Must be unintended or unexpected. Insurance company permission is required prior to euthanasia, AND prior to ANY surgery (including surgeries for CASLICK’s and CASTRATION, especially if general surgery is required. **Mortality must result from accident, illness, injury or disease** Reimbursement is limited to the current market value—basically the horse owner is put back into the position they were in at the time of the loss. Current market value is based on the purchase price, show record, and cost of professional training. For foals, insurance companies generally start with a minimum of twice the stud fee, and also take into account keuring results. No matter how expensive a horse is, if they are not showing and not in professional training, their value will decrease as the horse ages. A horse that is purchased in Europe will be allowed the purchase price (converted into US dollars) plus 1/2 the cost of shipping. Exclusions generally include intentional destruction, owner administration of medications without consultation with the veterinarian (this can include giving Banamine for colics if the veterinarian has not been called first), nuclear hazard, war, invasion, acts of foreign enemies, and acts of confiscation by the government. This latter came into play in Europe with the hoof-mouth epidemic, where some livestock losses, even though valuable show stock, were only reimbursed at the per-pound rate by the Government because their insurance became null and void. When a horse is insured, the owner must certify that the horse is sound for the purpose intended. A non-owner cannot insure the horse—since you cannot insure someone else’s property, and if the horse is sold, you also cannot collect if there is a loss, so you should cancel your policy and collect your prorated refund. There are really no short-term policies. The best you can do is to bind coverage for a month and get your money back if you return a horse that you have on trial. (A one month policy costs 1% of the insured value with a $250 minimum, and does not include major medical. Alternatively, it would be better for the owner of the horse to add an endorsement to an existing policy covering the horse while it is out on trial, and then charge the additional cost to the person taking the horse out on trial). When a horse is leased, the lease must be in writing and cover all angles. The policy must state where the horse will be stabled, and the insurance company requires immediate notification if the horse will be transferred to Europe. The lease establishes a financial interest in the horse because it places the lessor at financial risk for loss, and therefore the lessor is eligible to take out an insurance policy. If the horse changes its career in a significant way, the owner must notify the insurance carrier because it changes the risk. Endorsements can include major medical (which covers diagnosis and treatment—this is not a maintenance agreement), surgical only, flight (in general, horses are not covered for illness, accidents or death during flight without this endorsement), elective surgery and loss of use. Loss of use can be especially difficult coverage in that a vet must say that there is NO possibility that the horse will EVER return to its intended use. Most vets won’t say “NEVER.” Liability Insurance This is important for trainers, instructors and boarding facilities. Never cut corners here, particularly if you are not incorporated. This insurance covers the cost to legally represent you, in addition to pay any claims against you. The legal coverage is probably the most important part. **DO LET THE COMPANY KNOW WHEN THINGS OCCUR ON YOUR PROPERTY** In general, this will NOT affect your rates, but failure to report prejudices your company’s ability to protect you and protect your rights should a claim arise at a later date. **OBTAIN SIGNED RELEASES** If their language is clear and easily understood, they DO hold up in court for the most part. (See Equine Law lecture for more on this topic).The majority of the states now have equine liability acts, but these ONLY give reliefe if the horse is acting like a horse. They do NOT relieve an instructor if the student is placed on the wrong horse, if the tack is faulty, if the premises are unsafe or there are loose or unsafe dogs that cause an accident. Your insurance company cannot protect you if you do not answer a summons, which is why you need liability protection so that you have access to legal folks who can help you for claims arising from events. These policies are OCCURRENCE BASED meaning that they cover you for things that occurred while the policy was in effect, even if the claim arises after the policy has expired. Care, Custody and Control This covers injury or property damage arising due to acts of negligence. Liability excludes property, so this second policy is needed. Limits are written per horse and there is also a total per occurrence and per year. It is important to talk with your agent so that the limits are appropriate, both for individual horses and also for the total number of horses, realizing that if your farm burned down and you were held responsible, your limits would need to cover ALL the horses. Horse owners are liable for their horse’s actions. In the past, home owner’s policies covered their actions but that is often no longer the case. You can now buy a specific horse owner’s policy to cover yourself, but FIRST call your home owner’s agent and ask if you’re covered. If they say yes, ask for a letter. If not, get a policy. Note that USEF covers EXCESS LIABILITY for AMATEURS ONLY, but you should still have a first line policy. Other Types of Insurance Boarding Facilities should also consider a policy for loss of business income as a separate coverage. This is not super expensive. Clubs need insurance for banquets, clinics, shows, etc., and need to provide names, dates and numbers in attendance. The insureds (those who are protected from lawsuits) are the members, officers and volunteers. The horse show insurance is typically written as “spectator only” though participant coverage is also available, but it does not cover members of the club if the club takes out the policy. (So the club is protected from lawsuits from spectators, and may be protected from lawsuits from participants if they take out participant coverage. Participants that are members cannot sue the club, though, since you cannot sue yourself…they can sue anybody else they can think of, though, including the facility owner, provided the facility is not owned by the club, and they didn’t sign a release of liability.) These insurance policies are meant to protect the club and the club’s members from being sued, but not to pay their medical claims if they are injured. Return to USDF Convention Table of Contents.
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