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Buying Horse Insurance

In this time of economic recession, one of the first areas of economy sought by most horse owners and farm owners is in the area of insurance. Under-insuring or foregoing insurance entirely may seem like a good idea to your pocketbook, but the smarter play is to carefully evaluate not only your current insurance needs, but also your insurance carrier, to make sure that you get the best deal that suits your own needs.

You may find that much of your required insurance needs are affordable with a careful eye at coverage scope and an evaluation of your carrier and their offerings. As an attorney who has represented many clients in litigation against those who don't have sufficient insurance, let me just say that the condition of not having sufficient insurance is one of the "circles of hell" that Dante did not get around to talking about in the Divine Inferno — you don't want to be there.

A Competent, Cooperative Agent
All these efforts begin by calling your insurance agent. Be aware that equine insurance is a specialty area for insurance agents, and not all agents can or will cover the risks associated with equine operations or ownership. Don't work with a beginner in this area — experience counts. Your agent should not only be willing to meet with you, but also to review your equine situation knowledgeably and be able to ask pertinent questions. If the agent doesn't know what colic is, drop him like a hot potato. Second, your agent should be able to run your situation by a number of carriers; not all carriers evaluate risk in the same way. You may be able to get a better deal from some carriers than others. Your agent is the one to work with the various entities and search out the best deal for you. If your agent is NOT willing to make this annual search, then you should remind him or her that this is the kind of service you expect. Also tell him that if you don't get this service, he won't get your business because you'll change agents.

No matter who you go to, make sure that your agent is willing to use his or her expertise to help you find the best coverage for your operation. For example, it makes little financial sense for a boarding establishment that focuses on high-end jumpers to skimp on care, custody, and control insurance and risk a lawsuit related to a horse accident to a boarder's horse. Another example is having a boarder barter arrangement for stall help, and not getting workman's compensation insurance — this will put you at risk for large fines and crushing penalties in the event of an accident.

Insurance Requirements
Ok, now let us turn to the issue of what kinds of requirements a policy could have. First, consider that insurance is essentially a contract between an insured and the insurance company. Therefore, the usual rules of contracts apply, which means that these contracts are in writing, and both sides will "lawyer up" in the event of a problem. So, horse people should carefully read and understand what they sign. For some, this will be difficult because teams of lawyers make a very good living writing these policies. Get your agent to help you by translating the policy, or call an equine attorney if you don't understand the terms. But no matter what you do, make sure you know what you're buying. All I can guarantee from your policy review is that you'll learn some things you didn't previously know. For example, you may find that coverage for a loss only applies if you notify the company within a certain timeframe of the loss. If you don't notify in a timely fashion, the coverage won't apply. But all knowledge is good knowledge in this regard, so arm yourself.

Kinds of Insurance:
Broadly speaking, equine insurance is divided into two broad types:

  1. The kind of insurance you need as a horse owner or trainer, and
  2. The kind that you need as a farm owner with employees, boarders, boarded horses, and/or breeding operations.

Insurance for Horse Owners/Trainers
A horse owner or a horse trainer needs liability coverage. Many horse owners or trainers are tempted not to buy this kind of insurance thinking that their homeowners insurance will cover them. Unfortunately, most homeowner policies have a specific exclusion for horse related claims, in one form or another. This is because home insurance companies don't want to insure any risk that comes from owning a horse, which makes sense, because most home insurance company risk analysts know nothing at all about horses. A good rule of thumb is to have enough insurance to cover the value of all of your property. Also consider getting "umbrella" insurance, which is relatively inexpensive if you have homeowner insurance already. Horse trainers will need commercial liability coverage, and will need to fully disclose to their agent the kind of business they operate and whether or not the farm where they operate has insurance. Many times, a farm owner will require the trainer to list them as an additional named insured in the event of a lawsuit for a claim arising out of the trainer's activities. Trainers can also ask to be named on a farm policy as an additionally named insured. In such a case, though, the premium will be more for the farm, and so some negotiations will have to occur regarding costs.

Then comes the issue of what kind of insurance you need for your actual horse.

  1. Equine Mortality Insurance – This insurance covers payment for loss against death resulting from accident, illness, disease, injury, or humane destruction as well as theft and specified and optional perils. There are two broad types of perils coverage: Specified Perils, and All Risks. An exam typically is not required for Specified Perils, but then, most common kinds of causes of death, colic, etc., are not covered, so this insurance is less expensive. All Risks is expensive and needs an exam, though if you aggregate with a number of horses you can get the premium lower because it's a essentially a "quantity discount".
  2. Agreed Value – Owners should know if their policy is one of Agreed Value or not. If it's an Agreed Value, they won't have to prove what the horse is worth if there's a claim. There are some exceptions; for example, if you entered the horse in a claiming race for less than the Agreed Value, you'll only get that lower amount. These kinds of things are often common sense, but can come as a shock to the uninformed owner.
  3. Loss of Use – This is another kind of insurance. Loss of Use can be external, (accident) or internal/external (illness). This also has some fairly specific triggers for claims, and also definitions of what constitutes a loss of use. This insurance can also be expensive, so reading and completely understanding the policy is important.
  4. Major Medical – Major Medical is another endorsement available. This can be negotiated and does vary depending on the company; it can also differ depending on the amount of deductible, the types of costs covered, and veterinary requirements for approved coverage.
  5. Humane Destruction Clauses – These clauses allow horses that are covered for mortality to be euthanized if an extremely painful condition (e.g. colic) occurs requiring the horse to be put down. This is coverage that can be easily defeated if the exact rules are not followed, so be sure you read this policy in detail before pulling the trigger, so to speak, on a horse in distress.
Insurance for Farm Owners
Farm owners have an entirely different set of considerations. They need not only protection for what they do, they also need protection for what employees and boarders might do to each other while on farm property.
  1. General Farm Liability – This is a must for farm owners. It provides protection for the farm for what they and anyone else on their property does that could expose the farm to a liability claim.
  2. Workmans' Compensation Insurance – Farm liability coverage doesn't cover employees of the farm who are injured. The farm requires workman's compensation insurance to cover these damages. Farm owners need to fully discuss with their insurance agent whether their trainers are "independent contractors" or "employees". Also, barter arrangements with boarders WILL turn the boarders into employees, so if the boarder ends up getting hurt, the farm owner could get a nasty shock if the boarder files a claim for workman's compensation. Most workman's compensation offices will fine a farm for the failure to have such insurance, and such fines can run into the thousands of dollars on top of paying for medical bills and even attorney's fees in some instances.
  3. Care, Custody, and Control Insurance – This insurance is required if the farm boards horses. It compensates for damage to other horses on the premises, whereas the general liability policies only cover for damages to people.
  4. Stallion Infertility Insurance – For horse breeding, you'll need Stallion Infertility Coverage, of which there are two kinds:
    • Accident, Sickness, or Disease (ASD) – This kind of insurance protects against permanent and total infertility that manifests itself during the policy periods.
    • First Season Infertility (FSI) – This insurance is cheaper and only covers the first season as its name implies.
    The foaling process also allows for insurance for the new foal and for the mare.
  5. Equine Shipping Insurance – Shipping of horses also requires insurance and horse carriers have their own insurance as well.

Getting properly insured need not be a worry if the issue is handled correctly. In the event of an accident, insurance can be a lifesaver. One of the most important aspects will be the insurance agent and the companies represented by the firm. You want someone that will take the time to assess your situation, explain all sides, answer your questions, and be there with you to work through the claim process if it's ever needed. The best way to find such an agent is to ask around to find others that have had to make claims and are happy with the service they received. Then, you still need to do your part and investigate the agents you're considering by educating yourself and asking lots of questions. If this is not something you feel you can do for yourself, either get an experienced friend or hire an equine attorney.

So shop around and get yourself the best deal you can for your situation. It may not prevent accidents, but it sure prevents a lot of heartache!

Kathleen A. Reagan, Esq. is an equine attorney practicing in Braintree, MA, available at www.kathleenreaganlaw.com, has developed a course in equine law at www.concordlawschool.com, and is co-founder and Vice President of QueryHorse, the largest horse information resource on the Internet.

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