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Equine Insurance and Why it Matters

Better than a (Security) Blanket

Are you attached to your home? Do you like having bank accounts with money in them? Do you enjoy your assets? Do you appreciate being able to sleep at night? At bottom, a good insurance contract is like a large security blanket that covers horse industry participants. That is, an insurance policy represents a contract between an insured and the insurance company, that if certain (bad) things happen, the insurance company will protect the insured up to a negotiated amount. Beyond this basic concept, there is much to know for horse and farm owners, instructors, and other equine professionals when it comes to insurance. There are many kinds of policies available for purchase. Here's a very basic primer about insurance to help with the "ins and outs" of it all.

Mortality Insurance
Equine Mortality insurance covers payment for loss against your horse's death resulting from accident, illness, disease, injury, or humane destruction, also theft, and specified and optional perils. There are two broad types of 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 — this insurance is less expensive. "All risks" insurance is expensive and needs an exam. The premium rate is typically 3-5% per year of total value, though if you aggregate this with a number of horses you can get the premium lower than that.

Fertility Related Insurance
There is stallion infertility coverage, of which there are two kinds: ASD, or permanent and total infertility caused by an Accident, Sickness, or Disease that manifests itself during the policy periods. This isn't too expensive, .5 % to 1% of the horse's value per year. Or, there is FSI, First Season Infertility coverage, which is expensive, 5 to 6% of value. Fertility insurance in FSI has some policy differences that you need to be aware of. There are "rollover policies" which allows the company the option to NOT pay the claim after the first year it if looks like the stallion can improve and reach the agreed fertility percentage in the second year. This is where it gets tricky: if the mare does not get pregnant, the underwriter will want the mare to be rebred to the stallion as many times as possible during the breeding season. This might cause a conflict with the mare owner, who may want to switch to a more fertile stallion. Sometimes, a mare owner can provide an acceptable substitute, but unless this is worked out, the withdrawal of the mare can void the policy. This is definitely something to discuss with your agent if you have a breeding farm.

Loss of Use Insurance
This is another kind of policy. Loss of use can be external, (accident) or internal/external (illness). This has some fairly specific triggers for claims and definitions of what constitutes a loss of use. It is also expensive, so again, reading the policy is important.

Major Medical Insurance
Major medical is another endorsement available. The price can be negotiated and varies depending on the company, the amount of deductible, the types of costs covered, and veterinary requirements for approved coverage. Humane destruction 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 that the owners read this one in detail before pulling the trigger, so to speak, on a horse in distress.

Liability Insurance
Horse owner's liability is indispensable coverage and covers the horse's owner against claims. If you own a horse, this type insurance policy should be the FIRST purchase to be made along with the horse.

General Farm Liability Insurance
If you own a horse farm, general farm liability insurance is also typically a requirement. Do understand that if your farm boards other people's horses, that a "care custody and control" insurance, which compensates for damage to other horses on the premises also needs to be purchased, because general liability policies only cover for damages to people.

Home Owner's Insurance NOT Enough
Finally, keep in mind that homeowner's policies typically WILL NOT cover damages resulting from most horse accidents. And horse owner liability coverage does not cover employees of the farm who are injured. The farm will need Workman's Compensation insurance to cover these damages.

With these basic policies in mind, the next task is to find a good agent. Shopping around for a good equine specialist is definitely worth the effort. Then, once you're all signed up, a good night's sleep is finally in order!

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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