Covering All Your Bases

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Everyone in the professional business of horses should have appropriate insurance coverage specific to their needs. In this day of frequent lawsuits it is simply a matter of good business practice. “Commercial liability to me is critical,” says Penny Rose, agent with Livestock Mutual in Littleton, North Carolina. “When you’re in business with horses, when you first start out, your business cannot absorb a major loss. It’s important you cover yourself outside your own bank account.” As your business grows, you may be better able to bounce back if something happens, but regardless of how well you are doing financially, liability coverage is a must-have. If you are taking care of someone else’s horse or have people come into your facility to ride and take lessons, there is a good chance that sooner or later someone will get hurt. Rose points out that especially when children are involved, “you could die trying to pay that off” if you don’t carry liability insurance.

It is important to note that homeowner’s insurance typically does not cover horses. If you feel your policy does, it is best to look at it carefully, talk to your agent and get it in writing. In addition, general liability declarations must be made for a variety of activities, such as clinics, riding lessons and pony rides, or they are not covered.

But what is available beyond the basic types of coverage? You do have additional options allowing you to customize based upon your professional avenue. Since every situation is unique, it is best to sit down with your insurance agent, go over your existing policy and discuss with him/her your specific needs. In addition, it is good to review your policy every year upon renewal. As your business changes and develops, so must your insurance policy.

Covering the Facility

There are a number of different optional endorsements you may add to your policy. Professional equine liability covers you as a trainer and/or instructor. If you work at more than one facility, you may have to declare the different places and have them listed on the policy. “Care, custody and control” comes into play whenever you are involved in boarding, transporting or handling someone else’s horse at a show or away from home. This will cover you if something happens to that horse while in your care. Racehorse owner’s liability is obviously specific to people involved in horse racing. Similar to that is equine personal liability. Rose says this is fairly inexpensive and covers the horse owner if her animal does damage to another horse, person or property.

If you are in the trail riding business and rent horses for a fee, you will need additional coverage for that facet. Even if the named insured is a trail riding club, the insurance only applies to its members. However, horses hacking out on or off the premises are covered if enrolled in an instructional riding program conducted by the named insured.

Covering the Horse

The main forms of insurance on a specific horse are mortality/theft and major medical. Rose recommends insuring animals valued at $5,000 and above. If you have many horses, such as those in a lesson program, and money is a consideration, you will have to go through the horses and decide which ones are most valuable to the program. Another option is to ensure for partial value. For example, if the horse is worth $20,000, you can write a policy for $10,000 and “self-insure” for the other $10,000. Rose points out that at some point, you will grow to think, “this is the cream of my crop,” and want coverage on the best. If you have a loss on the rest, you can handle it financially.

If covering multiple horses for mortality is not something your pocketbook can handle, you may want to insure horses for “named perils.” This is much less expensive (typically around 1.25 percent of the horse’s value) and covers you for occurrences that don’t have to do with health. If your horse is attacked, struck by lightning, there is a fire, flood, etc. then you would receive payment. Theft or unlawful removal is also included. This type of coverage is usually limited to the continental U.S. Again, if you have questions on specific issues it is best to talk with your agent.

“Loss of Use” is a form of equine coverage that may or may not be appropriate for your situation. If you have a stallion insured for breeding purposes, it would be advisable to have loss of use in case your stallion is no longer able to cover mares. However, if you are trying to insure for loss of use on a show horse, Rose warns that you have to go through lots of hoops to get the coverage. When you place a claim, the policy kicks in only when both your vet and the coverage vet render the horse totally unfit. Typically, the company will pay 60 percent of the limit and assume title of ownership, and then they can do whatever they want with the horse. Rose does not recommend this insurance to most horse owners.

Stallions can also be covered by infertility insurance and permanent disability. These may be warranted for valuable breeding stock. Again, it is up to you to determine how much loss you can absorb.

Take Home Message

It can be overwhelming to try and figure out the best types of coverage for your job, facility and horses. That is why it is best to discuss your individual situation with an agent. Agents understand the different types of coverage and what would best serve your needs. Making sure you are appropriately covered will take away a lot of stress, headaches and even heartaches if and when unfortunate circumstances arise.