Getting Insured

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The good news about farm owner insurance is that premiums have been far less affected by the current “hardening” in the insurance business than those for most other types of insurance. But even though farm insurance is relatively affordable, many farm owners still don’t have enough of the right coverage, according to insurance experts.

First, the good news. Farm owners have escaped the large hikes that many insurance buyers have received in the wake of falling insurance-company profits from the stock market, where insurers earn most of their profits, and settlements arising from the tragic events of 9/11. Rate increases for farm insurance have been generally 20 percent or less; for many other types of insurance, increases of 40 to 80 percent have been common.

However, as with other types of insurance, agents and their carriers are requiring more information about the businesses they insure. “We haven’t processed an increase in our farm owner rates, but we require a good deal of information, just so that we’re knowledgeable about our accounts,” said Jane Ham-Holbert, an underwriter for American Livestock Insurance.

And it’s possible that rates will rise in the future. “As the market hardens, and it will, I worry about the clients in smaller, less-populated states,” said Ham-Holbert. “They don’t have as much access to carriers as those in more populated states. That’s always a problem.”

If there’s a silver lining in the current insurance market, it’s that farm owners are paying more attention to the details of their coverage. “And that’s a good thing,” Ham-Holbert said. A review also reveals the depth of knowledge of the agent, and that is also important. The experts agree that it is essential to work with an agent who understands equine insurance.

“...many farm owners still don’t have enough of the right coverage, according to insurance experts.”

Richard Bazaar, whose West Greenwich Insurance Agency in Spring Hill, Fla., specializes in equine insurance, pointed out the importance of choosing the right insurance company. His policies are underwritten by General Star National, an A++-rated company. “Ratings matter,” he said, “because they are a measure of reserves. And that’s essential.” His rate increases have been only five to 10 percent at most. General Star gives credits to operations, even new clients, who have had no recent claims, and that also keeps rates from rising.

Bazaar said that of all the types of insurance farm owners should carry—commercial liability; care, custody, and control; animal medical/mortality; shipping—the biggest misconceptions concern care, custody and control. “Most farm owners think that having the client have insurance on their horse covers the farm,” he said. “But it doesn’t. The farm owner can get sued by the horse owner.”

Another common fault: not carrying enough insurance. “Most farm owners are running on a shoestring,” Bazaar said. As a result, many don’t carry enough liability insurance. “It doesn’t cost much, $20 a month or so, to go from $500,000 to $1 million per incident,” he said.

Finally, make sure that riding instructors carry their own insurance. Many don’t, and that can affect the farm. “You should demand a certificate of insurance if you are allowing someone to teach on your farm,” he said. “It doesn’t cost much.”

Kim Fricke of Equine World Insurance echoed Bazaar’s advice. “Care, custody and control insurance is often something they don’t have, and should,” she said. “There are some naïve purchasers out there. We always recommend that owners have a good broker or agent.” She also emphasized the need for outside instructors and trainers to carry their own insurance, and to list the farm owner on the certificate as an insured. “Many barn owners don’t ask if the trainer is insured,” she said.

Fricke, who is both a barn owner and an insurance agent, provides a website (www.equineworldinsurance.com) full of advice for other owners. It includes an insurance audit and a list of common insurance mistakes. Among the do’s and don’ts:

1. Use an equine insurance specialist. Equine insurance is complex. Make sure your agent is knowledgeable about equine insurance and your business.

2. Don’t rely on your homeowner policy for business coverage. If a casual visitor gets injured at your home, then your homeowners’ insurance will probably protect you. But if you have any business operations, you need commercial coverage.

3. Make sure the named insured on your policy is correct. If you operate your business under a separate corporate name and that entity is not listed as a named insured, your entity is not protected under the policy. If you’re in business with others, you must list all the legal entities as named insureds. Failure to name the correct person(s) and/or organization(s) on your policy may mean that you (or someone who could end up suing you) might have no insurance protection.

“...it’s possible that rates will rise in the future.”

4. If you board or care for animals, carry care, custody and control insurance. Property not owned by you but in your care, custody or control is excluded from most basic commercial liability policies.

5. When a horse is injured or ill, notify your insurance agent before you need to file a claim so you are prepared if and when you need to give notice of a claim. All mortality insurance policies have a provision that requires you to notify the company promptly if a horse is injured, lame or sick, whether there is an immediate claim or not. If you don’t notify the insurance company, there is a possibility coverage might later be denied. Review the terms of all of your equine insurance policies with your agent and be aware of your responsibilities. If you have a stable of horses owned by others, get information about mortality coverage from each owner.

6. Get proof of coverage from any independent trainers and/or instructors in the form of a certificate of insurance. Make sure it names you and your business as certificate holder. You also need to be named as an additional insured on their policy for operations they conduct on your premises. This way, it is likely their policy will apply to claims resulting from their operations.