Insuring Good Health
- Nov 1, 2003
In today's world, there are many types of insurance that can protect us and our horses in the event of the ravages of disease, the pocket-emptying crisis of colic, and the finality of catastrophic injury and euthanasia. Equine insurance today ranges from major medical to mortality to loss of use to fertility. An owner often opts to purchase insurance so the decision of whether the horse lives or dies is not based on medical bills, but on medical advances.
Medical technology has advanced; many things can be done for a horse, but procedures are expensive. That's where insurance comes in handy.
Insurance in the United Kingdom
Equine insurance is commonplace in England, with several large companies specializing in it. Leo Jeffcott, BVetMed, PhD, FRCVS, Dipl. ACVS, Dipl. ECVS, dean of the veterinary school at Cambridge University, says medical insurance for horses is big business.
"Veterinarians recommend the benefits of proper medical coverage to their clients," he says. "I work in a referral clinic, and the majority of horses seen are insured, including general riding horses. From a business standpoint in our hospital this is important, as bills for second opinion work can be quite expensive."
Nick Mills, MRCVS, senior partner of a large equine practice in southern England, says insurance is an important part of equine life in the UK. "A high percent of competition horses--dressage, eventers, show jumpers, etc.--are insured," says Mills. "In the UK, we offer three types of insurance--death of the horse (mortality insurance); if the horse suffers accident, sickness, or injury during the policy period (loss of use); and veterinary fee coverage, which is normally up to a maximum of 5,000 pounds (or about $8,000). That covers most severe problems, such as surgical colics. In addition, there is the normal bloodstock insurance--for stallions, broodmares, and foals."
The Equine Insurance Veterinary Advisory Group is a group of veterinarians who help the insurance companies. In the UK, veterinarians sort out the claims, rather than the loss adjustors.
"Insurance companies employ a veterinarian as a consultant, and he coordinates with the attending veterinary surgeon to sort the problem out with the horse--to see if it's something that would be covered," says Mills. "Most veterinarians like their patients to be insured. That means they will get paid, and they are not so constrained by the monetary aspect if they want to do more investigation. Insurance enables them to do it.
"We have many specialized procedures--radiography, ultrasound, nuclear scintigraphy, and MRI scans for horses," adds Mills. "This can add greatly to the veterinary bill if used to aid in diagnosis of a problem."
In Ireland, by contrast, there is no insurance to cover veterinary fees, but most of the valuable animals are covered by mortality insurance, says Bridget McGing, MVB, MRCVS, chief veterinary surgeon at the Irish National Stud. This insurance covers death from accident, sickness, disease, and euthanasia for humane reasons.
"The latter causes the most controversy, as there can be considerable debate on 'suffering' caused by something like a severe tendon rupture on the racecourse," McGing says.
"Some broodmares are insured, and many foals are insured at 24 hours of age," she adds.
"The most money is spent on insurance of stallions--for mortality only, or it can cover fertility," says McGing. "Underwriters in the UK recently took a large 'hit' with the death of Danehill, who was probably the highest-insured stallion in the world."
In 2003, there was some heated controversy between veterinarians and underwriters in Ireland because of a new foal insurance form, said McGing. The British Equine Veterinary Association and others had discussions with the underwriters over the summer, and a new form is being developed for use in 2004.
Insurance in the United States
Terry McVey has worked with many of the U.S. equine insurance companies, and he is now president and owner of Equine Insurance Claims Services in Richmond, Ky. "Most companies will insure a horse from the time it is a foal until it reaches 15 to 16 years of age," he says. "As with any other insurance, you are trying to cover risks. Hopefully, nothing will happen to your horse, but you must decide whether you want to put those risks off onto an insurance company or carry them yourself."
"Currently, the equine insurance market in the U.S. does not provide health insurance, per se," says John Hart, president of American Equine Insurance Group (AEIG). However, major medical coverage can be added to a mortality coverage.
"Horsemen should work out a plan with their veterinarians for health care of the horse--inoculations, deworming, annual checkups--things involved in a preventive program," says Hart. "Then when they buy a medical policy, it will provide for major expenses in excess of everyday health costs. Those might include costs of colic surgery, an injured leg, treatment at an equine hospital for severe illness, or any other serious condition you hope never happens."
Most companies sell $5,000, $7,500, or $10,000 coverage policies, and you choose the coverage you want to pay for.
If your horse has colic surgery that costs $4,000, and you purchased a $5,000 major medical policy, you would still have $1,000 worth of coverage left for that year, depending on the deductible.
Some companies, like AEIG, provide free coverage for colic surgery (up to $3,000) as part of a mortality policy.
"If you have a horse insured with us, we don't want you wondering if you can afford to send the horse for colic," says Hart. "If you know the company will pay for that surgery, you will go ahead and do it."
McVey says the greatest risk is still colic. "Statistics show that of all things that can happen to a horse, there's a 30-35% chance of having colic, and lower risks for other problems," he says. "Insurance companies tried to address this; in addition to the major medical endorsement, they also offer emergency colic surgery (ECS). If you have both endorsements and the horse colics, emergency colic surgery would be your primary coverage; major medical would kick in secondarily after benefits were exhausted on the ECS. If you also had a surgical endorsement, the major medical would be third. Some people have all three. But of the three, the major medical is the most comprehensive and widest-ranging in coverage. Medical technology has advanced; many things can be done for a horse, but procedures are expensive."
Scott Lombard of Corinthian Insurance, part of Travelers insurance company, says he sees cases where horse owners had their animals put down because they could not afford a $6,000 veterinary bill.
"If you have mortality insurance on a horse, however, you must do what the vet thinks is best for the horse," explains Lombard. "You can't have it put down if there's reasonable chance for survival; that's part of your contract with the insurance company--you must secure proper care for the horse. The company depends heavily on the vets--and if they say a horse must be put down for humane reasons, the company goes along with it. But a horse is not allowed to be put down (even if the owner wants to) without good reason from a vet."
Erin Denney-Jones, DVM, owner of Florida Equine Veterinary Services, is chair of the Owner Education Committee of the American Association of Equine Practitioners. She says from a veterinarian's point of view, major medical insurance is a good thing for the horse.
"There are many drastic and emotional decisions that must be made when a horse is seriously ill," she says. "An owner may not realize the expense of taking care of an animal in a situation that might require surgery. This kind of news is received better if they have insurance."
It can also help with a variety of problems. "I had a client with a lame 2-year-old I sent to a referral practice for nuclear scintigraphy to pinpoint the problem, and they claimed medical insurance on that," says Denney-Jones. "They still could not locate the problem, so they did a shoulder X ray, and followed up with medication, which was also expensive. All of this was funneled through the major medical, and the insurance company covered it."
In another case, recalls Denney-Jones, a Paint show horse developed a skin problem that was detrimental to success in the show ring, so the owner did allergy testing--and that was covered by the major medical. "Now she is using allergy medication, which is also being covered by the insurance," Denney-Jones says.
So, it's not just life-threatening conditions that are helped by having medical insurance.
"But having insurance makes the tough decisions easier to make, especially when you must decide whether to treat a horse with expensive medical care," says Denney-Jones.
However, different companies offer different types of coverage. Some cover diagnostics, some don't. Some pay half the diagnostics. These are term policies, so if you buy a policy the first of January, it is good through the following December.
"We provide a 30-day extension for illness that happens toward the end of a policy period," says Hart. "Our experience has shown the cost of taking care of most ailments occurs in the first 60 days of the problem."
What's Covered, What's Not
Lombard says some people misunderstand a major medical policy and think it covers everything. "It doesn't," he emphasizes. "If you have a $5,000 vet bill, insurance may cover half of it, or up to $3,500. Read your policy. It spells these things out, including limitations. Post-surgical expenses are usually limited to a percentage of the total, such as half the surgical expense. If surgery costs $3,000 and post-surgical expenses run $2,000, the most the company will pay on those is $1,500. And once they determine the total covered expense, they also subtract the deductible."
Medical coverage excludes pre-existing conditions, preventive maintenance (vaccination, deworming), the cost of a vet call, and alternative and elective therapies such as acupuncture. Sometimes a veterinarian will recommend an elective therapy, but it might not be covered.
"If a customer calls the claims office before a treatment to discuss the horse's problem, this can save a lot of trouble," says Hart.
McVey says many companies are currently in the process of changing the wording of their endorsements, and some are cutting their benefits.
"For example, one of the standard exclusions in major medical coverage is any kind of arthritic condition, like navicular or degenerative joint disease," says McVey. "The feeling is that these things happen to nearly every horse with time just from normal wear and tear. A horse may become sore and require maintenance medication that would be long-term treatment.
"When insurance companies first came out with endorsements (in 1985), they covered nearly everything," adds McVey. "Then their loss records showed they were getting a lot of these situations. So, they began making exclusions for degenerative ailments like arthritis.
Many companies would pay 100% of the diagnostics to find out why the horse was lame, he says, but if it turned out to be one of the excluded conditions, insurance would not cover the treatment.
"At present, some companies pay half the diagnostic expense, but some won't cover it at all once they find it's a degenerative joint problem," explains McVey. "One company has even excluded coverage for any joint injections, regardless of the problem. Several companies overhauled their major medical policies this spring."
Hart says, "The key thing with all insurance policies (and one a lot of people trip over) is you must tell the company--at the time you insure the horse--about existing or previous conditions. Most insurance companies won't put an exclusion on for minor pre-existing conditions. But if a horse is already suffering from EPM, or foundered in the last 90 days, or had several bouts of colic in the last year, the company will exclude these conditions."
Adds Hart, "We insure some horses with heart murmurs, for instance, if the vet can quantify whether it's of significance or not. If it won't interfere with an athletic career, the company may go ahead and insure the horse."
Most companies have relied upon a veterinarian to provide a reasonable statement of health when a horse is insured. But now much of the market has moved to lower value horses, insured by a statement of health completed by the owner.
"When you fill out the form and attest that your horse has not had any accidents, illness, or diseases in the past 12 months, it had better be true," says Hart. If it's not true, the insurance company will not pay claims for a pre-existing condition.
Lombard says, "The company may put a one-year exclusion on a particular condition, and review it again the next year. If the horse has recovered fully, they may pull that exclusion. But once a horse has a problem, nine times out of 10 they will exclude it from coverage, especially if it has potential to recur."
Extensions allow you to keep your insurance even in the face of an illness or problem. Hart says, "Our policy includes a 12-month mortality coverage extension at no extra cost. If your horse becomes ill or injured during the policy term, and the condition is reported, then we will cover the horse (from dying from that problem) for up to another 12 months. If you are insured in 2003 and your horse has an illness and it dies in 2004 from that illness, we will still pay you."
While buying equine insurance wouldn't seem like a conversation to have with your veterinarian, he or she is a major partner in the decisions on the health of your horse, and can offer good suggestions on what might be needed in your situation. The bottom line is, can you afford to pay the bills in case of an extended illness or emergency, or do you want to pay a small premium to let someone else hold that risk?
HOW MUCH WILL IT COST?
Rates are usually the same for similar types of horses, says John Hart, president of American Equine Insurance Group (AEIG). "If two horses are the same (age, breed, use, sex, etc.), but one has an illness and the other doesn't, a company will exclude coverage for that illness--if it is of significance--for that horse, but the rate will not be higher," he says.
A company's rates are set based on loss experience, which differs for different breeds, ages, and uses of horses. Some companies will increase the premium rate when a horse gets to 15 years of age, says Hart.
Generally the cost of a mortality policy is calculated on age, use, breed, and insured value. The premium is a percentage of that. If it's a $10,000 horse, the rate might be 3.7% or 4%, so you'd pay $370 to $400 per year for mortality insurance.
You can insure a horse (mortality) for less than he's worth in order to get major medical insurance. For example, a $100,000 horse could be insured for $10,000, for instance. But if you insure a horse for too little, you won't have enough coverage. Some medical plans only pay a percent of the insured value.
"Our company has two plans," says Hart. "One costs $175 per year and provides up to $7,500 in medical coverage, but only up to the horse's value. If you have a $10,000 horse, you'd have a limit of $7,500. If you have a $3,000 horse, you only have $3,000 available for a medical problem (but still have the free colic surgical coverage).
"The other is our $10,000 plan," he continues. "If you pay $275 per year, it doesn't matter what your horse is worth or what it is insured for. You will get paid up to $10,000 a year in medical expenses, in addition to the $3,000 of free colic surgical coverage."
Terry McVey, president and owner of Equine Insurance Claims Services in Richmond, Ky., says most endorsements are very reasonable. "Generally, regardless of the mortality value of your horse, the major medical endorsement runs about $150 to $175 for $5,000 of coverage, depending on the company," he says.
In years past, many people would insure a horse for only $1,000 and then put on $5,000 worth of medical coverage, feeling they were more at risk for having a medical expense than losing the horse. "Now, however, if you insure a horse for mortality and add major medical, if that's higher than the mortality amount, the company limits the major medical coverage to the amount of mortality coverage, or the limit of major medical coverage, whichever is less," says McVey. So you must insure the horse for at least as much value as the medical coverage you want.
Most policies have a deductible (usually about $250) for any one medical occurrence; the horse owner pays the first $250 and the insurance picks up the rest of the covered expenses on a major medical claim. To find out details about policies, you should get samples from several different companies to compare.
Even after you have a policy, check it each time you renew to see if there's anything that might affect limit of coverage, exclusions that might have been added, or any policy changes that occurred. These things do change, so you need to ask questions.--Heather Smith-Thomas
SICK HORSE? CONTACT THE COMPANY!
Most policies require that you contact the company when a horse suffers any medical incident. Call your veterinarian first in an emergency situation, then call the insurance company to make them aware of the problem. If you are faced with an elective treatment or therapy, call the claims office and discuss it. Then you'll know what's covered.
"The horse owner may think it will count against him if he has a claim, but this isn't true," says Terry McVey, president and owner of Equine Insurance Claims Services in Richmond, Ky. "A mortality policy states that if the horse has any illness or injury, you must immediately report it."
Insurance adjusters have answering services and can be reached any time of day or night, on holidays, and weekends. You must notify the company, especially if it's an emergency and there's a chance the horse may need to be euthanized.
"The sooner you call, the better the insurance adjuster will be able to assist you and direct you about what to do," adds McVey. "In an emergency situation the horse may die. The policy may require that a post-mortem examination be performed in all mortality situations."
"If you call a vet out for anything other than routine health care, let the agent know," says Scott Lombard of Corinthian Insurance, part of Travelers insurance company. "Send a fax or make a phone call, and document it."
Lombard tells of a case in which a horse had a cough: "The vet came, charged $40 for the call, said it was minor and gave the horse medication. The cost was less than the deductible, so no claim was filed. The owner figured she didn't need to call the insurance company. Fourteen months later, that minor cough evolved into a fatal respiratory disorder and the horse died. The claim was declined because it was considered a pre-existing condition and the owner didn't notify the insurance company at first onset.
"With any accident or illness, you must notify the company, even if it's minor and does not involve a claim--because if it escalates into a claim, it may be too late," warned Lombard."--Heather Smith-Thomas
IF IT'S YOUR HORSE, YOU'RE LIABLE
Scott Lombard of Corinthian Insurance, part of Travelers insurance company, says privately owned horses used for recreation or competitions are insured differently than horses in commercial operations such as breeding farms, stables, training facilities, horse shows, and clinics, but liability insurance is important for any horse owner.
"Besides mortality, liability is the most important coverage a horseman can have, especially if you have assets like a home," says Lombard. "Most homeowner's policies do not cover exposure of owning a horse. If a horse runs out in front of a car and causes a fatality, the owner will be held responsible. Many people are under the false impression that if they keep a horse at a stable they are not personally responsible, but they are. As the horse's owner, you are responsible for any physical injury to a third party."--Heather Smith-Thomas
HOW IT ALL GOT STARTED
Insurance, per se, actually began in London in 1640. Businessmen often met at a coffee house called Lloyd's and would sit around having a cup of coffee, says Nick Mills, MRCVS, senior partner of a large equine practice in southern England. Someone would say, "I'm meant to have a ship coming in, and I'm worried that it may be shipwrecked, but I don't know. Will you take part of the risk for me?"
They'd sit there and pass a slip of paper around, with the risk on it, and write their signature with a quill pen. And that was the birth of the insurance industry, says Mills.
That was also the start of Lloyd's of London, one of the largest insurers in the world.--Heather Smith-Thomas
About the Author
Heather Smith Thomas ranches with her husband near Salmon, Idaho, raising cattle and a few horses. She has a B.A. in English and history from University of Puget Sound (1966). She has raised and trained horses for 50 years, and has been writing freelance articles and books nearly that long, publishing 20 books and more than 9,000 articles for horse and livestock publications. Some of her books include Understanding Equine Hoof Care, The Horse Conformation Handbook, Care and Management of Horses, Storey's Guide to Raising Horses and Storey's Guide to Training Horses. Besides having her own blog, www.heathersmiththomas.blogspot.com, she writes a biweekly blog at http://insidestorey.blogspot.com that comes out on Tuesdays.
POLL: Big Spender