Each year horse breeders, regardless of the breed they nurture, make their biggest financial decisions when they decide on matings. Those decisions involve the allure of the equine business and its greatest trauma. A breeding decision is hopeful--the breeder hopes to make a mating that will result in a superior individual, whether for racing, eventing, or other pursuits. But the business person in the breeder is also taking a classic leap into the void--a breeding fee is expensive, that once-a-year opportunity to breed a mare is itself a valuable asset and the results are always uncertain.
Nothing will ever take the hope or the risks out of the equine business, but in the last generation, the marketplace has developed some ways to insure the business person that lies at different depths within each horse owner that all is not lost financially despite the vagaries of equine reproduction.
Mare fertility insurance is one form of risk reduction that has become relatively commonplace, particularly among breeders who breed commercially or who must expend money to breed, as opposed to those who own both the stallion and mare.
For those who feel the need to protect their financial outlay, there are some things to consider before buying insurance.
First, if the season that has been purchased is guaranteed to produce a live foal that stands and nurses you have, in effect, already paid for the insurance in the form of a higher stud fee. Generally, fees that are not guaranteed are discounted to account for the risk that is shifted from the stallion owner to the person bringing the mare to the stallion. Buying insurance to guarantee the mare will get in foal and produce a live, healthy foal only makes financial sense if the cost of the insurance is less than the money saved by getting the no-guarantee season. In other words, if a stallion stands for $25,000 guaranteed and for $20,000 not guaranteed, you come out behind if you pay $6,000 for insurance that will compensate you if you don't get a healthy foal.
Another consideration is when the stud fee is due. Some contracts only require that the fee be paid at 42 days past the mating, if the mare is in foal. If such is the case, other considerations come in to play, but clearly the mare owner does not need to insure for conception since the fetus will be a 11.5 months old before the fee is due.
This second point brings up the combined nature of the whole package that is considered in fertility insurance. Nina Hahn, a Lexington, Ky., equine insurance broker, said there are usually three elements to a complete insurance package before a breeding.
First: Barrenness insurance that guarantees the mare will get in foal. As mentioned above, if this is already included in terms of payment for the fee, it is unnecessary.
Second: The "expected foal" portion of the total fertility insurance package covers the fetus from the 42nd day after breeding until some period after it is foaled. Hahn said that in almost all cases this is linked with barrenness insurance, if the former is necessary. Hahn said some expected foal policies go out as long as one year after birth, but she recommends a much shorter period after foaling.
"Thirty days is ideal," she said. If you go out longer than that "you put up all money in front and you don't know what you will get." And, she added, you are locked in to a certain level of coverage. If you have thirty days after foaling to evaluate the foal, you can adjust. "If it is a wonderful foal, you are going to want to insure it for more," Hahn noted.
Third: Another part of the package is "stallion availability" insurance. That insures that the stallion will be fit to breed. This does not have anything to do with scheduling--that should be spelled out in the contract. This insurance guarantees you are covered if there is "sickness, accident, or disease to the testicles of the horse," Hahn said.
From Hahn's perspective and experience, buying the whole package of insurance leaves little preventable risk for the mare owner. "There's really very little gray area left, and I couldn't point out an area where there would be a gray area that wouldn't be covered," she said.
So, should everyone to whom it would apply buy the whole package, and what would it cost?
The simple answers are no, it isn't for everyone, and the cost varies according to several factors.
To the first part of the question, Hahn said, "Most people with a no-guarantee season insure," but that insurance usually kicks in with more expensive stallion fees. "The average range for insuring begins at $20,000 to $25,000 in terms of what you are paying for the season," she said. Below that level, it might be worthwhile to get some serious estimates and do equally serious number crunching to see if insurance makes economic sense.
One consideration to keep in mind is that buying a policy before a breeding is another cash outlay in a business that already involves significant outlays prior to production--whether in terms of a live foal or a competitive horse--and if the value of it is limited, it might be better to consider skipping it entirely.
In terms of the cost, it can be considerable. Hahn estimated that generally the entire package of insuring--mare barrenness, expected foal, and stallion availability--can run in the range of 21-26% of the amount you choose to insure. That insurance amount is usually tied to the stud fee. As a result, getting the entire package when a stud fee is $40,000, for example, could run from $8,400 to $10,400. But even that range could vary depending on the particular circumstances of the mare and the stallion.
"The rates are based on the foaling record of the mare and age," Hahn said. "If she has been barren for three years, the rate is going to be astronomical. Mating to a stallion with known fertility problems could also drive up the rate."
Fertility insurance is simply one more tool to remove some of the risk from the horse business. It is, as Hahn noted, a common practice for many breeders and is worth considering as a way of maintaining a financially sound breeding program. The type of coverage you need, if you determine you need insurance, should be discussed with a professional broker.