Should You Insure?
- Apr 1, 1998
How much can you afford to lose? That's the crux of any insurance question and it's no exception for those who transport their horses to shows tracks breeding facilities sales barns living history festivals vacation areas parks and so forth. Because transporting a horse exposes the animal to the risks of road accidents and hazards at the destination owners need to weigh the cost of insurance to cover treatment or loss versus the cost of handling those expenditures themselves. It's not a cut-and-dried formula based on dollars and cents but an individual assessment based on dollars and sense. Emphasizes Nancy Eichler operations manager Markel Insurance Company "We have people that will insure a $500 horse and we have people that will not insure a $5-million horse. It's how much they can afford out-of-pocket for a loss."
And what kind of losses might an owner sustain? The list includes replacing a horse which dies surgical and major medical expenses for the horse and liability costs should the horse cause injury or destruction to other parties.
Before looking into the type of horse coverage you need examine your own financial situation. Says Paula Martin farm and ranch specialist for CIGNA Property and Casualty "You need to decide how much you can afford in premium payments once a month or once a year what you want to insure what you can afford to lose if you have a loss and how much you want your deductible to be. Also if the accident is your fault how much can you afford to lose if you are sued. Would you rather deal with that personally or let the insurance company handle it?"
Next consider the areas in which your horse--and your bank account--are most at risk. Various types of coverages include the following:
Transient. For the horse that travels the owner should consider whether it's more feasible to provide short-term transient coverage--i.e. during the show or race season when bringing home a new horse transporting to a breeding facility etc.--or if an annual year-round policy is best. Says Eichler who's had 21 years experience writing policies for Markel an insurance company that specializes in horse coverage "We can issue short-term policies for most lines of business for two weeks a month two months etc. but there is a minimum premium involved and usually it doesn't pay the customer to do a short-term policy. Most of the time people are concerned about coverage whether the horse is in its barn or on a trailer."
Adds Sylvester Kiger owner and chairman of the board Kiger Insurance and a specialist in horse insurance since 1962 "It may be more expensive to insure on a 30-day basis than for a year depending how you look at it. For example you might insure a horse for a year for a rate of 4% per year. Or you could insure that same horse for 30 days and your rate is 1% a month." The short-term rate of 1% a month comes out to 12% a year three times greater than the cost of year-round coverage. But if your show season is only a month or so long or you only wanted coverage for the trip to or from a sales or breeding barn and you feel at-home coverage is unnecessary then short-term insurance might be the better option.
Be aware however that should an emergency situation arise where you have to transport the horse you won't have coverage beyond the period stipulated in your short-term policy.
Mortality And Specified Perils. Full mortality insurance usually covers the value of the horse due to death from accident illness and disease. Mortality also can cover loss due to theft. Limited mortality also known as specified perils generally only covers the horse for particular designated causes of death such as a transportation accident or fire.
Although limited mortality is technically cheaper than full mortality most insurers require a minimum premium so full mortality and limited mortality might in some circumstances end up costing the same. Horse owners should get a cost comparison of both before considering limited mortality.
Mortality covers the value of the animal at the time of death on an agreed value basis or at a fair market value basis. Says Eichler "If it's a newly purchased horse we look at the purchase price. If the horse was purchased a year ago and there were training expenses show records and/or breeding expenses put into the animal we look at how much the value of the horse has increased since the horse was purchased."
Both Eichler and Kiger believe that horses which travel should have mortality insurance.
Surgical And Major Medical. Surgical insurance usually covers surgical costs for the horse as a result of injury accident and illness but not for pre-existing conditions. Explains Eichler "If the animal was known to have a lameness condition prior to insuring then we insured the animal and it continued to have this problem we would not cover this as it was a pre-existing condition."
Major medical generally covers medical treatment wounds medications and might or might not cover surgical procedures depending on the policy in the event of accident injury or illness. "Coverage is like a hospitalization policy" says Kiger. "There's a deductible and a variety of coverages. I recommend it for people in the show horse business."
Many insurers provide surgical and major medical coverage only as an addendum to mortality insurance.
Liability. If the horse damages persons or property at a show on the trail or elsewhere or in the event of an accident the horse gets loose from the trailer and causes another accident the horse's owner could be held liable for those damages. "Everyone should have liability insurance" Kiger says. "It's relatively inexpensive compared to mortality insurance. If your horse kicks or injures someone and you get sued you don't know what that's going to cost you. You may be able to plan into your budget the cost of replacing the horse if it dies but you can't plan the cost of a liability action."
Keep in mind that whatever coverage you place on your horse is for that horse only. If you're also trailering a friend's horse your coverage does not protect the guest horse.
Insuring Vehicle And Trailer
As with insurance for protecting the horse there are many variables when it comes to insuring the towing vehicle and trailer.
The amount of protection for collision which covers damages to the owner's vehicle and the amount of the deductible is a decision based on the vehicle's value and the owner's budget. In addition minimum liability coverages for the vehicle and/or driver differ from state to state with additional liability protection a matter of the owner's discretion. Liability covers damages to others that result from the accident.
Don't assume that your automobile insurance covers the trailer. You might need a rider (extra coverage) or buy separate coverage. Says Martin "Some auto carriers do not insure the trailer although most of the larger ones will so you will need to check this."
Some policies restrict how far a vehicle can be towed. "Our policies have a 1000-mile limit radius" Martin notes. "If you go farther you'd need to endorse that on your policy with your agent."
Note that insuring the trailer does not insure its contents: i.e. the horse. That's what horse insurance is for!
Besides insuring the horse owners might also consider insuring their equipment and tack under a home owner's farm owner's or similar type policy. Says Martin who also competes on the Appaloosa circuit% "An English saddle is easily worth $2000mand bridles another $500-$600. CIGNA's farm package policy offers replacement coverage if you schedule your equipment and covers fire and theft anywhere in the world so if you're at a show it'd be covered." Martin notes that the cost for equipment coverage is "very minimal."
Many home owner's policies do not automatically cover horse equipment and tack and some only cover those items as long as the tack or equipment remains on premises. If you want this type of protection and also want it away from home make that clear to your agent.
Selecting An Insurance Company
When buying horse insurance it's probably best to go to an equine specialist. Explains Kiger "There are many capable and qualified agents who are conversant about properties and business but not about horses. A specialist in the horse insurance business can give better advice than an insurance agent not familiar with the horse industry. There are a lot of peculiarities with horse insurance and even though I've been in the horse insurance business for over 30 years we still have something new happen every day!"
Besides being knowledgeable on horse matters the agent also should be trustworthy reliable and represent reputable insurance companies. Ask other horse owners who their agents are and if the agents were helpful in explaining and writing up their policies responded quickly and followed through with questions or problems. Be wary of the agent who claims the insured is covered for every possible problem warns Kiger. "No one is fully covered" Kiger says "because it's impossible to plan for all contingencies."
Some agents represent a variety of insurance companies while others represent only one so along with working with a reliable agent the horse owner also needs to ensure that the insurance company the agent represents is likewise reliable. Again ask other horse owners about their insurance companies: Have they ever had an accident and if so how were they treated?
Investigate the prospective insurance company. Says Martin "Call the Insurance Department and ask for the insurance rating what their payment history is and if they make payments late to people." The phone number for each state's Insurance Department can be found in the government pages under "State Government" located in the front of the telephone book.
Eichler also recommends finding out how long the company has been in business and how they process claims--within the company or with an outside firm. "The longer a company has been in business usually shows that it is well-established and stable" she says. "If an insurance company processes its own claims it is likely that a claim would be paid quicker than if an outside adjustment firm was settling the claim. It's just one less step in processing a claim check. You also have more control over settling the claim."
"You'd most likely want a company that is an A+ rated company" says Martin. (An A+ rating is the highest standard available.) "You also want a company that has a 24-hour hotline to report a claim: if you have a claim on Friday and you need a rental car you don't want to wait until Monday to finally reach somebody." With horse insurance it's even more important that you be able to reach the company if an emergency occurs.
Make sure that you receive your policy. Says Kiger "There are some agents who only send out letters to people saying they're covered and sometimes they send a bill without a policy making it easy for fraud to occur. Without a policy all you have is the word of the insurance agent. This isn't prevalent but it does go on."
It might take 30 days or a little more to receive a policy Kiger says, but it should be received at least by the time you get the invoice. "Don't pay the premium until you get the policy" he warns. "If you experience continued delays then seek another agent."
Review your policy carefully. Cautions Martin, "If you don't understand the terms and conditions, have an attorney or broker or even a good friend explain what you're signing, because once you have an accident, it's too late."
When Accidents Occur
The best accident is the one that never happens. "We want our customers to take all the necessary safety procedures to make sure the animal is in a safe place" says Eichler. "That it is not in a stall that has a nail sticking out. Make sure the towing vehicle and the trailer are safe and in good condition. Don't put your horse on a trailer with a person who has no experience hauling horses."
Be prepared and know what to do should a road accident occur. If your insurance company provides you with a brochure on what to do in the event of an accident keep it in your glove compartment. Always carry proof of insurance and your agent's and company's emergency phone number.
Keep a first aid kit on hand for both humans and horses.
If an accident occurs first help the injured parties then call the police. If the horse is injured call 911 or local authorities to send a veterinarian out and try to tend to the horse until help arrives. "If the veterinarian states the animal is suffering and incurable he can put the animal down but must notify us immediately" Eichler says. "We don't want the animal to suffer unnecessarily so in cases where the insured's veterinarian has put the animal down they must notify us immediately and follow up with a veterinary report and postmortem to confirm that the animal was a candidate for immediate destruction."
If possible write down the facts about the accident while still fresh: where the vehicle was damaged and what you know about the accident. If you ran into another person get information from him or her and from any witnesses on how they think the accident happened. As soon as possible notify your agent or insurance company.
About the Author
Marcia King is an award-winning freelance writer based in Ohio who specializes in equine, canine, and feline veterinary topics. She's schooled in hunt seat, dressage, and Western pleasure.
POLL: Horse Insurance