When asked to think about our horses, we may envision show horses, breeding stock, companions or even our best friends. Whether it is a top racehorse or your favorite trail horse, equines are a valuable part of our lives. Though no horse owner wants to think about their horse becoming injured or having to be humanely euthanized, it is important to consider purchasing equine insurance to cover the replacement cost of your horse. The daunting task of purchasing equine insurance to secure the value of your horse can become overwhelming for many horse owners.
There are a wide range of equine insurance companies available to horse owners, each having their own unique policies and procedures. As a horse owner, it is important that you are familiar with your equine insurance policy and make sure you understand what is expected of both yourself and the insurance company, as this knowledge may become crucial during a claim.
Regardless of which insurance company you choose, make sure you know your policy inside and out. Is your horse insured for "agreed value" or "actual cash value" (fair market value)? With agreed value, if your horse is insured for $10,000 and your horse dies, the insurance company will pay out $10,000, as long as there is proof of value. Proof of value is normally provided to the insurance company before a policy is purchased, and can vary from submitting show results, a bill of sale or simply filling out a Justification of Value form for the insurance company along with your equine mortality application.
With actual cash value, you may be paying premiums on a $10,000 valuation for 5 years, but if your horse dies, the insurance company will only pay out what your horse is worth at the time of death, which is also known as fair market value. For example, if your horse is older and has not been competing for several years or has been laid up with an injury at the time of death and the fair market value of your horse is only $6,000, that is unfortunately all the insurance company will be willing to pay out on the claim. Most horse owners are under the impression that if they insured their horse for $10,000 and they have paid their premiums every year that they will get $10,000 if their horse dies. Unfortunately, this is not always true, so it is important to understand the type of policy being purchased.
Most insurance companies’ offer three major types of equine insurance policies; mortality, surgical/ major medical, and loss of use. Each type of policy comes with its own restrictions and rules, so it is important to speak with your insurance broker in regards to the types of policies available to you.
Basic equine mortality insurance is available as "Named Perils" or "Full Mortality". According to Mike King, owner/operator of Intercity Insurance Services located in Aurora, Ontario, "a named perils insures the life of the horse for death arising from a defined list of causes (the "named perils"). These perils will typically include fire, lightning, theft, transport, entrapment, collapse of a building, attack by wild animals, drowning and perhaps other external causes. For this type of policy, the age the horse or the health of the horse is not critical because this type of coverage usually does not cover any death arising from natural causes or sickness. As a result, the cost is usually quite low and this type of coverage can often be found as an extension to a farm insurance policy or stand-alone through a specialty broker insurer".
The second type of basic equine insurance is full mortality. This type of insurance policy covers a horse from named perils, as well as any type of illness, disease or accident. According to Mike King, "because these policies cover more, they usually cost more". It is important to note that most insurance companies only offer full mortality equine insurance to horses under the age of 16. Horses over the age of 16 are normally only eligible for named perils coverage. Most equine insurance premiums can range anywhere from 3.0 to 4.0% of the total value of the insured horse. For example, if an owner wants to insure their horse for $5,000, they are likely to pay between $150-200 per year for equine insurance. Many insurance companies have a $150 minimum charge for basic equine insurance premiums, so it is important to discuss these fees with your insurance broker.
Surgical or major medical equine insurance policies are normally one and the same. Jenny Lamberton, an insurance broker with Capri Insurance in Kelowna, British Columbia states, "major medical/surgical covers the expense of medical treatment, surgery, after-care and diagnostic testing due to an injury, illness or disease. $5,000 or $10,000 maximum limits are available through Capri. Major Medical is subject to a $500 deductible per occurrence and coverage for follow-up care is limited to 120 days from the date of first treatment". It is important to realize that surgical or major medical coverage is normally purchased in conjunction with an equine mortality insurance policy. Rates for surgical coverage can range anywhere from $200-400, depending on the type and amount of coverage needed. This amount is in addition to the mortality premium for your horse.
Loss of use insurance coverage can be very complicated. As a result, some insurance companies do not offer this type of insurance coverage to horse owners. The intent of loss of use coverage is to cover a portion of the value of a horse that is no longer able to perform or compete in their designated discipline. Insurance companies that offer loss of use policies will normally only pay up to a maximum of 60% of the horses insured value. It is important to understand that the loss of use must be permanent. If a dressage horse suffers a suspensory ligament injury and a veterinarian has recommended the horse can start back into training after six months of stall rest and then start competing again, this horse would not qualify for a loss of use claim, as the injury has not been considered permanent or a career ending injury to the horse.
If deciding whether to purchase a loss of use policy for your horse, it is important to find out what will happen to your horse if a loss of use claim is filed. Some loss of use policies state the ownership of the horse is transferred over to the insurance company after a claim has been paid out. As a result, the insurance company then has control over the fate of the horse. According to Jenny Lamberton, "some insurance companies may offer a lower settlement and allow the owner to keep the horse". Due to the complexity of this type of policy, it is important to discuss loss of use policies in detail with your insurance broker.
No matter what type of policy you choose for your horse, it is important you contact your insurance company immediately if your horse becomes sick or injured. Waiting to see whether a problem with a horse gets better or worse before contacting the insurance company is not recommended. Contacting your insurance company in an emergency is always a condition of coverage for insurance policies. Failure to report an illness or injury can cause an insurance policy to become null and void. Notifying the insurance company of a problem does not obligate the owner to make a claim, but it simple makes the insurance company aware of a potential problem. Jenny Lamberton recommends that, "it is imperative the owner contacts us promptly if the horse is injured or sick, whether or not they feel it may result in a claim. This is so we can advise the insured of the responsibilities of the horse owner, the requirements in order to put in a claim, and to keep us updated on the condition of the horse". Insurance companies now offer a 24/7 claims line for after hour emergencies. Jenny advises that, "in the event of an emergency, we ask our clients to contact their vet first and call us as soon as they can".
Along with knowing your policy inside and out, make sure to keep good records on your insured horse(s), including pictures, videos and show records....and remember to keep them updated. Keeping track of the training put on your horse or the awards won at horse shows can help prove the value of your horse. This is important, whether your horse is insured for agreed value or actual cash value.
Horses are an important part of our lives. Even the family trail horse can be a valuable asset. Equine insurance can help protect your asset, but the steps to purchasing equine insurance do not have to be an overwhelming one. Due to the different types of equine insurance policies available on the market and the varying philosophies of equine insurance companies, it is important to understand your insurance policy and read the fine print, as this will benefit both you and your horse if a situation arises.
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