I Just Spent A Lot of Money! - How can I protect my investment in my horse?

January 01, 2017
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Finally! You shared countless texts and conversations with your trainer, studied dozens of YouTube videos and made several long shopping trips. One top prospect you brought home on trial didn’t work out, and another got a thumbs down from your trusted veterinarian. But now you’ve found the perfect horse – you love him, your trainer loves him, your vet approves and the price seems fair. The deal is done and now he is yours. Congratulations!

I JUST SPENT A LOT OF MONEY!

Sooner or later, after the thrill of the chase subsides and the new horse becomes part of the family, every horse owner reflects on this new financial commitment. Everyone’s circumstances are different, so whether your horse is a Ford, a Lexus or a Maserati, it is a major investment. And it is an ongoing investment. A car might be safe in your garage, but a half-ton performance horse is never completely safe from illness, injury or even death.

HOW MAY I PROTECT MY INVESTMENT IF THE WORST THING HAPPENS?

We ask the same question about ourselves and our loved ones when we consider life insurance and the answer is the same for horses.

Equine Mortality insurance is similar to annual term life insurance for humans, and protects the economic value of a horse in the event of its death or theft. You paid real dollars to purchase your horse, compensate your trainer for advising through the process, and perhaps even to import the horse from overseas. That value can be protected, and may be adjusted if a subsequent show record makes your horse worth even more.

The cost of Mortality insurance is based upon the horse’s insured value, age, use and breed. If the horse dies or has to be put down for humane reasons, or is stolen, the policy will pay the full amount for which it is insured. Mortality insurance obligates the owner to care for the horse, promptly notify the insurer of any serious health condition, and to provide and pay for all necessary veterinary care.

WHAT IF MY HORSE GETS SICK OR IS BADLY INJURED?

Ownership of a horse involves open-ended commitment to its regular care. You already expect to pay for boarding and training fees, regular shoeing by a professional farrier, and periodic immunizations. Those are not cheap. But sometimes things go wrong. Like all athletes, horses are prone to joint and muscle injury. And like all animals, horses are subject to illness and disease. It can get very expensive.

Major Medical insurance helps control necessary veterinary expenses for unforeseen events related to the health of your horse. Major Medical is not a health maintenance policy, and routine expenses and preventive care remain the owner’s responsibility. Major Medical protects against serious illnesses and injuries that can be costly to diagnose and treat.

Horses that might be ineligible for Major Medical may be insured against more narrowly focused risks of surgical costs and/or Colic treatment. Colic is a gastrointestinal condition that is particularly dangerous to horses. The condition can sometimes be fatal without veterinary treatment, and may even require surgical intervention.

WHAT IF MY HORSE SURVIVES BUT CAN’T BE USED ANY MORE?

That is a tough spot – a horse which can no longer be used for its intended purpose, but whose condition does not require humane destruction. It is not going to get better, and Mortality insurance will not pay unless the horse experiences suffering or debilitating risk which warrants humane destruction. If the horse cannot be repurposed to a less demanding use, you might be saddled with a very expensive pasture ornament. In either case, you would face a significant economic loss.

Loss of Use insurance is intended to protect against a financial loss which might occur if a horse becomes totally and permanently incapable of fulfilling the functions for which it is used, and when its condition does not necessitate humane destruction. Settlement of a Loss of Use claim is a percentage of the horse’s insured value, depending upon whether the horse is surrendered to the company or kept by the owner. Loss of Use is available only for specific disciplines and for limited ages, and its medical qualification standards are stringent.

I OWN A BREEDING STALLION. HOW MAY I PROTECT HIS BREEDING VALUE?

Stallion AS&D insurance protects the breeding value of proven stallions against impotency or infertility resulting from a covered Accident, Sickness and Disease. Stallion AS&D is limited to certain ages and proven breeding histories, and may be purchased in addition to Mortality insurance.

CAN MY HORSE BE INSURED WHILE OVERSEAS?

Yes, under certain circumstances. Mortality and Major Medical coverages are limited to the United States and Canada, but may be extended at the insurance company’s discretion.

Transit insurance extends the policy to cover the horse during air transit to approved countries, most often between the United States and Europe. The coverage territory may also be broadened during the horse’s stay in the approved country. With the Transit endorsement, an American buyer may insure a new horse immediately in Europe, and the coverage will continue through the flight across the ocean and for the remainder of the policy year at home.

WHAT IF MY HORSE HAS A PRE-EXISTING MEDICAL CONDITION?

Insurance is intended to protect against unexpected losses, and pre-existing conditions which increase the likelihood of a future occurrence are excluded from coverage. Companies exercise discretion when excluding coverages, and might waive exclusion for minor conditions which have been fully resolved and pose no heightened risk of recurrence. And in some cases exclusion might apply only to Major Medical and have no effect on Mortality coverage. It is important to provide complete information to the insurer so there will be no surprises if you make a claim.

MAY I INSURE MY HORSE ONLY FOR MEDICAL OR OTHER MISCELLANEOUS RISKS?

No. Equine Mortality is the basis of the policy, and all other coverages are offered as endorsements to extend the Mortality policy. Companies exercise discretion when excluding coverages, however. A company might waive exclusion of some conditions which are fully resolved and pose no heightened risk of recurrence. And in some cases exclusion might apply only to Major Medical and have no effect on Mortality coverage.

WHAT IS THE INSURABLE VALUE OF MY HORSE?

You may insure your horse for its market value, or a lesser amount if you choose. For a new horse, insurable value begins with the purchase price, which may include related sales commission and transportation costs. Insurable values above the purchase price require documentation of the increased value, such as records of subsequent competition, training or breeding.

WHAT DOCUMENTS MUST I PROVIDE TO INSURE MY HORSE?

Mortality policies require a signed Application, substantiation of the insured value, and evidence of medical insurability. Veterinary Exam Certificates are required for higher valued horses (often over $100,000) and foals under 30 days old. For all others, a signed Statement of Condition will usually suffice.

HOW MAY I PURCHASE INSURANCE FOR MY HORSES?

The market for Equine Mortality insurance is highly specialized and is limited to a handful of reputable carriers. An experienced and knowledgeable risk advisor can help you select the coverages and limits that best protect your financial investment and the health of your four-legged teammate.

Bill Harris is a Risk Advisor with The Harbin Agency, Inc., an independent insurance agency with major specialties in Equine Mortality and Farms as well as Commercial, Personal and Life & Health insurance. Bill can be reached at billh@harbingency.com.