Horse owners, like everyone, depend upon Homeowner policies to manage the everyday, non-driving risks of our personal lives. And Homeowner policies serve that purpose well by protecting our homes and a wide range of our personal possessions, and by shielding us from the consequences of our own negligence if we injure other people or damage their property. These protections are so broad that we seldom even think about them.
But we should examine them very carefully. Horses are powerful and often very expensive, and so can be the consequences of owning them. Most horse owners know that Mortality insurance is necessary to transfer risks of death, theft, injury or illness to their horses. But what about those “other” risks of horse ownership? What if someone steals my tack? What if my barn catches fire or is blown down? And what if my horse hurts someone else or damages their property?
The majority of horse owners may identify with either of these two families:
- The Smiths live in a regular neighborhood, own horses in their personal names, and board their pleasure horses at XYZ Stable. The Smiths’ Homeowner and Personal Umbrella Liability policies might be adequate to protect them in these circumstances. Even away from home, their tack and other personal items are insured for theft or fire (subject to their Deductible), and there is probably no exclusion for bodily injury or property damage arising from pleasure use of their personally-owned horses.
- The Joneses keep their personally-owned pleasure horses at home and trailer to shows. A Homeowner policy (and a Personal Umbrella) might be suitable for the Joneses, also. However, since coverage for outbuildings is usually limited to 10% of the Dwelling’s coverage limit, the Joneses will need to determine if that amount is sufficient to replace all their outbuildings - and must request a higher limit, if needed.
Serious problems arise when horse owners stray beyond the “pure vanilla” examples described above. In basic terms, Homeowner (HO) policies are designed to insure all losses that are not limited or excluded by the policy’s provisions. Exclusions can be triggered by “business” activities such as boarding, training, riding instruction, or even ownership of pleasure horses by an LLC or other corporate entity. Three potential landmines are described as follows:
Tack. This one can sting. HO policies cover Tack and equipment like all other household Contents, but severely limit coverage for Business Personal Property. So if you engage in any horse-related business activity, your Tack and Equipment may not be fully protected against damage or theft.
Barns. This one can hurt. HO policies protect outbuildings under a separate “Other Structures” or “Dwelling Extension” limit, which is usually 10% of the Dwelling limit. However, HO policies exclude coverage for Other Structures “used in whole or in part for business.” So if you board someone else’s horse, teach riding lessons, or even own your horses in an LLC, your HO policy can walk away from any loss to your barn – even from a storm or fire.
Liability. This one can devastate your finances and ruin your life. HO policies are not business policies, and expressly exclude liability for business activities. If you engage in a horse-related business activity and your alleged negligence leads to someone else’s injury or property damage, you are the insurance company. There is no coverage at all, and you must even fund your own legal defense.
The good news is that there are solutions for these deliberate Homeowner policy shortcomings.
Equine Farm insurance is designed to protect farms of all sizes from the many risks of personal and commercial equine activities. Equine Farm policies may be tailored to include barns, tack and equipment as well as dwellings and contents. Commercial General Liability shields equine and other farm-related activities, and Commercial Umbrella Liability may extend above underlying farm, auto, boat, rental dwelling and other liability exposures.
If your circumstances have outgrown the protection of a Homeowner policy, now is the time to consult with a knowledgeable risk advisor to identify your potential risks and design a plan that will enable you to enjoy the life that you have chosen
Bill Harris is a Risk Advisor with The Harbin Agency, Inc., an independent insurance agency with a major specialty in Equine Mortality and Farm as well as Commercial, Personal and Life & Health insurance. Bill can be reached at billh@harbingency.com.