It's easy to tick off a list of very expensive horses who clearly ought to be insured: million-dollar racehorses, Olympic-caliber sport horses, elite breeding stallions. The annual premiums are small price to pay to offset the financial losses that would be involved if these horses were injured or worse. It also makes sense to insure a seasoned hunter, a promising young cutting horse and a productive broodmare; these horses represent years of investment and effort, and even if they are not a major source of income, you'd probably feel the loss in many ways if anything should happen to them.
But where do you draw the line? Is it wise to insure your "weekend warrior" who picks up a few ribbons every summer at local shows? What about your backyard trail horse? Or your daughter's Shetland? Does equine insurance make sense for horses who aren't or may never be worth large sums of money? Many people would answer "Yes," says Jorene Mize, an independent insurance agent from Lancaster, California. "You'd be amazed at the number of $2,500 horses that are insured. A horse is a major financial investment, regardless of purchase price. The ongoing upkeep and maintenance is costly too, and people want to protect their investments."
The number of equine insurance policies available to horse owners can seem overwhelming, ranging from loss of use to international transit coverage. Some insurers even offer policies to protect a horse owner's tack. For those who operate equine businesses, the list of available policies is even longer: liability for trainers, property and liability coverage for farm owners, even insurance to cover a stallion's or mare's fertility.
However, the basic types of equine insurance coverage purchased by most horse owners are mortality and major medical policies, which roughly correspond to life and health insurance for people. Generally, mortality insurance reimburses a horse owner if the horse dies. Depending on the policy, the owner may receive payment for the full or partial value of the horse. Medical and surgical policies cover the costs associated with treatment of an injury or illness. An owner can purchase mortality coverage alone, but medical and surgical policies are generally available only in combination with mortality.
Given how time-consuming it can be to research different equine insurance policies, it may be tempting to simply gather a handful of quotes and pick the policy with the lowest premium. If you do, however, you'll risk overlooking some key differences among the equine insurance options. "Every insurance company and policy is unique," says Rich Maggard of West Coast Equine Insurance Services in Central Point, Ore. "You're not comparing apples to apples, so you can't rely on premiums alone to make a decision."
That's where an insurance agent can help. A good agent will be able answer your questions and help clarify the sometimes confusing language found in policy statements. Some agents work for a single insurance company; others operate as independent brokers representing a large pool of carriers. Many agents sell a wide range of consumer and commercial insurance policies, but some concentrate on equine insurance. Whatever an agent's professional specialization, experience with horses is crucial, says Mize. "I'm a horse owner, and I know that's partly why a lot of people choose me as their agent. The layperson isn't going to know the terminology if you start talking about navicular or founder. They're not going to be able to interpret your show records."
Whether you're working with an agent or doing your own legwork, it's wise to educate yourself on the basics of equine insurance. Here's a general overview of common types of coverage, exclusions--circumstances under which a policy will not pay--and procedures, along with some guidelines for evaluating different policies and determining how best to protect your interests.
Every horse has value. Though not pleasant thought, it's important to consider what it would cost to replace your horse if he should die. Are you prepared to pay the cost yourself, or do you need an equine insurance policy that will help to bear the burden?
Most mortality policies cover virtually any cause of death, including natural occurrences such as colic as well as fatal injuries resulting from accidents, fire, lightning and other causes. Frequently, humane destruction and theft are also covered. Some policies even protect against freak accidents, like a horse being fatally injured by wild dogs or by falling debris from an airplane. Although age limits vary by provider, full mortality coverage normally is available to horses as young as 24 hours and as old as 17 years. When evaluating a policy make sure the exclusions are clearly spelled out. A company might be reluctant to pay, for example, if a horse dies due to real or perceived negligence or other human error.
Another consideration in choosing a mortality policy is the amount of coverage you actually need. You can insure up to 100 percent of the value of your horse, but obviously, the more expensive the horse, the higher the premiums will be. Rates depend on several factors, including the horse's current value, age, sex, breed and discipline. For most owners, value is the one variable that is the most difficult to determine. Basically the question you want to answer is "How much would it cost to buy another horse similar to mine?" Insurers suggest that you factor in several considerations to arrive at a figure:
- Purchase price. The price you paid is a good starting point for gauging value. However, your horse's worth is likely to change over time, so there are other factors to consider as well.
- Training. The more training you've put into your horse, from ground manners to skills in your discipline, the more his value will have increased above his purchase price.
- Competition records. Your horse's showring successes are a good way to substantiate his current training levels.
- Breeding record. Successful offspring demonstrate the worth of mares and stallions. Higher values can be justified by the selling prices and performances of progeny as well as other measures of success, such as a stallion's fertility or a mare's ability to carry foals to term.
- Appraisals. Another way to determine value is an evaluation by an equine appraiser. Many are breed-specific. To ensure an accurate appraisal, find a professional with a thorough working knowledge of your breed and/or discipline. Some insurers also accept evaluations conducted by veterinarians.
- Market comparison. Even clippings from classified ads can help substantiate your horse's current value. Some insurers recommend keeping a file that shows the asking prices of horses similar to yours, especially if you don't have other documents to support an increase in value.
If you decide to insure your horse for more than his purchase price, your insurer is likely to ask you to complete a value-substantiation form to justify your figure. Sometimes no additional documentation is required; however, if you file a claim you may find that the burden of proof is on you. Most agents recommend that you keep an ongoing file of relevant information, such as your horse's show record, training fees and breeding record. That little bit of planning can alleviate the frustration of having to scramble for the information later, during a time that's already emotionally difficult.
A variation on mortality coverage is called "loss of use," which pays a percentage of the horse's value should an injury leave him permanently unable to perform in the discipline identified in the policy. For instance, if an injury ends a jumper's career the owner may collect up to 60 percent of the horse's insured value. But be sure to read the fine print: Many loss-of-use policies give the insurance company the right to take possession of the horse after paying a claim. Others offer two choices: a higher reimbursement if the insurer keeps the horse or a lower reimbursement if the owner keeps the horse.
Medical And Surgical Insurance
Technological advancements are having a tremendous impact on equine health care, but the costs of certain treatments can be prohibitive. An insurance policy may help you avoid the heartbreaking decision of whether you can afford the veterinary measures that could save your horse's life.
As the name suggests major medical/surgical insurance covers medical and surgical treatment for illnesses and injuries that occur during the insurance policy period. Some companies describe their coverage simply as "major medical," but it often includes surgery as well. Typically, the coverage includes diagnostics, medications, surgery and postoperative care.
Medical/surgical policies usually do not cover routine care such as vaccines and dental treatment, nor do most policies cover elective or cosmetic surgeries or treatment for developmental or congenital birth defects. Alternative therapies, such as chiropractic, acupuncture or magnetic therapy, are often excluded from policies, but some companies review such treatments on a case-by-case basis. Other exclusions are pretty commonsense; for example, don't expect reimbursement if someone other than a certified veterinarian performs surgery on the animal.
The most often misunderstood elements of equine insurance are exclusions based on a horse's previous health history. Usually, a previous injury or illness causes the provider to place a 12-month exclusion on the policy for that particular ailment. "A lot of people are confused about exclusions,' says Jennifer Faust of the United States Eventing Association's equine insurance program. "They often think that if a horse has had a problem, you can't insure it at all. Actually, exclusions are very specific. If your horse has a preexisting bowed tendon on the left front leg, the exclusion is going to address only the left front tendon bow." In most cases, if the horse heals and shows no recurring problems, the exclusion is likely to be lifted when you renew your policy. (Occasionally, lifetime exclusions are placed on mortality policies for certain ailments, such as navicular disease.)
A previous bout of colic is a common source of worry when it comes to exclusions on medical policies. "Remember that there are many variations and degrees of colic," explains Andy Beauchamp of Equine Insurance Specialists in Muncie, Ind.. "A minor case may warrant a one-year exclusion for colic. But lifetime exclusions for colic are rare." Even if an owner faces an exclusion based on a past health problem, there is still a lot of value in an insurance policy says Faust: "You'll still be insured against all the other things that could go wrong."
Weighing the Costs
Whether you buy mortality insurance alone or in conjunction with medical/surgical insurance, your annual premiums will vary depending on your horse, your location and the terms you choose. For mortality coverage you can generally expect to pay premiums of anywhere from 2.5 percent to 4 percent of the horse's value. That means, for example, that the cost of the annual premium to insure a horse valued at $7,000 will likely be between $220 to $280. Obviously the lower the declared value of the horse being insured, the lower the premiums, and vice versa; however, many providers charge a standard $150 minimum for mortality policies.
Adding major medical/surgical insurance to your mortality policy generally means that you'll pay an additional flat fee that is based on the coverage limit and the amount of the deductible, the sum you must pay if you make a claim. Most providers offer several different major medical/surgical policies, which are available for flat rates determined by the coverage limit, the deductible and the details of the coverage. Cost does not vary for each particular horse, a does with mortality policies.
You can save money on medical coverage by opting for a slightly cheaper "surgical-only" policy, which typically covers only the costs of surgery am postoperative care. These policies frequently will not cover any diagnostic work or hospital costs that occur before surgery. Surgical-only policies are not as common as major medical, simply because the coverage is not as broad, and the cost savings often are minimal.
Many people also save money by purchasing mortality coverage for less than the full value of their horses. "I always insure my horses, but my main concern is the medical benefits, not the mortality" says Debbie Rosen, an eventing competitor and trainer based in Agoura, Calif. "Full-value mortality is cost-prohibitive for me, but I insure for less than full value on mortality because I want the medical and surgical coverage. I never want to be in a position of having to put a horse down simply because I can't afford the treatment that might save him"
This attitude isn't uncommon, says Maggard: "Some people can accept the financial loss of a horse's death, thinking that it's money that's already been paid. It's water under the bridge. But most horse owners I know would spend their last dime to give their horse the medical care that could save his life." Some owners will decrease the horse's insured value as he gets older because they want to be able to purchase major medical coverage but feel they don't need as much mortality coverage.
However much the premiums might be, they're still much cheaper than buying a new horse or paying for major surgery. "A lot of people think insurance is more expensive than it really is," says Beauchamp.
Understand the Claims Process
Once you have found a policy that meets your needs, your research is nearly done, but not quite. Now you'll want to make sure your prospective insurance carrier is a reputable, financially sound company' and that you understand its claims process.
Ask how long the carrier has been in business—there are exceptions of course, but in general the longer a company has been around, the more financially stable it is likely to be. If possible, check the carrier's standing with an independent rating agency. A.M. Best Company, Inc., rates insurers based on financial resources and ability to meet obligations to policyholders. A.M. Best publishes a guide to its current ratings with an explanation of its system of analysis and also has a website, www.ambest.com. On the site, some of the information is available for free, some pages require users to register, and other types of reports are available for sale.
Once you've made sure you're dealing with a financially sound company, ask about its procedures for filing claims. Timing is often crucial, and you don't want to have to learn the fine points of a process during a crisis.
You will likely find that communication is important: Many insurers require that they be notified if a horse is injured or ill. If you keep the company informed, you'll save yourself from having to provide documentation in a hurry should surgery become necessary or if a complication arises months after an initial illness.
So when is it appropriate to call the claims adjuster? Insurers usually suggest that you notify them of any problem that's serious enough to call a veterinarian. In fact, it's wise to call your insurer when the veterinarian is still with you, if possible, since the adjuster may want to speak with him as well. Most insurance claims adjusters can be reached 24 hours a day, seven days a week. If an emergency occurs at 1 a.m., they want you to wake them up. That's their job.
"We would like to know of any issues right away," says Beauchamp. "However, I own eight horses, and I'd never ask my clients to do what I wouldn't do myself. In an emergency situation, of course, they should keep the animal's best interest at heart and do what needs to be done first." If you're in doubt about the timing of your claim, check the wording in your policy. It should spell out exactly how much time you have before you must file your report.
A clear understanding of policy terms and the requirements for filing a claim will help you avoid unpleasant surprises when you're dealing with insurance companies. And, for most horse owners, the time spent learning the fundamentals of equine insurance is an investment of time well made.
After all, your horse probably provides you with enough surprises. And you know you can't protect him from all of life's illnesses and accidents, but with a properly chosen insurance policy you can make sure that finances alone won't prevent him from getting the medical care he needs. As with any other type of insurance, the best benefit simply may be peace of mind.
Gretchen Ditto specializes in freelance writing and corporate communications. She lives in Thousand Oaks, Calif., where she does a little eventing in her spare time.