Understanding Equine Insurance Policies

Frequently asked questions about the types and stipulations of equine insurance

What would you do if your riding horse colicked, seriously injured himself, or, worse, had to be euthanized? You’d not only be devastated emotionally but also saddled with a stack of veterinary bills. Talk about adding insult to injury.

This is where equine insurance policies come in to help cover these costs. But when choosing a plan for your horse, where do you start?

Types of insurance available to horse owners include mortality (similar to a life insurance policy), major medical, loss of use, and liability (to protect you legally if your horse hurts someone). Some liability policies also protect you from a lawsuit if someone gets hurt on your property.

Shannon O’Dell, an owner and competitor of American Paint Horses, has worked in the insurance industry for more than 20 years and in 2009 founded First Choice Insurance in Spokane, Washington. She says the most common policies horse owners purchase are equine mortality and medical insurance, though she sells everything from ranch liability to traditional home and auto coverage.

Horsewoman Holly J. Lopes, who founded Cheval Insurance Services, in Fullerton, California, started her company in 1992 to help clients determine their potential exposures to loss and devise programs that mitigate or transfer as much risk as possible. Her agency offers a number of policies and coverage, including liability, equine mortality, farm and ranch liability, workers’ compensation, personal horse owner’s liability, and liability for riding clubs and -organizations.

In this article we’ll review the most frequently asked questions these equine insurance professionals get from horse owners.

What should I look for in an insurance company?

When you seek a quote from an insurance company, there are two things you want to know about that company, says Lopes: Their A.M. Best rating and whether they are admitted in your state.  

A.M. Best is a national service that grades insurance companies on their financial strength and solidity. “Ratings range from A++ on down and may have a number following them (such as XV or 15),” she says. “The number indicates (financial) size of the company. To find an insurance company’s rating, go to ambest.com. Look for companies with a rating of A- (superior) or better.”

RELATED CONTENT: Understanding Equine Insurance and Liability (Ask TheHorse Live Q&A)

An insurance company is “admitted” to do business in your state once the State Department of Insurance has reviewed its books and filed its insurance rates. Why is this important? “In the event you have a problem with the insurance company, you would have recourse for remedy through the Department of Insurance,” says Lopes. “Not so with a nonadmitted company.”  

Find out if a particular insurance company is admitted by asking your agent or your state Department of Insurance via phone or website. For instance, “on California’s Department of Insurance website, any admitted company you look up will be there, along with information about it, but nonadmitted ones won’t show up,” Lopes says.

Sometimes, however, your only option is to place coverage with a nonadmitted company. “It may be that no admitted companies will provide coverage (e.g., for difficult-to-insure disciplines or activities such as vaulting or rodeo) or the nonadmitted company has a special aspect of their program that is different than an admitted carrier, and you must have that difference to operate,” says Lopes. “An agent, however, is prohibited from placing your coverage with a nonadmitted company for price alone when an admitted company is available who will provide substantially identical coverage. If you are placing your insurance with a nonadmitted carrier, check that company’s A.M. Best rating. If it is A or better, especially if the size number is VII or better, you are probably on good ground. Your agent should be able to explain why he or she is recommending a nonadmitted company at the time your quote is issued.”

How do I set an insurance value on my horse?

If you buy a valuable horse, you generally want mortality insurance on him, especially if you are still paying the horse off. For mortality insurance, you can’t just pick a figure for the amount of coverage you want. Value is established in several ways, says O’Dell.  

“We can insure any horse, from pasture pet to a fancy show horse, but valuation is a tough question unless it’s a horse you just purchased; the purchase price would be the value,” she explains. “This can be frustrating, however, because in today’s market people can buy some really good horses at relatively low prices. Even if you think your horse is worth more, it doesn’t matter, because the value is the amount of that check you wrote. You can, however, increase the horse’s value through training, showing, etc. If it’s a horse you raised or one you bought five years ago, we have to fill out additional forms to show the underwriter why the horse is worth the value you are requesting.”

For instance, if you bought the horse for $2,000 and put a year of training into it, winning at open shows and placing in breed shows, then you might be able to establish a higher value for that horse. “You must substantiate or justify the value you are stating for the horse that you’ve been working with,” she explains, through horse show records and training bills.

Your horse’s value might also affect the amount of coverage he gets. For instance, says O’Dell, “I have one carrier that will not issue medical insurance unless the horse is valued at $15,000 or more. I have another carrier that has … medical policies with limits of $7,500, $10,000, and $15,000, but the horse has to be insured for at least the value of the medical policy. If you buy an $8,000 horse, you can only buy a $7,500 medical policy” with that particular carrier.

What does equine medical insurance cover?

From the base mortality policy you can add major medical insurance to pay for reasonable and customary veterinary expenses necessitated by accident, illness, injury, or disease. Exclusions vary from one insurance company to another and might include maintenance procedures, veterinary call and travel charges, transport of the horse for treatment, pre-existing conditions, congenital defects (ones that he’s born with), elective procedures (such as castration), alternative therapies (chiropractic, acupuncture, etc.), dental procedures, horses over the age of 15 or under 30 days of age, joint treatments or injections (this varies by company), necropsies, and more that might be company-specific.

Don’t be surprised if conditions you’ve treated your horse for in the past are excluded upon major medical renewal. “If a horse has a colic episode, you may have colic excluded on the renewed policy,” says O’Dell. “A horse that has an injury that has not healed or is diagnosed with arthritis will have those conditions (in that joint/limb/area) excluded.  

“Horse insurance does not work like human insurance; it is designed to cover sudden and unexpected injury, illness, and disease,” she adds. “So once a horse has a certain condition, it is no longer unexpected. Whether or not it will be excluded on the renewed policy depends on the diagnosis and whether the horse has fully recovered and sometimes even how long it has been since the last episode.”

What is “loss of use”?

Loss of use is designed to reimburse you for a portion of the value of your horse should he become permanently unsound for his stated performance use due to specified causes of loss. A horse owner can insure for full loss of use, which covers unsoundness caused by accident, illness, injury, or disease. Another option some companies offer is loss of use due to external traumatic accidental injury (e.g., trailer accident, crashing through a jump) only. Full loss of use requires a veterinary exam, radiographs (from the knees and hocks down), flexion tests, and, with some horses, a drug screen, says Lopes.  

The horse’s use should be specific as to the level or division of his particular discipline, because the insurance company will consider that information when evaluating any potential claim. You can add loss of use to mortality coverage only if you also take major medical coverage.  

The percentage returned to you in the event of a loss-of-use claim varies from one insurance company to another, from 50% to 100%, at which point the horse becomes the property of the company—which usually seeks to rehab and find some use for it to cut their loss. If you want to retain the horse, you can usually do so by subtracting a salvage value from the claim payment (evaluated on a case-by-case basis).

Another type of loss involves valuable breeding stallions, which you can insure for loss of fertility from disease or injury. “The insurance carrier requires collection of semen and analysis to make sure the horse is fertile to begin with,” says O’Dell. “This is a relatively inexpensive endorsement called accident/sickness and disease and would cover loss of use if the stallion is breeding a mare and gets kicked or becomes ill and is no longer fertile. There is no equivalent type of coverage for a broodmare, however, unless the owner buys the regular loss-of-use coverage.”

What is “care, custody, and control,” and do I need it?

While liability policies protect you from being legally liable for human injuries, they exclude damage to or death of a horse while it is in your care. “A separate coverage is available to protect you from being held responsible for such damage or death of another person’s horse, and this is called care, custody, and control, or CCC,” says Lopes. “It may be written by itself or in conjunction with a liability policy or ranch package. Limits are set on a per-horse/per-year basis, generally starting at $5,000 per horse and going as high as $100,000 per horse or more.”

You need CCC coverage if you are boarding, training, or exercising horses for others, handling other people’s horses for breeding, or doing incidental horse hauling.  

“The rule of thumb is if you are ever handling a horse belonging to someone else for a fee, you have a care, custody, and control exposure,” says Lopes. “Incidental hauling is when you haul horses for others strictly as a sideline to your main equestrian business. If you derive a significant part of your income from hauling or do not also have another equestrian business, you are considered a professional hauler, and CCC will not cover that activity. Professional haulers need a different kind of coverage.”

When should I report a potential claim for my horse or business?

Each insurance policy requires that you report an incident that could result in a claim as soon as possible, either to the insurance company’s claims line or to your agent. If you have a potential claim on your horse, a good rule of thumb is to call the claims number for your insurance company while the veterinarian is on the way to see your horse.

Why can’t I insure my older horse for full coverage?

“Mortality insurance coverages are designed to protect from loss due to premature demise of your horse,” says Lopes. “As horses age, the likelihood that they will die rises. Insurance companies each have their own upper limit of age at which they will provide full mortality coverage. Many will offer some type of limited perils coverage for over-age horses at a low rate, which protects only from loss from such things as fire, lightning, and other Acts of God, transportation accidents, and theft. Under limited perils, no medical or surgical coverages are available, nor is any type of illness, injury, or disease covered unless it is directly caused by one of the listed perils on the policy.”

O’Dell says all equine insurance carriers insure horses up to age 14, while some continue medical coverage up to age 20. “In the horse’s 15th year, (if he’s still eligible for coverage) the rates start going up,” she says. “The first increase, at age 15, isn’t bad. It all depends on the carrier, but it’s usually about another 1 to 2% higher.”

She likens insuring an older horse to trying to get life insurance on an older person: The premiums are higher. “Insurance companies figure there will be more health problems and they may have to start paying out more claims,” she says. “The whole object of insurance is to have a lot of nonclaims horses!”

Who decides when an insured horse can be euthanized?

“Carriers state in their policies that you must do everything possible to try to save the life of the horse, following all the veterinary recommendations, depending on the claim,” says O’Dell.

Veterinarians follow the American Association of Equine Practitioners guidelines (aaep.org/info/horse-health?publication=849) on when to recommend euthanasia.  

“If the horse has no hope of recovery, you don’t have to spend a bunch of money trying to save it,” says O’Dell. “But for most other claims, the insurance companies want you to do what you can to prevent death. They used to be more lenient toward the owner who didn’t want to perform colic surgery with all the aftercare and higher risk of mortality, but now with the improvements in colic surgery and lower mortality rates post-surgery, if your veterinarian recommends surgery for a colic and you opt not to, the carrier does not have to pay the mortality claim.”

Take-Home Message

Before you’re caught shelling out upward of $8,000 for your 10-year-old riding horse’s colic surgery or extensive lameness diagnostics, consider insuring him for the policy that best suits your needs. Work with a reputable insurance agent to make sure you’d be covered in the worst-case scenario.