The Money Pit Column written by Tax Lawyer Leonard Smith

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Photo of Ivory Pal by Cheri Prill Tennessee Walking Horse Issue August 2010

Equine Insuance

The Horse business requires insurance. It may be the difference between success and failure. Equine Health Insurance, may be the difference of keeping or euthanizing the horse.

Insurance policies generally have two coverages. The first is the Indemnification provision which is to pay you for which you are insured. The other is the cost of defense provision. This is the cost of defending you to a claim or a lawsuit.

In addition, the insurance policies are of two types. The first is a Claims Made policy which provides coverage only when both the policy is in effect and the claim is made. The other, provide coverage regardless of when the claim is made. In other words, the second policy provides you coverage even though the claim is made after the policy is not longer in effect. The costs difference between these two types of policies is huge.

Not having insurance is referred to as “Going Bare”. This is very risky!

The following is a simple overview of the types of Equine insurance.

Horse Mortality Insurance. This insures the animal against death due to accident, injury, illness, or disease. It includes humane destruction to relieve incurable and excessive suffering if caused by covered peril. Theft coverage is included.

Major Medical. This horse health insurance reimburses veterinarian's fees for surgery, major illness and disease. It will pay reasonable and customary charges necessitated by accident, injury or illness for your insured horse. There is a deductible for each horse health insurance claim, and a limit per animal per year. This horse health insurance coverage will help you control veterinary expenses for unforeseen events related to the health of your animal. The Surgery provides limited coverage of reasonable and customary medical and surgical treatment necessitated by accident, injury, illness, or disease. All treatments must be conducted by a licensed veterinarian. This is not available for race horses.

Guaranteed Renewal/Agreed Value. This provision guarantees mortality renewal for one year regardless of the health status of the animal. The horse value is agreed upon at policy inception.

Surgical Only Option. This covers reasonable and customary treatment made by a licensed veterinarian for surgical procedures, made necessary by accident, injury, illness, or disease. It includes a limited amount for additional expenses relative to the surgical procedure.

Permanent Disability. This is insurance for the horse that becomes totally and permanently disabled. It does not require destruction for humane reasons.

Stallion Infertility. This pays if stallion becomes totally & permanently infertile or impotent because of accident, sickness or disease. The Insurance Company has right to take title and possession.

Loss of Use. If your horse becomes totally and permanently incapable of fulfilling the functions for which it is used, as stated on your equine mortality insurance policy, but its condition does not necessitate destruction for humane reasons, you may suffer a financial loss. The Loss of Use extension to the equine mortality insurance policy will generally pay up to 75% of the animal's value if the company takes possession and or title to the animal or 50% of the value if you choose to keep your horse.

Trip Transit. This is coverage for importing or exporting your horse internationally by air.

Farms Property & Liability – Commercial. The sizable investments in horse farms must be protected from property loss or a potential liability suit. Properly designed farm and umbrella policies provide both security and protection.

Care, Custory, or Control Insurance. This is similar to the prior coverage. You need this coverage if you are in the Horse Business of:

• Boarding,

• Training,

• Breeding, and

• Transporting; any Non-Owned Horses that are In Your Care, Custody, or Control.