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August 24, 2010

Insurance For Horse People: Consider Equine Insurance Before You Have An Emergency

You should think about horse insurance before you have a problem on your hands. Photo by Mollie Bailey.

Curious about insurance for horse owners? Check back every Wednesday through Sept. 8 for this three-part series that will cover horse insurance, liability insurance and farm insurance. Sponsored by Taylor Harris Insurance Services.

Imagine a cold, wet night in February. You’ve been walking your horse for hours, watching as your veterinarian treats him for an increasingly painful colic episode. Things aren’t improving, and the vet asks you “Is surgery an option for you?”

Colic surgery, with its thousands of dollars of cost, is a daunting decision for most horse owners, but it’s one that is made much easier with an insurance policy. Whether your horse is a high-dollar show star or a treasured back-yard companion, there’s an insurance policy to help you keep him healthy.

Barton Hitchcock, of Taylor Harris Insurance Services, Inc., strongly advises being an educated consumer when shopping for horse insurance. There are a myriad of options out there to decide between, so doing some homework and making sure that you’re getting what you—and your horse—need is critical. Here are some things to think about:

Your Insurance Is Only As Good As Your Underwriter

One thing to keep in mind is that the insurance agencies you’re going to deal with aren’t the actual insurers of your horse—the underwriting company is. While your insurance agent is your pathway to the underwriter, keep in mind that the underwriter makes the ultimate decisions about coverage and claims.

“The main thing to emphasize is that your coverage is as good as your agent,” Hitchcock said. She advises against simply filling out an online form to get an insurance quote.

“Call and get an agent to talk you through your needs. It’s worth the time on the phone to go over the specifics. The agent is your link to the underwriters, so find one who’s willing to work for you,” said Hitchcock.

The base policy is a Full Mortality Policy, which covers your horse’s death, based on the horse’s value. You can cover your horse for just mortality…

Or, you can add on one of a vast array of Major Medical and Surgical options. These policies cover things like colic surgery, sicknesses, injuries and other major health problems.

Major medical and surgical coverages usually have a variety of coverage limits such as:

  • A reimbursement cap—a certain dollar amount which, should your horse’s care exceed that level, the insurance will not cover
  • Deductibles—a set amount you’re required to pay before insurance begins reimbursement
  • Co-pays—a specific dollar amount which the owner is required to pay out-of-pocket for each claim

“Deductibles and co-pays may or may not reduce the premium. There are many options on deductibles and co-pays, which directly affect your coverage and its ultimate cost to you.  Be sure to ask your agent about their limits of coverage, deductibles, and co-pays,” advised Hitchcock.

“An important thing when comparing major medical is to be sure to compare apples to apples, not apples to oranges. You need to know if a policy has restricted coverage, restricted payments on certain procedures, and whether there’s a co-pay on anything or not,” Hitchcock continued.

“There are other policies out there that might have a co-pay on diagnostics, and might require that there’s a written diagnosis before they cover any diagnostics. They might limit your coverage, paying only X amount of dollars on hospitalization or procedures like shock wave therapy. You have to dig and ask questions to find out what a policy really covers. Ask an agent to go over the whole policy line-by-line and see what you’re actually getting quoted,” she said.

Your insurance policy quote depends on many things—the age, health, use and value of your horse, as well as your geographic location.

“Depending on what part of the country you’re in, your major medical costs—such as colic surgery—are going to vary. Costs for a colic surgery are going to be different in West Palm Beach, Fla., versus in Alabama. That person in Alabama might not need as extensive coverage as someone in a more high-cost area. The veterinary costs are geographical. It’s completely the client’s decision about what they’re comfortable with,” said Hitchcock.

Common Questions

What’s my horse’s current market value?

All mortality insurance policies are based on what the insurance company deems your horse’s “current market value.” If you’ve recently purchased your horse, it’s easy to establish that value at the price you paid.

But, there are other situations that require more evidence.

“Right now, a lot of people have questions because—given the downturn in the market—they’re buying horses for less than perhaps they’re worth,” Hitchcock said.

But insurance companies don’t base their decision on what a horse might be worth. “If you just bought it for $10,000, you’ve established that horse’s value at $10,000,” she explained.

You can insure up to your horse’s current market value, but you can also choose a mortality policy for any amount under that value as well.

That current market value is a fluctuating thing, however. “As soon as you’ve established a show record, you can change the value at any time during the policy period,” Hitchcock said.

If you’ve bought a horse cheaply as a training prospect, keep your agent informed as to its level of training and show record. “Schooling shows do count as a performance record, and we account for training, especially if you’re paying each month for professional training,” Hitchcock said. Your horse’s value can change multiple times in the course of a year, if his record and training warrant an increase in the current market value.           

If your horse doesn’t have a purchase price—let’s say you bred him or he was given to you—your insurance agent will ask detailed questions to help establish his market value.

What are exclusions?

If your horse has a known physical problem, such as a history of colic episodes or a bowed tendon, the underwriting insurance company might choose to “exclude” that pre-existing condition from a major medical and surgical policy, meaning that they would not include that problem in your coverage. A veterinary exam may be required at the inception of a policy, depending upon use, value, and/or length of ownership. The key thing to remember is that it’s important to be honest about your horse’s medical history.

For example, if your horse has suffered multiple colic attacks in the recent past, it’s possible that the insurance underwriter would exclude colic treatment and surgery from his policy. “When you’re applying for insurance, you need to be upfront about things and disclose any pre-existing conditions,” Hitchcock said.

Again, communication with your agent is your best strategy. “When writing a policy in the first place, let’s say six months ago your horse had a mild gas colic that was medically resolved. That’s completely different than if it had a surgical resection resulting from colic. It’s all done on a completely individual basis,” said Hitchcock.

“We’ll go to the underwriters and try to get the best we can for the client concerning exclusions. If you had a colic, we will submit it to the underwriters and explain the circumstances to them; you might have an exclusion, you might not.  It depends on the severity, the length of time since the incident, and how recurrent it is,” she continued.

It’s possible to have exclusions reversed, so keep your agent informed on your horse’s health. “If it was a suspensory injury, for example, but if an ultrasound shows that its completely healed, and the horse is back in work and doing well, that exclusion could be removed,” said Hitchcock.

“We follow up on injuries after a certain amount of time to see how the horse is doing. If it’s doing OK, and you’ve got proof it’s healed, we can ask for that exclusion to be removed. But that also is on an individual basis,” she said.

When do I need to call my insurance agent?

If you have your veterinarian out for any reason other than routine maintenance (wellness exam, vaccinations, etc.), you need to notify your insurance company.

“It doesn’t mean that there will be an exclusion just because you notified us; it depends on the particular situation,” said Hitchcock. Most insurance companies have 24-hour notification services.

But in an emergency, the veterinarian always gets the first call. “We are not going to dictate that horse’s care; the vet is,” said Hitchcock. “But the client needs to notify us in a timely manner of anything going on. Most of the vets will ask if you have insurance and if you’ve notified your agent.”

What about a horse’s death?

You need to notify your insurance company promptly in the event of the death of your horse, “because you need to have a necropsy done,” Hitchcock said. The owner, not the insurance policy, pays for the necropsy. Many veterinary teaching hospitals and state departments of agriculture perform this service. Prices generally range from $80 to $200 for necropsy and disposal services.

What if I want to insure my horse just for a buyer’s trial period?

If you’re sending your horse out on a trial to a potential buyer, it’s possible to buy a short-term insurance policy—either mortality or mortality and major medical and surgical—for the period of time he’ll be elsewhere. If your horse is already insured, his policy will still cover him while he’s in someone else’s care (this applies only within the United States and Canada).

What if I just bought a horse in Germany and want to insure it right away?

Contact an insurance agent—they can help you write a policy that not only covers your horse once he arrives at his new home, but also for his travel to you.

What if my horse is competing abroad?

Most insurance policies extend coverage only if the horse is in the United States or Canada, but your agent can help you choose a plan to extend that coverage to an international trip if you need.

“We do write for travel and extend coverage for some countries all over the world, especially when horses are going to compete internationally,” Hitchcock said.

What specialized policies are there?

You can insure a horse for a period of time during which he’s being leased. You can insure a mare and foal during her pregnancy and foaling with expected foal insurance, which starts six weeks after the last cover date, or with guaranteed live foal insurance, which begins at the first cover date. There is also infertility insurance and loss of use insurance, which covers the loss in value if a performance horse loses the ability to compete. Loss of use insurance involves quite a bit of proof of value, including an extensive veterinary exam.

 

 

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