leases and insurance and exclusions-- how does this work?

[mvp]

For all you wheeler-dealers who lease horses with smart agreements:

Signing an agreement and insuring the horse (not for loss of use) is a great idea. So if the horse has had an issue in the past and the insurance co will exclude that in the future, how do you proceed?

The person leasing the horse, of course, must know about the problem and make every attempt to manage it well. But it may be the weak link in the horse and the whole deal since a re-injury will fall into someone's lap-- owner or the person leasing.

How does this work so that both sides feel somewhat protected against a catastrophic set of vet/rehab bills?

[Lucassb]

Once an issue appears on an insurance exclusion - that method of protection against vet bills is obviously simply not available.

The way I think is most fair is for an approach for dealing with a recurrence to be outlined in advance. For example, in the event the horse reinjures the excluded area, the lessor and lessee agree to split the first $x in vet costs 50-50,(or 60-40, or whatever) and any amount that exceeds $x is the responsibility of the lessor.

For the record I would not include regular expenses (board, etc) in the "injury related expense," just the vet bills/direct rehab cost. But that's just me. I'd consider it a risk to lease a horse with a known problem and would be thrilled if I could find someone who wanted to take the horse on anyway.

If I were leasing a horse with a known problem, I would feel it fair to help with the acute expenses if the animal broke, but I would not want to take on a long term board/maintenance expense on a horse I couldn't ride. Too much risk.

[Janet]

My lease contract was very clear.

I, as owner, was responsible for all expenses related to pre-existing conditions. And I insistent that the person leasing have a PPE (at their expense) to identify the pre-existing conditions (even if not excluded in the Medical Insurance).

In Spy's case, it was (initially minor) arthritis, and a heart murmur. I paid for all arthritis meds and supplements. And when he came back to me for good it was because of the arthritis.

The other way round, when I leased Moo, he was rehabbing from a suspensory injury. There was no written contract, but the owner (a vet) and I were in regular consultaion about his workload and condition. If he had not come completely sound, he would have gone back to the owner with no further responsibility on my part. But she offerd me the lease in the first place because she trusted my judgement.

In fact, I returned him sound, and he continued to jump into his 30s with no recurring problems.

[mvp]

Yeah, it's a toughy. And I can't imagine it's all too uncommon since lease horses have the experience that makes them useful in that role but also corresponding milage.

I can imagine there are leased horses out there that are insured except for LF coffin joint, RF suspensory, R stifle... you get the picture.

Among the group I'm talking about-- whether the owners of these campaigners or non-clueless leasors-- do know a lot about keeping tabs on a problem and managing them. But it's sad that the financial nature of the deal means that the lessee has every reason to return the horse ASAP for any kind of long lay-up. Perhaps this means initial leases ought to be short so that both sides, even with good intentions, can see how well the lessee's riding and management program actually work well enough?

I'm really curious to know how this works in Big Eq world. Dollars to donuts those horses are insured and have their share of known problems and excluded body parts.

[Lucassb]

Yeah, it's a toughy. And I can't imagine it's all too uncommon since lease horses have the experience that makes them useful in that role but also corresponding milage.

I can imagine there are leased horses out there that are insured except for LF coffin joint, RF suspensory, R stifle... you get the picture.

Among the group I'm talking about-- whether the owners of these campaigners or non-clueless leasors-- do know a lot about keeping tabs on a problem and managing them. But it's sad that the financial nature of the deal means that the lessee has every reason to return the horse ASAP for any kind of long lay-up. Perhaps this means initial leases ought to be short so that both sides, even with good intentions, can see how well the lessee's riding and management program actually work well enough?

I'm really curious to know how this works in Big Eq world. Dollars to donuts those horses are insured and have their share of known problems and excluded body parts.

Well, those big eq horses tend to have pretty carefully designed and closely managed programs. And they are often leased in their own barns or among professionals who know each other well and communicate regularly so the horse stays in that program regardless of whose care it is under.

[toomanyponies]

Very true Lucassb.

Shorter leases are also becoming more common when there is a known problem. eg the lessee commits to 3 months and if the horse stays sound doing that job, then they commit to another 9.

Its all what you work out in advance. Some reputable dealers will trade you out if the horse 'breaks', so at least the customer has something to ride, and will rehab the horse - maybe not vet bills but will at least lay it up at their farm.

I try to write into all my lease contracts (my customer is lessee) that the horse may be returned early with no penalty or cost to the lessee, but no reimbursement of lease monies. This is potentially beneficial to both parties - in the case of a pony, I may have a year lease through December - but the kid is ready to move up and I find a horse in October. Pony gets returned and the owner can re-lease pony earlier than expected. Flip side, if the horse breaks and you've done everything you can to get it sound, and he's still not rideable you can return it early, so the customer can move on to a new animal. Yes the lessor now has to board the horse but the he also still has the lease money.