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  1. #1
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    Default Spin-off Insurance Thread: no insurance on equine business??

    I forgot to start this thread (probably because I was so aghasted) three weeks ago when DH came back from a clinic and told me.

    So our plan is to have an equine business in the future.

    DH has a buddy who has a very successful equine business, training only, so no boarders coming in and getting his/her horse and going for a spin. He does however have clinics on a weekly basis that are basically an open arena, pay the fee, get instruction. This is an all-ages deal, I saw one little girl wearing a helmet, no helmets on adults and teenagers under 18.

    So I told DH to pick his brain about insurance. DH comes back and tells me he is not insured. OK, pick your jaws up off the floor... I had the same reaction, trust me. DH says that this guy owns all the equipment personally and then leases it to the business, which is set up as an LLC. So if he gets sued, the business doesn't actually own anything. Or very little. And that he consulted with a judge about this, who recommended it. DH got to talk to her as well, as she was at the clinic, and she said that a. insurance only covers attorney fees in the case of a suit, not damages, and b. the equine liability law has never been successfully beaten in court in our state.

    So I don't have to put on a flame suit, because they are itchy, WE ARE GOING TO HAVE INSURANCE. . I'm just flummoxed at someone in a high risk environment not having any... I do know they sign waivers, but I've always been told that waivers are really only as good as you can hoocus-poocus the signer into thinking it is. And any sort of proven negligence negates it.

    Anyone been sued and lost? Did insurance pay more than atty fees? And thoughts in general... Try to keep the flaming to a full roar because I have no control over this situation, nor do I care to, and I don't plan on doing the same, despite what DH may think. I'm the brains of dis heer operation.
    Aisha, my heart from 03/06/1986 to 08/22/2008.

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  2. #2
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    You are very wrong about written releases. While I have never defended a release in an equine case, I have defended many in my years as a trial lawyer when I was doing insurance defense work. At least in Texas and Colorado a properly worded and signed release will get a case won for the defendant on a summary judgment. Doesn't even need to go to trial.

    Thing is, you have to have a release that was written well and uses all the magic words for your state and is written in such a way that the average person can understand it. That means consulting and paying a lawyer in your state and not copying something from the web.

    A good signed release and a properly posted equine liability sign won't keep you from getting sued, but it will very likely keep you from having a judgment against you in most cases. Insurance is great for paying the legal fees that will arise in defending you, though, which can be considerable.
    Visit Sonesta Farms website at www.sonestafarms.com or our FaceBook page at www.facebook.com/sonestafarms. Also showing & breeding Cavalier King Charles Spaniels.


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  3. #3
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    He can still be sued personally. And you can't completely waive your right to sue, especially a minor. He is an idiot.
    "We can judge the heart of a man by his treatment of animals." ~Immanuel Kant



  4. #4
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    Quote Originally Posted by LauraKY View Post
    He can still be sued personally. And you can't completely waive your right to sue, especially a minor. He is an idiot.
    Just what law schools have your attended? In what states are you admitted to practice? Before you go spouting off you might want to educate yourself first.

    G.
    Mangalarga Marchador: Uma Raça, Uma Paixão



  5. #5
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    Great info Sonesta, thank you. Glad to know I was misinformed on that!
    Last edited by TheJenners; Apr. 11, 2013 at 11:08 AM. Reason: stupid autocorrect
    Aisha, my heart from 03/06/1986 to 08/22/2008.

    COTH's official mini-donk enabler.
    Odie, aka the Evil Burrito, is on Facebook.



  6. #6
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    Quote Originally Posted by LauraKY View Post
    He can still be sued personally. And you can't completely waive your right to sue, especially a minor. He is an idiot.
    He could, indeed, be sued as an individual if HE commits an act that would create liability. So, his personal assets would certainly be at risk in such a case.

    As to waiving rights to sue, an adult can do so under proper circumstances in most states. A minor cannot, but how you get around that is that a properly worded release states that the parent agrees to indemnify the defendant in the case that the child sues when he reaches age of majority. So, basically, the parent would be on the hook to pay any judgment - which is a pretty good deterrent to a child suing.
    Visit Sonesta Farms website at www.sonestafarms.com or our FaceBook page at www.facebook.com/sonestafarms. Also showing & breeding Cavalier King Charles Spaniels.


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  7. #7
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    There are a number of schemes out there that profess to permit a professional or business to "go bare" and protect their personal assets in the event of a suit. Most work best for the seller of the scheme. While "piercing the corporate veil" is difficult it's not impossible. Moving assets off shore makes things difficult for a plaintiff, but also not impossible.

    All waivers I'm aware of are based upon a theory of "assumption of risk." Riding horses carries with it certain risks and if a person is injured as a result of one of these known risk factors then they are precluded from a civil recovery.

    A properly done release can be effective. The waiver must be done strictly in accordance with the waiver statute. Some but not all, statutes are broad enough to include ordinary negligence. In all states I'm aware of it will fail if the plaintiff makes out a prima facie case of either gross negligence or willful, wanton, and reckless misconduct. There is also precedent for waivers binding minors; there is precedent in the other direction, also.

    The best waiver in the world, however, does not pay a defense lawyer. An insurance policy will. For that reason, alone, the "going bare" strategy is highly questionable. Even filing for a summary judgement will be costly.

    Further, even if the precedent is that a waiver is valid if the trial court, erroneously, finds it's not (for any reason or no reason) then there will be a trial and the issue will go up on appeal. This is Real Money (easily in excess of $50,000). Then, if you win, you get to back to the trial court to get a correct judgement. More money, don't you know.*

    For some specific information by state go to http://asci.uvm.edu/equine/law/ I've met Ms. Dawson and she is very knowledgeable.

    G.

    *Note that just how these thing play out is highly dependent on what jurisdiction you're in. As noted above, reliance on a waiver will be successful if, but only if, you've perfectly crossed all your "t's" and dotted all your "i's." Even a tiny, clerical error can get a waiver invalidated. Each state has its own Rules of Civil Procedure as well a substantive precedent. What will work in NY or TN might be ineffective in TX or CA.
    Mangalarga Marchador: Uma Raça, Uma Paixão



  8. #8
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    Quote Originally Posted by Guilherme View Post
    In all states I'm aware of it will fail if the plaintiff makes out a prima facie case of either gross negligence or willful, wanton, and reckless misconduct.
    Actually, I established in Texas that even gross negligence can be waived in a proper release. Even I was surprised and not sure I agree, but it's established and often quoted case law in Texas. See Newman vs. Tropical Visions, 891 S.W.2d 713 (Tex. App. - San Antonio 1994, writ ref'd nre)

    It was a SCUBA case. You can read the court of appeals decision - which quoted relevant portions of the release (that I had drafted for use by all PADI SCUBA facilities & instructors insured through my client, Lloyds of London) at http://www.leagle.com/xmlResult.aspx...006&SizeDisp=7

    BTW, I was Rebecca Matthews way back then.
    Last edited by Sonesta; Apr. 11, 2013 at 11:35 AM. Reason: to correct that they didn't quote the entire release, just portions
    Visit Sonesta Farms website at www.sonestafarms.com or our FaceBook page at www.facebook.com/sonestafarms. Also showing & breeding Cavalier King Charles Spaniels.



  9. #9
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    Quote Originally Posted by Sonesta View Post
    Actually, I established in Texas that even gross negligence can be waived in a proper release. Even I was surprised and not sure I agree, but it's established and often quoted case law in Texas. See Newman vs. Tropical Visions, 891 S.W.2d 713 (Tex. App. - San Antonio 1994, writ ref'd nre)

    It was a SCUBA case. You can read the court of appeals decision - which quoted relevant portions of the release (that I had drafted for use by all PADI SCUBA facilities & instructors insured through my client, Lloyds of London) at http://www.leagle.com/xmlResult.aspx...006&SizeDisp=7

    BTW, I was Rebecca Matthews way back then.
    Wow. You learn something new every day. Thanks for link.

    I guess I'd agree with the Dissent on the issue of gross negligence, but it appears that it can be waived. This is not what I would have expected. And I would not rely on a waiver that tried to do so, even in Texas.

    Seems to be that the maintenance of a good insurance policy, along with a good waiver, is the better policy.

    G.
    Mangalarga Marchador: Uma Raça, Uma Paixão



  10. #10
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    Even I could ferret out some knowledge from that legalese!!
    Aisha, my heart from 03/06/1986 to 08/22/2008.

    COTH's official mini-donk enabler.
    Odie, aka the Evil Burrito, is on Facebook.



  11. #11
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    I would want the insurance in this case solely for the duty to defend language written into most policies because holy cow some of these lawsuits I see (I work for an insurance carrier) drag on...and on...and on. Particularly if there is a death involved.



  12. #12
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    Well, would the insurance be who/what defends the language, or would an atty on retainer? Curious.
    Aisha, my heart from 03/06/1986 to 08/22/2008.

    COTH's official mini-donk enabler.
    Odie, aka the Evil Burrito, is on Facebook.



  13. #13
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    Quote Originally Posted by TheJenners View Post
    Well, would the insurance be who/what defends the language, or would an atty on retainer? Curious.
    Most liability policies include two parts: a duty to defend and a duty to indemnify.

    The duty of defend the insured against a claim is generally carried out by the company retaining a private attorney. As a rule they will contract with a firm to send them business in return for some sort of discounted rate. Some policies have a dollar limit on this but that's pretty rare.

    The duty to indemnify an injured person arises after either the company determines it's liable for the actions of its insured or when a judgement is rendered against the insured. Then the company must pay up to the limit of liability stated on the declarations page of the policy.

    G.
    Mangalarga Marchador: Uma Raça, Uma Paixão


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  14. #14
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    Well... many horse folks I know ain't got much that could be won in a lawsuit anyway.

    I will admit I did choke recently when speaking to the owner of a 'pony party/petting zoo' business when she said she has no insurance.

    But really, my impression is that most people who are sued are sued because they have assets that can be collected. Honestly, I think insurance makes it more likely that people sue, and results in MORE lawsuits, overall.

    You only sue your doctor because they have an insurance policy. If they had nothing but an apartment, a toyota with 220,000 miles, and $100,000 in college debt, then you (most likely) would not bother to sue them.



  15. #15
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    Don't have much to add to the great advice, other than Washington is a percentage of fault state. http://apps.leg.wa.gov/rcw/default.aspx?cite=4.22.070. For example, if the person suing is found 90% at fault and you found 10% at fault, you would still be liable to pay 10% of the judgement because you were 10% at fault.

    The particular case that comes to mind for me involves Mt Baker Ski Area, not horses, but is a good example of how percentage liability works. The injured woman was sitting in an area near the lodge that had multiple warning signs about falling snow and was actually closed off to prevent entry to the area. Even though she ignored all signs and barricades to enter the area, she was still awarded a judgement because 15% of the blame was assigned to Mt. Baker Ski Area. http://www.washingtoninjuryattorneyb...inst_mt_1.html, http://www.saminfo.com/news/jury-ren...-baker-lawsuit.
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  16. #16
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    Quote Originally Posted by Isabeau Z Solace View Post
    You only sue your doctor because they have an insurance policy. If they had nothing but an apartment, a toyota with 220,000 miles, and $100,000 in college debt, then you (most likely) would not bother to sue them.
    I'm not a lawyer, but I'm pretty sure this is not how it works. You sue the doctor because they cut off the wrong leg -- even if he only has a toyota and college debt and no insurance, he will still be held responsible. The lawyers can figure out the details.


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  17. #17
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    Quote Originally Posted by Isabeau Z Solace View Post
    You only sue your doctor because they have an insurance policy. If they had nothing but an apartment, a toyota with 220,000 miles, and $100,000 in college debt, then you (most likely) would not bother to sue them.
    I'm not a lawyer, but I'm pretty sure this is not how it works. You sue the doctor because they cut off the wrong leg -- even if he only has a toyota and college debt and no insurance, he will still be held responsible. The lawyers can figure out the details.



  18. #18
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    So a question, then, along the same lines: how much protection does an LLC status actually grant?
    Aisha, my heart from 03/06/1986 to 08/22/2008.

    COTH's official mini-donk enabler.
    Odie, aka the Evil Burrito, is on Facebook.



  19. #19
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    Quote Originally Posted by TheJenners View Post
    So a question, then, along the same lines: how much protection does an LLC status actually grant?
    Depends. Say you are the "owner" of the LLC that runs a training barn. If a trainer working for you beats a horse to death and the horse owner sues the trainer and the LLC, then your personal assets could not be seized to satisfy that judgment against the LLC or the trainer. But if YOU beat the horse to death and the owner sues you and the LLC, then your personal assets are subject to seizure to satisfy that judgment against you because YOU were the bad actor.

    And, of course, plaintiffs can try to "pierce the corporate veil" and try to prove that the LLC is just a sham to protect assets and that the plaintiff should be allowed to get to your personal assets. Hard to do, but not impossible, depending upon the facts.
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  20. #20
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    I've sold plenty of professional liability insurance in my life. I've also bought plenty of liability insurance for myself and my businesses. I have never seen a liability policy that didn't pay legal fees and damages in my 30+ years in the business. Guilherme stated it correctly. I'm not saying there is not some off-shore fly-by-night carrier that would write a defense only policy, but I have never seen it. Liability policies certainly pay damages. Is it common for a claim to have damages paid -- not really. I don't worry about having to pay out huge damages for a lawsuit (in a settlement or through adjudication.) What scares the willies of out me is the legal defense bill. I've been housed in law firms in my career and I have seen how they bill. It doesn't take long to blow through your premium payment in defense fees even for a frivolous suit, much less a serious one. An LLC can help, other kinds of incorporation can help, but at the end of the day, if a suit comes, then you are going to want to have a lawyer to defend you. It is not a people's court gig. I like to pay for my insurance and never use it.
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