With the COVID-19 pandemic affecting all aspects of the horse industry, from boarding barns to shows to horse sales, if you’re a farm owner or trainer, it’s important not to forget your insurance coverage.
According to Claire Johnson, farm and liability specialist at LEGISequine.com in Burbank, California, now is an unprecedented time for insurance agencies, and like everything else during this crisis, things are changing daily.
“We’ve had calls from trainers facing [loss of coverage]. We’ve gone back to the insurance companies and said, ‘Hey, just double-checking again today,’ ” she said. “It’s truly like a daily check-in with them because everything is just changing day to day—the messages are changing; the mandates are changing. It’s dependent on the type of policy you have. These are unprecedented times, and I’m sure other agents are feeling that as well and panicking trying to make sure their trainers can work.”
Keeping in mind that every policy is different, and every state is different, we spoke with Johnson about some questions equine professionals might have as they navigate these uncertain times.
COTH: What concerns are you hearing from your clients?
Johnson: We’re getting calls from trainers who aren’t even our clients saying, “Hey, I just talked to my agent, and they say I have no coverage, but I know Trainer B who’s insured through you guys, and you do have coverage, so what do I do?”
Some of the biggest differences that we’re seeing really just come down to policy language, and that’s a primary difference between an admitted market—your normal, within the United States carriers—and then the excess market, which are companies that don’t necessarily have to abide by state regulations, state licensing, that kind of stuff. They’re sort of your last resort markets, and we’re finding that a lot of trainers are actually insured through some of those last-resort markets, which is why they have maybe an extra exclusion that our policies don’t have that says they can’t operate while there is a statutory mandate in force.
Our clients are also concerned about billing, and each carrier is responding differently. We’re encouraging all of our clients to keep in contact with us more than less.
Have you changed your policies? What are you telling your clients?
As far as policy wordings go, those are pretty much set in stone. Those are regulated and have to be approved and submitted by each state specifically, so policy wording doesn’t change.
What we can answer to our clients, the policies that we work with, we have found that there is not a statutory exclusion on it. That’s become our biggest message, especially to those people who aren’t necessarily our clients: Does your policy have a statutory breach exclusion? That is the specific exclusion that is stopping people from being able to run their business. It may not stop them from running their entire business, because animal care is still considered essential. Maybe the trainer can go out and care for the horses, but a boarder may not be able to come out and see their horse; they may not be able to give a riding lesson, that sort of thing.
We’ve found that some insurance policies have no problem. We’ve talked with underwriters and managers who say, “Our policy will continue to respond for bodily injury and property damage for any of your covered activities.” If you were a riding instructor, and you’re deciding to go do livery stable trail rides, and you weren’t insured before, you’re not going to have coverage now. You have to get that added to your policy. Bodily injury and property damage claims are still being responded to by most admitted carriers, I would say. It’s really those polices that are from excess and surplus markets that are struggling to find coverage.
We’ve had clients who say, “We’re not in a ‘shelter-in-place’ area, but we are in a ‘safer-at-home’ area. Can I still run riding lessons as long as we abide by social distancing?” Really, at the end of the day, as an insurance agent, we can’t tell you what the socially responsible thing to do is, but what we can tell you is that your policy will continue to respond.
As far as loss of business income [also known as business interruption coverage], we really don’t know what that looks like right now. The way the policy wording reads is that coverage is only applicable if a piece of the property is damaged [due to weather, for example].
You would have to have your whole farm insured. For instance, the barn would have to be inaccessible or damaged in some way due to COVID. But at this point, as far as loss of business income, we’re really just encouraging people to reach out and talk to their agent, and if they think they might have a claim, submit it. [It’s better to] let the insurance company decline it, rather than find out on the backend that there could have been coverage [if you’d submitted a claim]. At the same time, insurance can only respond so fast, and the government can only respond so fast. Unfortunately, those are two kind of slow-moving entities.
If someone contracted the coronavirus at the barn, can that person sue if they believe the barn owner failed to respond appropriately to COVID-19 concerns?
Yes, they can, and that’s one of the big risks that you take by keeping your barn open at this time. You are absolutely opening yourself up for risk. Now will the policy respond? Eh … it’s gray. It’s a maybe. There are exclusions on your regular run-of-the-mill policies that say there’s a bacteria/virus/microbe exclusion on there, and we really aren’t entirely sure how that’s going to play. Each individual situation is going to be so different. At this time, the underwriters are saying, “Submit the claim. Let claims handle it.”
It could be even well before you receive that lawyer letter. You just have that one cranky boarder who likes to complain about everything, and now they’ve mentioned something or said something in passing, and you’ve got a bad gut feeling—call your insurance agent. Make that claim. Just put them on notice.
People get really afraid of making claims. At the end of the day, you can turn it into just an incident report. It doesn’t necessarily have to go through the full claims process, get paid, do all of that. If you get 5 percent into the claims process, and they’re like, “Eh, we’re not finding any coverage,” you say, “OK, great. Log it as an incident; I’ll take over from here.” If we need to reopen the claim because we think there might be coverage, we can reopen it. But it doesn’t reflect poorly just by reporting to your insurance company. They would rather you report it.
Could a trainer or barn owner be liable if a worker contracted COVID-19 while on their property?
They could be. It’s again a gray area. But from what we’ve been seeing, what we’re reading and the trends we’re seeing—Sacramento [California] just put out an article the other day about how doctors and nurses are contracting COVID on-site, which then makes it a workers’ comp claim. What that article was saying is that the onus is actually falling to the person who’s sick to prove they contracted it at their place of work.
Yes, you can be named, but how are you going to prove where you caught it though? It’s all very gray. As much as we wish we had all the black-and-white answers we could right now, between government and insurance and legal, none of those are fast-moving industries!
If you live in a state that’s on lockdown, but you still have people coming to ride, would you still be covered?
You could be. If you have an insurance policy through an admitted carrier, you could have coverage for those activities. If you have coverage through an excess market, you may not. It all comes down to verbiage in the policy.
The biggest key phrase that people should be looking for is statutory breach exclusion. If you have that, they’re going to draw the line in funky places and say for instance, “You can go out and care for your horses, but you can’t give any riding instruction. Well, Boarder A can come out because they’re the only person who knows how to give their horse this supplement, therefore they’re an essential worker; but Client B over here, because she’s in full training and grooming has absolutely no need to come down to the barn because the barn will do everything for her.”
This is all regardless of whether you have a shelter-in-place order, you’re an essential or non-essential business—basically the admitted carriers are saying insurance policies will continue to respond for those activities. How you’re going to prove you weren’t being negligent in allowing people at the barn, or how you’re going to prove that everybody was following social distancing rules set forth in this new time, those are the deeper questions that you have to ask yourself.
We understand this is going to kill some people’s businesses because they’re not that big or that strong, but at the end of the day, if something were to happen, do you have the means or the ability to get out of it? Is the payoff going to be greater than the risk? That’s what we’re asking clients to consider in this moment.
What about an insured trainer traveling to different barns that are still open? Are they still covered?
Again, looking to the statutory breach. They very well could have coverage. Is it in her best interest? Is she considering that she might be spreading COVID between facilities and therefore exposing more people? Potentially. How is legal going to fight all of that though? We’re encouraging people to think about the legality, the social responsibility and the risk versus reward payoff.
If your horse was injured because it couldn’t be turned out or exercised because you’re not allowed at the barn, would his injury be covered?
If they carry that type of policy, then yes. If they carry a mortality policy with major medical on it, there could absolutely be coverage for it. If it’s not found to be due to any of those reasons, then it could be declined. It really all comes down to those kinds of nitty gritty details and the timeline, and how everybody played a part in the injury or whatever it might be.
What else do equestrians need to know?
Because we don’t know how long this is going to go, and I’m sure businesses have also taken hits, call your agent and see if you can adjust coverages. If you were teaching 20 lessons a week, and now you’re not teaching any, and you don’t foresee teaching any for a couple of months, maybe try taking that coverage off for now. Save yourself some dollars.
Or if you go from 20 students to five, why pay for 20 students when you can pay for five? See where you can pare down your insurance coverages as is appropriate. For people who are doing clinics or events, take a look at how many days and what days are covered under your policy, if you had to postpone that show or cancel that clinic, whatever it is. Call your agent and see if you can adjust.
Have more questions? Contact Johnson at email@example.com.