Equine Insurance Insights
What is Equine Insurance, and how does this all work?
Not surprisingly, when we hear from prospects with so many variations of how Equine Insurance all works, it’s no wonder many feel intimidated in just picking up the phone and calling to find out more, I hope this helps motivate you to seek better options in this very valuable resource.
Let’s dive in and start with the basics and grow from there!
“Mortality”, Primary and basis of your coverage limits
Our horses are not just family members, partners in our disciplines, but major investments as well. Mortality is coverage form in this industry to help protect this investment.
Mortality coverage is primary to other available coverages to be added onto as endorsements. i.e., Medical, Surgical, Treatment, Travel, Loss of Use, etc.
- As you start your Equine insurance quest, you will need to determine your horses value, and this is to be substantiated in a Justification of Value or JOV process. While we may have determined numbers to your horses’ values, there are standards to this value development. The Basic’s: First and often is purchase price amount, or in Foal’s breeding fees, costs & time of training, and of course level of horse’s performance in a disciplined horse. Your agent will help with this process.
- Following would be the type of added coverages you may need; As stated, Mortality is the primary coverage, often this must be obtained first and from there we build optional coverage forms to best suit your needs, not only in investment reimbursement, but also in your horse’s health and your financial capacity. Your agent should take all the above in consideration and deliver your best options.
What does Mortality cover?
- In the event of the unfortunate, based on the coverage limits derived from JOV, full mortality policy provides coverage for death as a result of an injury, illness, or humane destruction, and should include loss or death as a result of theft. These policies will have coverage territory limits, most often includes the contiguous U.S.A. and Canada, and in some cases expanded to carriers approved global territories.
Many Full Mortality policies also include:
- Colic Surgery Coverage of up to a stated $$ amount and or % of horse’s insured value, some include aftercare, which is very important. This is not the same for all carriers, so do your homework. Don’t always go with stated colic $$ limits as the basis of your decision we all too often see, so much more rides on a good policy than a stated advertised limit of colic surgery. i.e., medical coverages during and after is often more important, in not only total coverage costs and reimbursements, but making the best decisions and care for your loved one. Read between the lines.
- Agreed Value, based off the JOV we discussed above – if the value of the horse at any time during the policy period was equal to the liability limit, the insured will be paid that amount. More on this later!
- A policy should include a Guaranteed Extension Coverage – in the event of a condition occurring and reported during the policy period, mortality coverage for that condition should automatically continue for additional months from the expiration date.
Medical and Surgical:
- We determined our horses value, we decided on a Mortality limit that fits our investment and financial needs. Next comes Equine Medical and Surgical coverages or EMS.
- Your EMS coverage limit is based on your Mortality limit, it can be less than your Mortality limit, but it cannot exceed this limit.
- NO TWO CARRIERS ARE THE SAME, so do your homework as well on this, same as colic in mortality, EMS coverages vary widely on the following types of coverages available.
Diagnosis is so important in determining your horses care and treatment, and extremely important that your chosen policy has the broadest coverage form available. What are the Sub Limit or max $$ amount per type of treatments available, Copay’s, and types of covered technologies available, important questions to ask?
After they have determined the problem, will your care be covered?
Again, each carrier has covered and non-covered care pending diagnosis. It really varies broadly in this industry, ask your agent to send you a comparison list to be certain. Treatments after care is critical in your horse’s recovery, as with the above no two carriers are the same, ask your agent for a list of treatment technologies acceptable to your policy, it may determine if it's covered or out of your pocket.
All the above have Deductibles, limits, Diagnosis limits or copay, Lameness treatment (yes some may not cover this) and their limits, so you need to discuss this with your agent to find your better options.
Pre Existing Conditions, and how they affect your policy?
- Unlike our Health Insurance, equine medical insurance excludes preexisting conditions from coverage. While some carriers with good claim dept’s and a great agent can work past some of these issues, often preexisting conditions cannot be covered on your policy.
- Also Preexisting Conditions play a role in your hoses JOV, as stated above, your limit of insurance is based off the JOV, any condition that may reduce the horses value and or performance, before or even during the policy period will affect your limit of insurance and what is reimbursed in the event of a claim.
- Remember above, “if the value of the horse at any time during the policy period was equal to the limit of liability, the insured will be paid that amount” you may have a midterm injury and the value of your horse could be compromised, in some cases without an agreed value clause you may lose reimbursement limits.
Other coverages are available per your horse or stables needs.
- Full Loss of use, which is available with some carriers with generally limited to disciplines or use of horses and often needing pre-approvals.
- Stallion infertility, self-explanatory, covered claim if your Stallion cannot perform after a proven record.
- Territorial limits as mentioned above, and each carrier has different appetites to available territories.
- Third Party Liability, very important coverage. Horses can be horses and can cause damage to person or property at any time.
- Other coverages are available based on carriers’ offerings, just ask!
Coverage premium rates, how are they determined:
Now that we have a better understanding of Mortality, EMS and other available coverages available to you, let’s talk about rates, you will have a premium assigned for the above selections, so let’s dive in how these costs are derived:
Mortality is your primary coverage; its premium costs are derived from the following:
- Horse breed, sex, age and JOV $$
- In addition, the horse’s usage determines your rates. You can have two horses, identical profiles above, but one-horse costing more per year, due to its usage, i.e., Dressage, Cutting, Reigning, Team Penning horses are your lowest rates, while Eventing often being your highest and if your horse has reached higher levels, let’s say above prelim stages their rates may increase as well.
- Yearlings, Foals also have different rating factors.
- Senior horses’ rates will increase past a certain age, often at 15 years, a premium surcharge is added which increases each year. Each carrier will have a limit to which age they no longer will offer Mortality coverages. Some offer specialized medicals on seniors, ask your agent for details.
- These again very per carriers as does the coverages being offered, I can say this, you get what you pay for in insurance, do not be afraid to ask and get a chart to help you determine your better options and rates.
- Generally, the higher the limit of coverage the more your premium is going to cost you. You can for financial reasons, or you feel your horse is a low risk, reduce this amount, you cannot have EMS limits higher than your mortality limit. Some carriers use a simple scale and have a minimum limit to make this easier for you, i.e., $5k, $10k, $20k EMS limits for ease of premium development.
These add-on endorsements to your Mortality often have a stand-alone pricing value, ask your agent for cost analysis.
We have done our homework, your agent has delivered your best option, and later down line the unforeseen has occurred. Claims management is so greatly important in the overall satisfaction of your horse’s care and the reimbursement amounts for their treatment. Always have your agent involved in the claim process from the beginning, their guidance is critical to your satisfaction, horses’ recovery and claim management.
We covered a lot in the above, however no two clients have the same needs and reaching out to your agent with your newfound knowledge, should help you navigate the broadest coverage, at the best rates available for you and loved ones.
“Equine Insurance Insights” originally published on Better Options Insurance Services, LLC
Jim Nocero CICS