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 for your horses’ values, there are standards to this value development. The basics: First and often is the purchase price amount, or in Foal’s breeding fees, costs & time of training, and of course, the level of the horse’s performance in a disciplined horse. Your agent will help with this process.
The 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 into consideration and deliver your best options.
What does Mortality cover?
In the event of the unfortunate, based on the coverage limits derived from JOV, a 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 include the contiguous U.S.A. and Canada, and in some cases expand to carriers’ approved global territories.
Many Full Mortality policies also include:
Colic Surgery Coverage of up to a stated $$ amount and or % of the horse’s insured value,
some include aftercare, which is very important. This is not the same for all carriers, so do your
homework. Don’t always go with stated colic $$ 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 are often more important, not
only in total coverage costs and reimbursements, but also in making the best decisions and care
for your loved one. Read between the lines.
Agreed Value, based on 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, and 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 horse’s 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 treatment available, copays, 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 are 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 copays, Lameness treatment (yes, some may not cover this), and their limits, so you need to discuss this with your agent to find 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 depts 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 horse’s JOV. As stated above, your limit of insurance is based on the JOV. Any condition that may reduce the horse’s 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 for 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 into 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, Reining, 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 and foals also have different rating factors.
Senior horses’ rates will increase past a certain age, often at 15 years, and a premium surcharge is added, which increases each year. Each carrier will have a limit on the age at which they no longer offer Mortality coverages. Some offer specialized medicals on seniors, ask your agent for details.
EMS rates:
These again vary per carrier, as does the coverage 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.
Other coverages:
These add-on endorsements to your Mortality often have a stand-alone pricing value; ask your agent for a cost analysis.
Claims:
We have done our homework, your agent has delivered your best option, and later down the line the unforeseen has occurred. Claims management is 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.
Conclusion:
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 your loved ones.
“Equine Insurance Insights” originally published on Better Options Insurance Services, LLC
Jim Nocero CICS
VP/Division Manager
800-264-7750 x1
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