With horses, it’s not a question of whether they’ll get sick or injured, but when, how bad it will be, how much it will cost to fix—and whether you can afford it. After all, there’s little worse than having to make a decision about your horse’s health based solely on financial factors. That’s why some horse owners opt for insurance coverage.
But insurance itself can be a costly and complex proposition, which is why you should thoroughly understand what you’re getting into before you sign on the dotted line. Read on for insights to help you determine if insurance is the right choice for you and your horse as well as tips to help you pick a policy and an insurer.
Do I Need It?
Once upon a time, it seemed that only elite performance horses were insured. But as veterinary technology has changed, so have the insurance needs of everyday horse owners. Advanced diagnostics and treatments—bone scans, MRIs, shockwave, stem-cell therapy and so on—are no longer reserved for Olympic and world-caliber mounts. They’re available for your Children’s Hunter, your Novice eventer, your Second Level dressage horse—to extend the useful life (or, in some cases, the actual life) of your horse. But they come at a price. So the dual questions many horse owners ask themselves when determining their insurance needs are, “If my horse suffered a major health setback, would I have the financial ability to address it? And if not, am I prepared to accept the consequences, whether that means ending a performance career or putting down the horse?”
If your answer to both questions is no, then insurance might be for you. Although it’s hardly free, it can give you peace of mind knowing you won’t have to turn down potentially life- or performance- saving treatments for purely budgetary reasons.
Can I Get It?
That said, insurance has its potential drawbacks, too. For starters, while technically no horse is uninsurable, it can be difficult to find policies for horses with certain conditions. For example, “It’s very difficult to find coverage for a horse that has been nerved or had a neurectomy,” says Ryan Gotshall, who represents Great American, American Equine, The Hartford and BritAmerica carriers through Equine Insurance Center in Liberty, North Carolina.
In other cases, policies may simply become difficult to afford. “Three months to 15 years [of age] is the sweet spot where normal rates would apply,” says Lance Allen, DVM, a representative with Markel Insurance Company. “At 16, 17, 18 years old, rates start to climb. After 18, rates will go up significantly.” And, he adds, you have to have an exceptional horse to pay the premiums at that point.
In addition, even if a horse is insurable at a normal rate, not all health issues are necessarily covered. Pre-existing conditions are one example, says Julie I. Fershtman, an attorney based in Farmington Hills, Michigan, whose expertise includes the equine industry and insurance litigation.
So if your horse has a current health issue or had one within a certain time frame, an insurance company likely will exclude that condition from your coverage. Horses afflicted with hyperkalemic periodic paralysis, for instance, may qualify for a policy that excludes HYPP-related coverage, says Ryan.
Sometimes, exclusions are temporary. “For example, let’s say a medical colic occurs during the policy term,” says Ryan. “When that policy renews the following year, there may be an exclusion for colic. However, dependent on the time frame that has passed, we may be able to look at that exclusion for review and have coverage put back in place with certain criteria being met.”
What Kind of Policies Exist?
Assuming that your horse meets the basic criteria for an insurance policy and setting aside any specific exclusions that apply, exactly what will be covered depends on the type of policy you get. In most cases, that means at least a mortality policy, which insurers require before other coverage can be added.
In a nutshell, equine mortality insurance pays you if your horse dies from injury, illness, disease or accident; some policies also cover theft. How much you’ll receive is essentially based on your horse’s value. That could be defined one of two ways, depending on the policy:
-Actual-value policies pay based on the fair-market value of your horse near the time of his death.
-Agreed-value policies pay a specific amount agreed upon when you obtain the policy. This option has become more common over the past decade, says Lance. “It takes the hassle out up front,” he notes. “If you insure your horse for $25,000 today and it dies next week, the insurer is not going to give you $18,000, because we’ve agreed that the horse is worth $25,000.”
However, there’s no Kelley Blue Book on horses like there is for autos, as Lance points out. So exactly how does an insurer determine a horse’s value? A recent purchase price is the easiest way. But say you spent $10,000 on a dressage horse a year ago and now you want to insure it for $15,000. The insurance company will want some validation for the increased value, says Lance. That could be based on show results and/or the evaluation of your trainer or another trusted expert with whom the insurer has a relationship.
What Other Coverage Is Available?
Once you have a mortality policy, you usually have the option to add more coverage, also known as endorsements, for additional cost. The most common endorsements are major medical and surgical policies.
“Major-medical insurance is designed to provide reimbursement for certain veterinary medications and procedures subject to a deductible,” says Julie. “Insurers have a list of exclusions and requirements, but a common condition is that the veterinary services be ‘reasonable and customary.’” For instance, your policy might cover the cost of x-rays, antibiotics and colic care, but not acupuncture.
That said, major-medical coverage extends to serious nonsurgical health issues and injuries. It won’t help with expenses related to basic maintenance and upkeep of your healthy horse, such as vaccinations, deworming or Coggin’s tests.
Surgical insurance, not surprisingly, covers costs of surgery and related services, such as diagnostic testing and post-surgical care. Usually, coverage is restricted to necessary surgery and doesn’t include elective surgery, such as cosmetic procedures (like removing an unsightly scar).
Both major-medical and surgical policies have coverage limits, usually have deductibles and may have co-pays. It’s also important to realize that, unlike with your own health insurance, you will pay the veterinary bills yourself and then get reimbursed by the insurance company.
Numerous other types of equine insurance are also available. This may include (but isn’t limited to):
-Colic-only. Covers costs related to medical or surgical colic treatment and aftercare. “Most carriers are adding an emergency colic surgery endorsement to the mortality policy,” says Ryan. “This provides a specified amount for colic surgery at no additional charge [and] would be in addition to any major-medical coverage that you may have.”
-Named perils. Provides payment if your horse dies from specifically named occurrences, such as during transport or due to a natural disaster, such as flood.
-Loss of use. Pays out when your horse experiences a condition that permanently prevents him from performing a specified function. You’ll usually be required to provide proof of the disability, possibly requiring confirmation from two veterinarians. These policies typically do not pay your horse’s full value and, in some cases, require you to surrender your horse to the insurer.
-Infertility. Most often covers a proven sire who can no longer settle mares due to an accident or illness. Some companies also offer infertility polices for mares.
-Liability. Offers you some coverage protection if your horse injures a person other than yourself or damages another person’s property.
What Does It Cost?
By now, you may be thinking, “Sounds great. But what is this going to cost me?” Well, that depends. As Ryan explains, “Your mortality premium is determined by [your horse’s] age, breed, use and value.” So it’s challenging to give a precise dollar amount here.
However, you can get a rough idea by taking a percent of your horse’s value, says Lance. A good range, he notes, is from the high 2 percents (say, 2.85 percent) to the high 3 percents (say 3.75 percent) annually. For example, the mortality premium on a $10,000 hunter might be between $285 and $375. \
For a $10,000 major-medical endorsement, adds Ryan, you could expect to spend $400 to $425 on top of your mortality-insurance premium. (Lower-limit plans are available, with correspondingly lower premiums.)
Ryan says that most of the companies he represents have broadened what can be covered due to the availability of new treatments and procedures, including shockwave, IRAP™, PRP and stem cell. However, many companies have sublimits on these items, notes Lance. So while your overall coverage might be $10,000, there may be a $1,200 or $1,500 limit on shockwave therapy. In addition, says Ryan, several insurers have added co-pays to their major-medical coverage for diagnostic imaging, such as bone scans and MRIs.
How Do I Pick an Insurance Company?
With so many variables in cost and coverage, it pays to comparison-shop. Ryan and Lance advise that you start by looking at any potential insurer’s financial stability and reputation for processing claims. Lance points to A.M. Best Company, Inc. (www. ambest.com) as one resource you can check to review basic information, including a financial-strength rating. You want an insurer that’s A-rated.
You can also check with your state’s insurance department to see if an insurer is “admitted,” meaning you may have some protection if, for some reason, the company fails. However, you may not want to eliminate an insurer simply because it is not admitted. For instance, says Lance, Lloyds of London is not admitted in most states in the United States but is considered a highly reputable source for equine insurance.
Lance also suggests talking with friends and family and checking online chat rooms to learn about people’s experiences with various insurers. Pay particular attention to accessibility and responsiveness. You want to make sure that you can reach a claims agent if your horse happens to colic on a Friday night, notes Lance.
Be aware that while you may work with an insurance agent who is employed directly by a single insurance company, other agents, like Ryan, represent multiple insurers. Regardless, he says, “The agency you place your coverage with should be very knowledgeable about the carriers and products they are offering.”
When you start looking at specific policies and prices, he continues, it’s extremely important to make sure you’re comparing apples to apples. “There are a lot of carriers now who have very reasonable costs associated with their plans, however the plans are very minimal and include copays and/or exclusions that will not cover some issues,” he explains. “In this industry, cheaper is not always better.”
Make sure the carrier explains all the policy limits and criteria upfront, so you can make an informed decision, says Ryan. Here are some specific factors that you need to consider:
-Does the mortality policy also provide coverage for emergency colic surgery? If so, how much?
-Are there co-pays for any treatments or diagnostics? n What are the deductibles on the major-medical or surgical policy?
-How much will the carrier pay out per year (the annual aggregate coverage limit)?
-Based on your horse’s age, at what point will your rates start to increase? At what age will your horse no longer be eligible for coverage?
-What is the time limit for treatment and for reporting a claim?
-How will your policy be affected if you make a claim?
-What is the renewal process? Will you need to provide an updated veterinary certificate or will the insurer accept your own statement of the horse’s current health status?
What Else Do I Need to Know?
It’s also good to know what the insurance company will expect from you, starting with the information you’ll need to provide when you apply for a policy. First and foremost, that will be information on your horse’s medical history.
“Insurers need to know about the horse’s condition before they agree to insure it, and they are relying on the truthfulness of the information they receive,” says Julie. “If the owner discloses a problem, maybe a recent history of a fetlock injury, the insurer might agree to insure the horse but might impose a unique exclusion on the policy that prevents coverage related directly or indirectly to that fetlock condition. If the insurer learns that a pre-existing condition was misrepresented or concealed in the application, it could have grounds to deny a claim or rescind the policy.”
Ryan agrees and further notes, “We as agents would rather have an exclusion to worry about than the client not having coverage because she was scared to file the claim based on exclusions.”
Besides your own statement of your horse’s health, you may be required to provide a health certificate from a veterinarian and, in some cases (often above a certain horse-value threshold), have a prepurchase-type exam performed.
In addition, the insurer may ask for the following information:
-your horse’s purchase price
-any training or show records that have impacted your horse’s value
-whether you are the horse’s sole owner
-if you have any other insurance coverage on the horse
Once you’ve purchased a policy, the insurer will expect you to keep it apprised of any changes to your horse’s health. And should you need to make a claim, you’ll be expected to follow specific steps or risk invalidating your coverage. (See sidebar, “Making a Claim” page 49.)
The Decision Is Yours
Whether you’re still debating if insurance is the right move for you or you’re ready to start shopping, don’t hesitate to ask questions. Ask horse-owning friends and trusted professionals about their experiences with equine insurance. When you’re talking to insurance agents, make sure you understand all the information you’re being presented. Don’t be thrown off by technical jargon—ask for explanations. And never feel pressured to make a decision. Only you know the right solution for you, your horse and your budget.
This article originally appeared in the February 2014 issue of Practical Horseman.