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Insuring a riding horse

From: Bonnie

Dear Jessica, I love HORSE-SENSE. Thank you very much for taking the time to help all of us with our questions. I think you have a wonderful talent for answering every question at the right level so that the "question asker" can understand the answer, but you also make it interesting for all of us whether we know less than the "question asker" or more! Also I love that you answer so many different kinds of questions. I learn something every single time I read HORSE-SENSE.

My question is about insurance for a riding horse. I have had horses for many years, but they have always been "second hand" horses that someone gave me or that I adopted from a rescue. They were all wonderful and I loved them. My last one was very old when I adopted him and he died two years ago. Now I am 55 and I finally have a horse that I went out and searched for and bought after a lot of thought! None of my other horses cost much, but this one was expensive, at least to me. $5,000 is probably less than a lot of people pay for their horses, but this is the first horse I have gone out and bought, and it seems like a lot to me! I don't regret spending it, she is just wonderful and I love her already, but now that I have her I catch myself worrying about what I would do if something happened to her. I know next to nothing about horse insurance except that it's possible to insure a horse's life and get medical insurance and surgical insurance. At my age, I think she might be my last horse, I hope she will live a long life, and I don't know if I would even want to buy another horse if she died, so I might not need to get life ("mortality") insurance for her. Medical insurance and surgical insurance would be a good idea, but I don't know how to set that up.

My regular insurance agent has never said anything about insuring my horses so I don't think it's something he knows about either. I would like to find out how much I could insure her for, maybe in a year or two when she has more training. Her breeder said that after a couple of years of training, she would be worth at least twice what I paid for her. If I do insure her I should probably insure her for $10,000, but I have no idea how much that would cost. I might not be able to afford it, and if I can afford only one kind of insurance for her I really think I would rather have the health insurance (medical and surgical insurance) than the life insurance. A friend of mine suggested health insurance and showed me some of the bills she had on her gelding that had colic surgery last year - they all added up to a frightening amount, it was actually MORE than $10,000! She says she could not have paid that much and would have had to put him down, only since she had the insurance the whole mess cost her only about $2,000 in cash (and millions in worry).

Can you give me some tips about horse insurance or some information sources for me? I would trust you if you recommended a company or an agent. Bonnie


Hi Bonnie! Thanks very much for the kind words about HORSE-SENSE!

I'm not an expert on equine insurance, but I can certainly give you some suggestions about how to find information, and some suggestions about subjects to discuss with the agent.

First of all, you are correct - you can indeed get medical/surgical insurance for your horse. However, as far as I know it's not possible to purchase medical/surgical insurance unless you also purchase mortality insurance - the medical/surgical insurance is really an endorsement to the mortality policy, so you should plan to begin with mortality insurance.

You can't insure a horse for an amount that's larger than you can PROVE the horse is worth. "Worth" to an insurer usually means the price you paid for the horse, maybe plus additional money if the horse has established or improved its show or race record since you purchased it, or if it has fabulous bloodlines that weren't reflected in the purchase price. You paid $5,000 for your mare, so you could probably insure her for that amount - but you might not be able to insure her for MORE than that amount. Just remember that although her value to YOU will certainly increase as you spend more time with her and become more fond of her, the insurance company may not see her value in the same light. And if you're going to insure her, there's no point in waiting another year or two, because (a) her value may not actually change much - or at all - from the insurer's point of view, and (b) if her value DOES increase, you can have your policy changed (and your premium increased) to reflect her increased value.

In the past, some people have gone to considerable trouble to insure horses for more than their value, but insurance companies frown on that. You can understand the insurers' reasoning, of course - a few years ago a number of horses died and their owners/trainers were were revealed to have killed them for the insurance money, so you can see why it's important to be careful, and why someone who just bought a horse for $5,000 and now wants to insure it for $10,000 or $20,000 or $50,000 would probably be told "No, we can't possibly insure your horse for that much."

Shop around - check out several companies and compare what you find. Insurance companies are NOT generic, and neither are insurance policies. Every company is different, every company has slightly different rules and slightly different contracts... you'll need to look at several, and look at them carefully. Here's a link to a really useful article:

www.equispec.com/archive/06.phtml

And here's a link to one of the best horse insurance companies in the country: Markel www.horseinsurance.com/Products/Mortality+and+Medical+Surgical.htm

A couple of other reputable insurers: Agri-Risk Services www.agririsk.com

and

Horse Insurance Specialists www.horse-insurance.com

You might begin by visiting those web sites and reading the general information about mortality insurance. Then you can download their application forms and study them. Actually you may want to print everything out and compare the various forms. That will give you a LOT of answers to your questions, and it will also answer some questions you didn't know you had. ;-)

Keep a pad and pen handy, and as you read the forms and answer questions, mentally compare what you read to the way your horse is managed and maintained, and write down any questions that come to mind. Then be sure to discuss all of your own questions with the agent! Some of your long-time habits and horse management methods may work very well for you, but might not be compatible with the terms of your horse's insurance policy. For example, do you - like many horse owners - give your own vaccinations? ASK the agent about this ("Oh by the way, I give vaccinations to my horses myself, is that okay?") With some policies, giving your own vaccinations could invalidate the coverage, so READ ALL THE FINE PRINT and ASK QUESTIONS. The application forms are NOT always as clear as they should be, so don't worry if you have almost as many questions as the application does... this doesn't mean that you're stupid, it just means that you're attentive and aware and CAREFUL.

In your case, since you'd probably be insuring your mare for the $5,000 you paid for her, your annual premiums will probably add up to approximately 2% - 4% of that amount (or of whatever "fair value" you and the insurer agree upon). The medical/surgical policy will involve you p, possibly a bit more. Then the medical/surgical policy will add more to your monthly premium, but it's well worth having, because when horses become ill or injured, medical and surgical costs can become very high, very quickly. A few nights at the veterinary hospital, a few medical procedures or a single surgical procedure - a single 72-hour period can run your vet bills up as high as (or higher than) your mare's purchase price!

This may sound heartless, but when you buy insurance you are effectively making a bet with the insurance company - you're saying "I think that something bad might happen to my horse" and the insurance company is saying "Oh, no, we don't think anything will happen to your horse." You pay your annual premiums, and you wait. If nothing happens, that money is spent and gone, and all it bought you was... peace of mind, which is actually worth quite a lot! But what if something DOES happen to your horse? Since colic is so common, let's say that your horse develops a surgical colic, and you're suddenly asked to make a quick decision about whether or not to schedule colic surgery (at a cost of possibly $3,000 or more). If you're like most horse owners, you are NOT made of money, and you'll be very grateful to be able to say "Surgery, please, she's insured!" and then pay your deductible amount (which may be well under a thousand dollars) and let the insurance company cover the rest of your horse's bill. In this case, you win the bet, and your horse gets the care that she needs - and that you might not have been able to afford otherwise.

I think you're wise to think in terms of the medical/surgical insurance being more important than the mortality insurance, so here's a suggestion (it's not mine, it comes from an insurance agent, and I think it's a good one). Most of us have horses that are, for insurance purposes, worth less than $15,000 - in fact, most of them are probably valued at significantly less than that amount! That being so, it may make good sense to follow this agent's advice. He suggested that if a horse owner on a tight budget wanted insurance and had an inexpensive (by insurance company standards) horse that would be insured for $5,000 or less, he would advise that person to get the MINIMUM amount of mortality insurance that the company would allow (ask your agent what that amount would be), in other words insure the horse for LESS than its value, so that the annual premium for the mortality insurance would be as low as possible. At that point, you could afford to add the medical/surgical endorsement, because your total premium would then be much more affordable.

This may seem counter-intuitive at first, but think about it - ESPECIALLY if you're on a budget, which would be worse, collecting only part of the horse's purchase price if it dies, or having to choose between having your horse put down or going into major debt to cover the horse's medical/surgical costs? That's an agonizing decision, and you rarely have very much time to make it. It's something to think about, anyway, and something to discuss with the insurance agent. And oh yes, the insurance agent - be sure that yours is someone you can talk to, someone who will answer your questions and explain patiently, someone who seems genuinely interested in YOUR horse and YOUR situation. If you don't feel comfortable talking to one agent, or if the two of you just don't seem to communicate well, try someone else. This isn't just A horse that you're going to insure, it's YOUR horse, so find an agent who communicates well and takes you seriously.

Jessica

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