Everything You Ever Needed to Know about Horse Insurance

Horse are graceful and noble animals, but sometimes even the best of them can be silly and/or clumsy and can injure themselves, others, or damage property. Even when they are being perfect, they can become sick. For all the many ways that things can go wrong when we have horses, there are a variety of insurance policies to help protect people from unexpected bills.

What insurance can I get for my horse?

Getting medical and/or mortality insurance to cover the investment in your horse can be sound financial planning. You may have invested many years and several thousand dollars into training your horse so he’s your perfect partner. If he were to get injured or die, you may not be able to afford to get him the treatment he needs or have the financial means to purchase another horse that performs at his level.

To protect against those possibilities, niche insurance companies have created new products that offer greater flexibility, depending on your budget. In the past, horse insurance was restrictive and covered very few risks. These days, coverage is now available under programs like EquiCare from CapriCMW Insurance Services Ltd. that helps horse owners manage costs when things can, and sometimes do, go wrong.

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Life insurance for horses can be categorized into two general categories: Named Perils mortality and Full mortality insurance. Named Perils mortality insures your horse against specific events, or you can opt for the more comprehensive Full mortality.

Named Perils (a.k.a. Specified Perils) mortality insurance covers specific causes of death such as fire, lightning, theft, transport, drowning, attack by wild animals, accidental shooting, being struck by a vehicle and even Government order. However, this type of mortality coverage does not usually cover death arising from illness.

The cost of Named Perils horse insurance is relatively low and can cost as little as $25/year for $10,000 worth of coverage in the event of death.

The benefit of Named Perils horse insurance is that it is inexpensive and available from many sources that insure livestock, but the drawback is that it doesn’t usually cover death arising from accidents or sickness.

Full mortality insurance covers the life of the horse against death arising from a longer list of causes. This option includes external perils like those included in the Named Perils policy, but then goes further to cover just about any accident or sickness.

Because Full mortality insurance policies cover more exposures, there are different qualifiers that must be met before a policy is issued. The age of the horse, the use of the horse and most importantly, the health of the horse are all items that will be reviewed by the insurer before coverage is placed. In some cases, a veterinarian will need to sign off that the horse has been examined and is sound and in good general health as part of the application process.

The benefit of Full mortality coverage is the financial peace of mind knowing that life of the horse is insured for just about everything imaginable. Notwithstanding the higher cost, Full mortality is the better proposition for most horse owners.

Unlike human life insurance, most horse insurance carriers require some measure of review annually so that any changes to the health of the horse can be noted and if the changes represent an unacceptable risk to the insurer, the coverage can be modified.

The cost of Full Mortality horse insurance is typically about 3% of the fair market value of the horse.

Horse mortality settlement payments are paid out in one of two ways which is defined in your policy:

“Actual Cash Value” means the fair market value of the horse at the time of loss, taking into consideration all conditions and circumstances. Note that fair market value is the amount that you could have sold your horse for just prior to the loss and doesn’t consider how much money you have spent on training and caring for your horse.

For example, if your $100,000 horse had become chronically lame or stopped performing, the insurer of an Actual Cash Value policy will assess the horse’s value prior to settlement and may only offer a reduced amount because of that history of illness or poor performance.

“Stated Amount” (a.k.a. Agreed Value) binds the insurer to pay the value of the horse based on the limit as shown on the policy, regardless of the horse’s condition prior to the loss.

Medical/Surgical insurance for horses is an extension of Full Mortality insurance to help offset unexpected veterinary costs.

With veterinary medicine progressing at unprecedented rates, horses that need attention due to health or soundness challenges are benefiting from diagnostic tools and treatments that were unheard of even a few years ago. These innovations, however, do come with a high cost and horse owners who are concerned with being burdened with thousands of dollars of vet expense to keep their partner sound and healthy can choose from several limits of coverage to suit them.

These policies are not “health plans” and won’t cover expected and routine vet expenses that all horse owners face (annual inoculations, dental floating, parasite control etc.) but are invaluable when the horse colics on Sunday night and is rushed to the equine hospital for emergency surgery (a huge bill will surely follow).

Beyond paying for the actual veterinary costs incurred to diagnose and treat the situation, equine medical insurance also includes coverage for extended treatment periods to ensure that the rehab expenses are included.

The cost is a flat fee depending on what annual limit of coverage you choose. For $2,500-5,000 of coverage the cost is $225; for $5,001-$10,000 of coverage the cost is $350; for $10,001-$15,000 of coverage the cost is $550.

The EquiCare program also covers additional expenses incurred when a horse dies, such as the removal of the carcass or a post mortem if required by the insurer, among other things.

You may also be eligible for included “emergency stabling expense” as part of the package and this can be very useful if the horse is displaced from its home barn due to a fire, flood, contagious disease, etc.

How much does it cost to insure a horse?

The cost of horse insurance will depend on several factors that include:

Age of the horse
Breed of the horse
Use of the horse
Health of the horse
Value of the horse
Coverage chosen to protect the horse

Following are some examples of annual cost to insure a horse in Canada:

>> The horse: A 7-year-old Thoroughbred used for recreation, in good health and purchased for $10,000.
Named Perils: $100
OR
Full Mortality insurance with a limit of $10,000 on the life of the horse: $300
Medical/Surgical Insurance with $5,000 coverage: $250

>> The horse: A 14-year-old Quarter Horse used for barrel racing, in general good health but with a history of lameness that is manageable, but likely degenerative in nature, purchased for $20,000.
Named Perils: $200
OR
Full Mortality insurance with a limit of $20,000 on the life of the horse: $800
Medical Insurance of $10,000 Medical/Surgical coverage: $350 and there will likely be some restrictions of coverage due to the history of lameness.>

>> The horse: A 12 year-old Warmblood used as an adult amateur hunter, purchased for $60,000 and requires significant health maintenance including regular joint injections.
Named Perils: $600
OR
Full Mortality with a limit of $60,000 on the life of the horse: $2,100
Medical/Surgical Insurance with $10,000 coverage: $350 likely with higher deductibles and pre-existing medical conditions will be excluded.

What is horse liability insurance?

As the owner of a horse, you can be held responsible for its actions. If the horse kicked someone and caused bodily injury, escaped onto the road and caused a traffic accident or damaged a car that was passing by, you could be held legally liable for the damages caused. To protect yourself, obtaining a liability insurance policy that recognizes the special exposure surrounding horses is a good strategy. The best policies are those that do not restrict the number of horses owned, borrowed, leased or used or limit coverage to any specific premises. The policy should provide coverage 24 hours a day, 7 days a week and ideally, cover the exposure anywhere the horse is.

Depending on what you do with your horse there are two different kinds of Liability insurance you can purchase:

Personal liability insurance protects you from being sued by a third party because a horse that you own or lease, ride or handle non-commercially, causes property damage or bodily injury to a third party.

Note that if you pay a reduced board bill so the facility manager can use your horse in a riding lesson program, this is a commercial exposure and will not be covered by a personal liability policy.

In Canada, members of Provincial or Territorial equestrian associations are covered by $5 million Personal Liability insurance automatically as part of their annual membership – a huge benefit!

Commercial liability insurance should be purchased if you use your horse for any kind of business (a horse used to teach riding, a horse in the public trail riding string, the pony used for kids’ birthday parties, the horse used for carriage rides, etc.). If there is any income stream or revenue of any sort or trade in kind, the horse and owner can only be covered under a commercial liability policy.

Is horse insurance necessary?

As with any insurance, horse insurance is an excellent risk management tool to protect what can be a very valuable asset. Over the last four or five decades, insurance offerings to the horse industry have evolved to the point where (just about) any possible cause for loss is insurable. The life of the horse, the medical expenses that all horse owners face (eventually) are all exposures that can be deferred to specialized insurance carriers.

Does my house insurance cover my horse?

It is unlikely that a home insurance policy would have extensions of coverage available to cover horses or equine activities in any meaningful way.

Home insurers provide coverage to a broad audience of homeowners and occupants from typical exposures that are faced by millions of people. In our experience, the carriers who purport to cover the horse for loss of life or liability would not anticipate the very different reality of horse ownership where the horse is boarded 25 miles away and is in the care, custody and control of the facility manager and not in the fenced in backyard of suburbia – like a dog or cat.

I cannot stress enough that horse owners need to find sources of insurance information from those that are in the business of providing the right coverage at the right price, like CapriCMW Insurance Services Ltd.

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Mike King is a Partner and equine industry lead for CapriCMW. A life-long horseman, Mike and has been an equine specialist in the insurance industry since 1993.