Horse Insurance - Types, Benefits and Disadvantages

This article discusses the various types of horse insurance, common mistakes and how to avoid them, and tips for buying horse insurance.

Types of Horse Insurance

Most horse insurance plans allow you to choose what you want to insure against, such as:

- Third party insurance (also known as 'Public Liability', sometimes known as 'horse liability insurance'). This is insurance for injury to other people or damage to their property. For example, if your horse goes onto a road and causes an accident, you might be liable for damage to cars and injury to people. This insurance is to pay for any such financial liability. In some countries, horse owners are legally obligated to have this insurance. Note that this is insurance only for financial liability, not for criminal liability (e.g. if your horse causes serious injury or death due to negligence on your part, you could still be at risk of a jail sentence).

- Personal Injury. Insurance in case you are injured yourself by your horse.

- Vet Costs. Insurance for vet costs is one of the most common types of horse insurance. Normally, it does not pay for routine costs (e.g. yearly inoculations) but is intended for costs associated with injury or illness. Keeping in mind that a severe case of colic requiring surgery can cost $10 000 or more, this type of insurance is seriously worth considering.

- Death (also known as 'mortality'). Insurance to be paid out if your horse dies. Normally more of interest to people with valuable horses, rather than inexpensive ones.

- Permanent Loss of Use. A horse might survive a serious injury or illness, but as a result be unable to continue to perform its function. For such insurance one needs to specify the use of the horse (e.g. riding, show jumping, international competition).

- Theft. A particular risk with valuable horses and those in the public eye (e.g. show, competition, racing and stud horses).

- Tack and Trailer. These items can be insured against damage (e.g. damage to trailer in a road accident) or theft. You may wish to check with the local officials if horse trailer insurance is a legal requirement.

Different insurers offer a number of variations on these. For example, in the event of theft, some advertisers will pay the cost of advertisements and rewards (up to a maximum amount) aimed at recovering the horse.

You can choose the types of insurance you want your policy to cover, and how much insurance for each item (i.e. how much do you insure your horse for, how much do you insure your trailer for). Many companies have online horse insurance quotes, which allow you to specify your requirements and receive an immediate quote, then change the insurance levels and receive a new quote. You can use this facility to determine how much each item of insurance costs, which is useful when deciding which items to insure and which not to.

It is usually cheaper to combine different types of insurance into a single policy, rather than have separate policies. For example, it is cheaper to have a single horse and trailer insurance, rather than insure your horse under one policy and your trailer under another.

Tip: If you only want 'Third Party Insurance', you can sometimes do this less expensively under your house insurance than under a separate horse insurance.

Current Value or Replacement Value

One should check if the insurance is for current value or for replacement value. For example, a high quality saddle may cost $2000 or more, but if it is worn and scuffed may have a resale value as low as $200, even though this is just cosmetic damage and the saddle would be good for many years. An insurance policy which paid 'current value' would give you only $200 whereas an insurance policy which gave you 'replacement value' would pay the cost of an equivalent new saddle.

Policies which pay replacement value are consequently better, but more expensive as well. If you choose the less expensive 'current value' option, when asked the value of the items being insured you should specify the current value rather than the replacement value. Otherwise, you could be paying a premium calculated on a $2000 value saddle even though the potential payout is based on a $200 value saddle.

Conditions

It is absolutely important to check carefully the conditions under which the policy will pay out and the conditions when it will not. Some examples:

- Personal Injury insurance. Policies vary in terms of what is covered in the event of an injury. Is it a fixed price (e.g. so much money for a broken leg, so much for a missing tooth), or medical costs? Does it include loss of earnings? Is it just injury while you are riding the horse (i.e. horse riding insurance), or does it cover all riders of the horse (i.e. horse rider insurance), or does it cover injury to you by the horse under all circumstances?

- Permanent Loss of Use. What is use defined as? For example, if you had a competitive jumping horse which could no longer be used for jumping but could still be used for other purposes (breeding, normal riding), would you receive a full payout, a partial payout or none at all? Are you insured for a fixed amount, or for an amount based on the decreased value of the horse?

- Location. Is your horse ensured everywhere (e.g. stable, riding out, transport, shows, competitions) or just certain locations (e.g. on owner's property)? A breeder friend of ours took a $20 000 horse to a clinic for urgent colic surgery but the horse died in transport; had it died at home he would have received full payment but as his insurance did not include transport he received nothing.

- Vet Costs. Which type of vet costs are included and which are excluded? Any special conditions? Are you required to obtain approval in advance (if so, in the event of an emergency outside of working hours, you may not be insured for treatment done prior to approval).

- Amounts. What are the maximum amounts which will be paid? Under what conditions would reduced amounts be paid?

Conclusion

There are three main reasons for insuring:

- To protect your investment (e.g. horse, trailer, saddle and tack)
- To protect yourself (from public liability claims, or injury costs)
- To protect against large vet bills

However, horse insurance is a substantial cost, so one needs to look closely at what one insures and for how much, balancing protection provided against costs.

One also needs to look very closely at the terms and conditions of the individual policy. In some cases, it may be worth paying more, in exchange for more favourable conditions.