Interesting question just arose recently and I thought I would share some thoughts on it….
There are many different types of insurance someone involved with horses might obtain. Equine Mortality, Equine Liability, Equine Instructor and on and on. If you can think of it, it probably exists somewhere already OR can be created by what we call a “surplus lines” insurance carrier (Lloyd’s of London is the surplus lines carrier which most folks have heard of – they basically “create” all sorts of unique policies for unique situations – for example, these “hole in one” contests you see at golf courses are frequently insured so that if someone makes a hole in one the charity or golf course doesn’t have to fork out the prize money – and surplus lines carriers like Lloyd’s of London usually write these kinds of unique, unconventional policies).
So, now that we’ve established you can buy insurance for virtually any risk you can conceive, you need to be sure that what you’ve bought covers the risk you’re concerned about and if it doesn’t, you need to either (a) expand your coverage and request an endorsement or additional policy to cover that risk or (b) don’t engage in activities that would give rise to the uncovered risk.
What does all that mean in plain old American English? Well, let me give you an example. A while ago I had a client who was a riding instructor. Let’s call her Stephanie. Stephanie, very responsibly, purchased an “Instructor’s Liability” insurance policy. She thought she was good to go. Time goes on, Stephanie pays the premiums on the policy and feels good about her coverage. She has a student, we’ll call her Annie, who owns a horse. We’ll call the horse Chief. Annie doesn’t have enough time to ride Chief so she asks Stephanie about whether Stephanie knows anyone who might like to half-lease Chief and ride him 3 days a week. Stephanie has several other students who don’t own horses and usually just ride lesson horses owned by the stable. After Stephanie mentions Annie’s situation to them, one of her other students, Jane, decides she would like to try Chief to see if she might like to half-lease him from Annie. Stephanie tells Annie that Jane might be interested and Annie gets very excited and asks Stephanie when Jane might be able to come sit on Chief and try him out. Stephanie talks with Jane and the three of them agree to come out to the stable on a Saturday so that Jane can try Chief and Stephanie can watch Jane ride Chief and see if she thinks they are a good match and then advise Annie of her thoughts on the issue.
Well, you probably already guessed that the trial ride didn’t go well. When Jane tried to climb on Chief (even with the aid of a mounting block), she somehow managed to pull Chief down on top of her, crushing her ankle. Stephanie and Annie were in shock, having never seen such a thing occur in all their many years of riding (nor have I, for that matter). Of course they immediately ran to Jane’s aid and helped get Chief up and off of her and called 911. Jane went to the hospital and had her ankle set and put in a cast. Now she’s suing Stephanie, Annie and the owner of the stable where she tried Chief for the medical bills, lost wages from having to be out of work as well as for pain and suffering.
Stephanie originally wasn’t overly concerned because she knew she had insurance and so she called her insurance company to report the lawsuit. They hired a lawyer to advise Stephanie (us) and we thought things were okay. Then, after their initial analysis of the situation the insurance company called and told Stephanie that they were sorry but this incident was not covered by Stephanie’s insurance policy because it did not occur in the course of Stephanie acting as an instructor. In other words, if Jane had scheduled a riding lesson with Stephanie and this had happened when Jane went to get on Chief for her lesson, it would be covered. But because Stephanie was just there to watch Jane ride Chief to assess their compatibility as horse and rider, and not as Jane’s instructor, it wasn’t covered. A very technical distinction, but the different was night and day to Stephanie.
Needless to say, this denial of coverage has been financially devastating for Stephanie, who has had to pay a lawyer out of her own pocket to defend the lawsuit. Like most riding instructors, Stephanie does not make a huge salary. Her only other choice was not to fight the lawsuit and then end up with a default judgment against her for the full amount of the damages claimed by Jane. That judgment could potentially follow Stephanie around for the next 20 years, so she felt like she had no choice but to fight the lawsuit.
Moral of the story: Read your insurance policies carefully. Make sure they cover all the situations you’re worried about and if they don’t, talk with your insurance agent about getting more coverage for the things you are concerned about. And, if you can’t afford the additional coverage, you may have to decide not to participate in certain activities because they are not covered by your insurance policy. Stephanie now wishes she had not agreed to watch Jane ride Chief because just the simple act of her being present has resulted in Stephanie now having to defend herself in a lawsuit in which she should not be involved at all. READ YOUR POLICIES!
If you get into a bind and need assistance or just want to ask some questions to avoid getting in a bind, feel free to email me at email@example.com. I often will answer a short and simple question for free if I have time and know the answer off the top of my head! If you don’t hear back from me quickly, it’s not because I don’t love you or think you have a great question or because I don’t know the answer (usually), I’m probably just really busy and haven’t had a chance to email back. And you can always buy the first hour of my time for $250 (my usual hourly rate for 2012 is $325). Lots of folks will save up all their equine (and some corporate or real estate) legal questions and short documents and sit with me for an hour and we will do as much as we can during that hour and it’s only $250. You can check out my Twitter feed @nchorselawyer as well as our firm’s Equine Law Group web page at www.rl-law.com if you’re interested, and yes, in addition to providing what I hope are interesting and informative stories, this blog and the Twitter feed referenced above are also advertisements for legal services. I have to tell you that in bold, says the State Bar.