Last month I wrote about common misconceptions with farm property and liability insurance coverages. This month I am addressing equine mortality and major medical insurance in the hopes of highlighting useful information for everyone. Lisa Steller of Star H Equine Insurance Agency has been a fantastic resource for information and was a major resource for this article as North Carolina’s resident “expert” on all things equine major medical/mortality insurance related. Whereas I typically see issues on the back end after something has gone wrong, Lisa is able to help you on the front end to ensure you have the coverages you need and that you understand what losses your insurance covers and what losses it does not cover.
Let’s start with mortality insurance. Here are some points to remember:
1. While all insurance companies and all individual horse circumstances are a little different, mortality insurance on a horse usually costs about 3-4% of a horse’s value up until the horse reaches 15 years of age. For horses between 15 and 20 years of age, the premium usually runs about 5% of the horse’s value for 15 year olds to about14% of the value for 19 year olds. Finally, equine mortality insurance is typically not available for horses which are 20 years of age or older absent a very expensive, customized policy for a very specific situation.
2. Depending on the circumstances of your situation, there may be conditions or scenarios which are excluded completely from your mortality coverage. Read your policy so you are not surprised if that happens!
3. If you attempt to purchase mortality insurance on a horse for the very first time when the horse is 19 years of age, most insurance companies’ will refuse to insure that horse’s mortality. Insurance companies are understandably much more comfortable continuing to insure a 19 year old horse when they have insured that horse’s mortality for several years (and they have of course had time to collect premium from you over those years as well) than they are taking on a brand new, unknown risk at age 19.
4. Always remember that if your horse gets sick or is injured, you need to call your mortality insurance company ASAP. If you do not notify the company in a timely fashion and the horse dies, the company may be able to deny your mortality claim.
5. Mortality premiums are not usually affected by whether you have previously notified the company of your horse’s illnesses, so agents will tell us that we should not worry that advising the company of our horses’ illnesses will cause the mortality premium to go up if the horse survives the illness. Except in unusual circumstances, mortality premiums are almost always solely based upon age, use and value of the horse, not its health history.
6. One common and difficult situation: your veterinarian says the life of your horse can be preserved – but not its usefulness for your purposes. For example, you have a $20,000 champion reining horse which develops issues with his hooves. Your vet says that a certain treatment is necessary or the horse will founder and die, but the treatment the vet is recommending costs $5,000 and afterwards the horse will no longer be able to participate in reining. You may not have $5,000 or you may prefer instead to spend that $5,000 on a young, green horse which you can develop into a new reiner. If you refuse the treatment which your vet is recommending for your horse and, as a result, your horse founders and dies, your insurance company may be able to deny your mortality insurance claim because you did not elect to have the $5,000 treatment.
7. A necropsy (an autopsy performed on an animal) to determine the cause of a horse’s death is required for all equine mortality claims. This requirement stems in part from the fact that insurance companies do not want to give people an incentive to cause the death of their unwanted horses in order to collect the mortality insurance proceeds.
With regard to equine major medical insurance claims, here are some quick points to remember about this type of coverage and claims:
A. You can sometimes lower the premium cost for your equine major medical coverage by reducing the mortality value of your horse.
B. Major medical coverage premiums are roughly the same for a horse of any age or value, so whether it is 6 months old or 16 years old, worth $500 or $50,000, the premium cost is about the same. Sometimes certain of your horse’s health issues may be excluded from the policy, however. Again, read your policy.
C. Routine health maintenance costs (such as vaccinations) are typically not covered by major medical coverage, nor are veterinarians’ trip charges to your home or your boarding facility, even if your horse is sick or injured.
D. Elective surgery is typically not covered by a major medical policy – for example, complications arising from the gelding of a male horse would not be covered because that surgery is elective. You can usually, however, by paying some extra premium dollars, purchase an endorsement (i.e., additional insurance coverage) to cover elective surgeries if you so desire.
E. As with mortality coverage, major medical coverage requires that the company receive prompt notice of any injury to or illness of your horse. Leave instructions and have the company contact information posted on your horse’s stall door so that someone else at the barn can call the company in case you are not present when the illness or injury occurs.
Last but not least are a few quick facts which pertain to BOTH equine mortality and major medical insurance:
I. Your agent needs a completed and signed application for insurance in order to bind mortality or major medical coverage for you. These coverages cannot be bound over the telephone, so please do not wait to call your agent until you are in the car on the way to pick up your new horse.
II. Equine mortality and major medical coverages are for a specific animal and cannot be switched to another animal. A horse can be added to an existing policy or removed from an existing policy, however. But a new, signed application for that specific animal is required when adding a horse to an existing policy.
III. If you sell your horse, the agent or company will not revise the policy to change it to the new owner’s name. The new owner will need to complete and sign an application for coverage and pay the premium. The prior owner can then cancel the old policy and receive a pro-rated refund of the annual mortality premium and, in some limited cases, of the major medical premium as well.
IV. If a neurectomy has been performed on your horse, it is often no longer insurable for mortality or major medical.
V. Insurance is limited to the value which you paid for the horse, so if you get a $10,000 horse for $5,000, the maximum value the insurance company can place on your horse is $5,000.
Hopefully these quick tips will prove useful to you if you purchase mortality or major medical insurance coverage for any of your equines. The bottom line, as always, is to be sure to read your policy so you know what it does and does not cover.
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 firstname.lastname@example.org. I often will answer a short and simple question for free if you are in North Carolina and I have time and know the answer off the top of my head! Or often know good equine lawyers in other states if you need a referral. 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 2014 is $350). 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 http://www.rl-law.com/equine 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 (in one way or another, I guess) an advertisement for legal services.