Featured Article (September 2004)

Should You Insure Your Horse?

As a Certified Financial Planner, I have observed a universal truth; most people hate to discuss insurance. We all seem to have this innate sense of "it won’t happen to me!"

As a horse owner, I must say, I have always known that "it could happen to me." I’ve been at the Marion duPont Scott Equine Medical Center waiting room with parents who had to make the decision for $7,000 colic surgery for their child’s $2,000 pony. The cost of the surgery was going to be a financial hardship for that family. There’s another universal truth," the time you wished you had insurance is the time IT’S TOO late."

Protecting Your Investment

Sue Bopp of the EMO agency in Warrenton, Virginia has many years of experience in the equine insurance industry. She is an accomplished show hunter rider, foxhunter and a rated horse show judge. I felt she would be a good person to help guide me in this sometimes "distasteful" discussion. Her answer to my general question as to why one should buy equine insurance was that this is a way to "protect your investment in your horse." If the worst happens, you at least have some money to invest in a new horse. Also, one must buy mortality insurance in order to have major medical insurance.

The equine insurance industry is a small one in relative terms. Twenty years ago there were very few firms that underwrote (offered insurance) on livestock. Today, more companies underwrite this insurance, but it is still a niche industry.

These companies vary in terms of their particular niche. For example, one company will be better for the prospective buyer who has an older horse. Veterinarian care is much more sophisticated today because of the developments in drugs, surgical procedures and the diagnostic technologies such as nuclear imaging. Our beloved equine companion’s useful lives can be prolonged, but it does come at a cost. Over the years, the veterinarian’s care has become more expensive. When the cost of claims within the equine insurance industry goes up it follows suit that the overall cost of insurance premiums increases. (Continued below)

Each Situation is Different

According to Ms. Bopp, perhaps a good rule to follow on whether or not to insure is if the combined minimum mortality premium, $200.00 per year and the major medical premium, $250.00 per year is more than 10% of the value of the horse, insurance may not be cost effective. She futher emphasized the point that each potential insurance buyer usually has a unique situation. Maybe it’s an older horse or the need for loss of use. It is important to discuss each situation on a case-by-case basis.

Common Misunderstandings

The most common misunderstandings between the insured and the insurer is understanding the terms of the policy, particularly the LENGTH OF COVERAGE of a major medical policy and that OUTSTANDING PREMIUM payments must have been paid in full ("The premium must be fully earned") in order to be eligible to collect on the mortality covered.

I am a believer in horse insurance. It certainly has not eased the pain of the death or injury of my horses in the past, but it has made some of "the hard decisions" easier to make. When your horse is standing in the pre-surgical room, his life hanging in the balance, awaiting your decision as to whether or not you can mange the cost of the surgery, knowing you can comfortably give the surgeon a "yes" is a luxury. Making the phone call to your insurance agent to advise them of the situation is hard enough. Having that kind voice on the phone to help you through your equine crisis is a blessing.

My advice is chose an agent who has a good reputation for being there for you. When you have to make any of the terrible phone calls, you want someone who is attentive to your insurance needs. It is CRUCIAL that you READ your policy and are advised of the importance of CONTACTING your insurer if you have an episode, which will require you to place a claim. Most vets will remind you of this necessity, but sometimes when one is in the grips of the emotion of the moment one might forget. MAKE THE CALL and follow up on the paperwork.

Once you have the necessary coverage may you never need it!!