To Insure or not to Insure – That is the Question?

Equine Insurance NZ

In this day and age and the uncertainties in the current economic climate, the cost of services is increasing (including that of Veterinary Services and treatment). All horse and pony owners have a responsibility to look after their equine friends both when healthy and when ill. However, only a few of us have the necessary financial resources to cover the full cost of any loss that might result from accident, injury, or disease. While equine insurance should be considered for any horse or pony, there are certain considerations that need to be considered before a policy is taken out and reading to ‘fine print’ is important. Indeed, the provision of such cover should be considered part of the normal “running costs” of keeping a horse and those who cannot afford to insure should consider whether they should factor in the cost of unexpected Veterinary bills.

Compared to some parts of the world, the percentage of horses treated at our clinic that are Insured is relatively low. Nevertheless, there are important steps and procedures that must be undertaken before any major work is carried out.

So why do we Insure our horses?

The purpose of any insurance cover is to protect the policy holder against unexpected loss. With horses this loss may take various forms including accidental injury, death, veterinary treatment, or injury to third parties. There are many types of policy cover available and these greatly vary from company to company. As a rule the owner gets what they pay for and the difference in premiums charged by the insurers usually reflects the widely differing levels of cover. It is, of course, the responsibility of the owner to ensure that the cover that they take out is adequate for their needs.

When should you insure?

If you do not already own the horse then it is sensible to decide on the type of cover you need and choose the particular policy before you actually purchase the horse, as most policies only cover accidental injury for an initial period. Some policies require a Veterinary Insurance Examination prior to the policy being taken out, while others will require a full ‘Pre-purchase’ examination to be submitted. Do be aware, however, that it is perfectly possible that a horse may be suitable for purchase following a ‘vetting’ yet an insurance company may make various exclusions on the cover available, due to pre-existing conditions. Foals that are insured from 24 to 36 hours of age will require a Veterinary Examination plus blood samples taken to check there has been sufficient transfer of immunoglobulins (IgG).

Individual insurance companies will stipulate what the exact requirements are for each policy that is taken out. While some insurance companies do not require a Veterinary Examination to be performed, it is important to remember that your insurance cover for your horse is a legal contract between you, the proposer, and the insurance company. It is based on the fact that all known facts have been declared and your policy may be invalidated if you do not disclose all pertinent facts that you know or should have known before you insure. Further information should be available from either your insurance broker or from the individual insurance companies concerned. And remember, that horse insurance policies run for one year and if renewed are a separate contract. Unlike medical insurance they do not run automatically for the life of the horse.

What types of Insurance Covers are there for Horses?

1. Mortality Insurance

This is a reasonably straightforward cover – if your horse dies by illness or accident, you are usually covered. Policies vary but the horse is only covered if it is found dead or if it has to be humanely destroyed as a matter of emergency. If it is to be euthanased on humane grounds, then contact with the insurance company should, where possible be made first. For mortality insurance, the insurer may put restrictions on what you are covered for, depending on the policy. E.g. you might not have cover if the horse dies from colic if he/ she has a history of colic prior to the year’s policy starting. There may also be some exclusions for very young or old horses, plus during pregnancy or immediately post foaling. Policies are available that do cover for these situations, but they are more specialised. Mortality insurance usually requires a definitive cause of death, or definitive diagnosis as to why the euthanasia must happen. One thing that may not immediately be apparent is that mortality insurance may not pay out for conditions that have a fair to poor prognosis but do not warrant immediate euthanasia. In these cases, you may choose not to treat the horse and hence elect to euthanase your horse but are prevented to due to it still being a ‘treatable condition’.

Situations that we have seen this apply to included severe lacerations that will require a significant amount of time and money to treat. While the prognosis may be fair in cases managed appropriately, they will come at a significant cost. It you elect to have it euthanased immediately, the insurance company may not pay you out, as the advisers could argue that it could be treated. The same can go for laminitis, tendon injuries, or colic that could respond to medical or surgical treatment. If euthanasia is required on humane grounds (i.e. failure of the horse to respond to appropriate treatment and is suffering unnecessary pain or distress) then they will require a Veterinary Certificate. A post-mortem examination will often be requested in animals where an antemortem diagnosis has not been obtained. This may sound upsetting and can be an emotional thing to deal with, but it is a procedure that vets see regularly and handle with as much compassion as possible. If you elect to not have a post-mortem performed, your insurance may refuse the pay-out.

2. Third Party Insurance

This will cover the horse against claims resulting from injury to other persons’ or property. For example, if your horse breaks out of a field and causes a car crash or if your pony kicks a child in the yard at which he is stabled then the owners of the car or the parents of the child can potentially sue you for damages. If this was the case these claims would be covered by a third party insurance policy. This level of insurance should be considered for all animal owners and may well be provided by your own household insurance cover or farm cover. However, owners of horses and ponies are strongly urged to ensure that they are fully covered in this respect as personal injury claims could mount to several millions of dollars.

3. Veterinary Fees Cover

Depending on your policy, this may be a set amount for your horse, or a proportion of its market value. This cover will reimburse the owner for non-routine veterinary treatment and gives you peace of mind that expensive surgery, diagnostics and appropriate treatment can be carried out if indicated. Regardless if your horse is insured or not, the ‘Gold Standard Treatment options’ should be discussed with your vet from the start. It is your decision on what financial options you prefer to take. The emotional stress involved in putting your aged equine through colic surgery or tolerating box resting a hyperactive lunatic horse are all considerations needed when considering which treatment path you take, and hopefully the relationship with your vet will allow the best course of treatment and the best outcome for your horse in a ‘what will work best for you’ scenario. So, along the lines of Vet Fee cover - what is the cost of things that we are looking at these days? Inflation and new technology have resulted in a significant increase in the cost of diagnostics and treatment.The amount of cover available for each incident will depend on the specific policy and is designed to provide cover for the unexpected costs of treatment following disease, accident or injury. Owners should be aware that the total available under even the better policies may not be enough to cover the worst possible scenario, for example a major colic surgery or repair of a fractured leg. Without such insurance cover or with inadequate levels of cover an unfortunate owner might find that they were unable to pay for major treatment or surgery. This might mean they have to have a horse put to sleep that might otherwise have been saved by treatment. Current figures would suggest that it is prudent to insure your horse or pony for up to $5,000 per incident to cover all the forms of major treatment available. Limited cover for only a few hundred dollars or even $1,000 - $2,000 will not, in the event of a more serious condition, provide the cover that you hope for. Taking out such cover enables your horse to benefit from the major advances in veterinary medicine and surgery that have been made over the last few decades but do be aware that different companies have different cover.

4. Loss of Use Cover

This cover provides you for reimbursement of your loss if your horse is no longer able to perform its stated insured use following accident, illness or disease. Full loss of use cover provides protection against the effects of any accident, illness or disease leading to your horse becoming permanently unable to carry out the previously agreed roles for which you have insured him. These policies will offer you varying amounts of his total insured value if the horse is no longer able to, for example, event but may still be able to hack satisfactorily. “Proving” a loss of use claim may not be easy and frequently requires an exhaustive list of diagnostics to be carried out. To enable a claim on a ‘Loss of Use Cover’ check that your wording of your policy is correct.

If you have cover for Dressage but an injury would preclude the horse being use at a high level of dressage and yet could still be ridden at a lower level, then you would be unlikely to get paid out. The most important thing about loss of use is that you need to have both proven what the problem is and also treated it to see if it is likely to recover to get the pay-out. The cost of such diagnostics and treatment has been outline above. It is advisable to get adequate vet fee cover if you are going take out a loss of use policy. Some loss of use policies have a different pay-out if the horse is euthanased, compared to just retired. Historically, loss of use horses had an ‘L’ branded on them, but that is rarely done these days. Watch out if you are looking at buying one though!

5. What else may be covered?

Certain policies may also cover for theft or removal and disposal costs, travel insurance to cover your horse while being transported by sea or air. Fertility insurance covering your stallion if he becomes permanently impotent, infertile or incapable of serving mares as a result of an accident, illness or disease. Semen/embryo insurance and foetal insurance are also available. Some policies also have extension cover in place to cover for a nominated time frame from which the policy has expired should an injury or incident occur when your policy is about to expire.

When and how should you make a claim?

It is your duty as a policy holder to inform the insurance company as soon as possible that your horse has been injured, lost or is suffering from an illness or disease or will undergo a significant surgical procedure (e.g. Castration, OCD joint arthroscopy etc). Once notified varying insurance companies may initiate different procedures but they will all ask you to show that you have actually sustained a loss (i.e. documentary evidence of veterinary fees already paid) and they will ask you and your veterinary surgeon to complete an appropriate claim form and accompanying veterinary certificate. You should note that the insured policy holder is only covered for a loss already sustained and legally cannot therefore claim for example, veterinary fees that have not yet been paid. However, most insurance companies will, with prior notification, work together with the insured to minimise the distress and inconvenience of any loss.

What are you likely to get paid?

Most insurance companies will pay up to the agreed value or fair market value shown on your certificate, for any one event but policies will vary. The ‘Agreed Value’ is based on an independent written valuation, the purchase price, the performance of the horse, or any other combination of factors. The ‘Fair market value’ is what a reasonable buyer would have been willing to pay for your horse before the loss and takes into account several factors including competition history and the breed of the horse. It is advisable to ring around to find a policy that suits you best. Here are a few contacts to get you started:

Hopefully this helps to guide you in the type of Insurance that you would be after for your horse, if you have any further questions please do not hesitate to contact us at VetSouth Equine Invercargill.

- Heather Busby


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