Topic28 Equine Insurance

							Module: Risk Management
Unit 3:
Topic 28: Equine Insurance


(SH)1. Introduction
Risk management will have to find ways of providing finance following an untoward event
occurring to horses. These animals can range from the child’s pony to a top class stud or many
times winner in the races. The usual way of providing finance in the event of something going
wrong is to purchase an insurance policy. In addition there are special events such as gymkhanas
and horse shows that will require cover as well as financial protection for the buildings and
contents of the stables. This leads to the conclusion that the equine industry requires specialist
insurance cover. This may be provided by a number of different underwriters or insurers. The
cover offered is similar to that which we have already discussed when examining other types of
insurance but this time provided in a package aimed at various sections of the equine industry.


This topic discusses details of cover available for both the animals and other property that form
part of the equine industry.


(SH)2 Objectives
At the end of this topic, you will be able to:


   select the required insurance cover for participants in the equine industry
   discuss the insurance policies issued to cover loss or damage to livestock
   provide insurers with sufficient information to obtain the best cover available.




(SH)3. Liability Insurance


(SSH) Availability


Special liability cover is available on the Irish and British insurance markets for BHS and AIRE
recognised equestrian establishments. Cover is also available for non-recognised stables but the
premiums are generally higher than those offered through the national bodies.
(SSH) The proposal form


In order to obtain this cover, a proposal form must be completed that advises underwriters of the
risk involved. In this form, details of the establishment, such as name and address, have to be
provided, as well as details of all the activities that are being entered into by the establishment,
such as teaching, hacking, hunting and jumping. These activities must be supervised by qualified
personnel. Details of their qualifications have to be provided on the form.


For example, If pony-trekking is one of the activities of the organisation, details such as the
following have to be given:


   the average number of riders per week
   the maximum distance and duration of rides
   the maximum number of riders.


The insurer will also wish to know how much of the trek is on public roads and whether there are
overnight stops away from the premises. Information about the number of horses or ponies used
for riding instruction is also required, as well as the maximum number of horses the establishment
owns. Figure 28.1 is an example of a proposal form.


(SSH) The cover


The cover provided is for accidental bodily injury (except to an employee) or accidental loss of or
damage to property for which the insured is legally liable. Thus it is a standard general liability
policy aimed at the equine industry. The limit is per occurrence with a minimum of £500,000 and
covers Ireland and the United Kingdom and temporary visits outside these territories for the
purpose of business. If you take a horse to France temporarily, the policy will provide you with
liability cover.


(SSH) Exclusions


There are a number of exclusions on the policy. These are high risk activities which underwriters
do not normally wish to cover or will only do so at an additional cost. Stunt riding and the training
of stunt riders is excluded, likewise the teaching of vaulting. The use of horse-drawn vehicles is
also not covered.


There is an excess of £1,000 any one accident in respect of third party property and liability injury
with a maximum excess of £3,000 per annum. Product liability and employer’s liability cover is
obtainable as optional extras, at additional premium.


(SSH) Warranties

                                                                                        1
There is a warranty on the policy that all persons must wear hard hats while riding. Any breach
of the warranty, regardless of whether it has anything to do with the loss, gives insurers the right
to decline a claim.


(SSH) Conditions


If a loss has occurred which may be covered by this policy, you must take care to ensure that
liability is not admitted, either verbally or in writing. An agreement to pay any injured party’s
medical expenses could be construed as an admission of liability. Take care when dealing with
anybody who suffers an injury at the hands of you or your organisation. If an admission of liability
occurs, the insurers are entitled to repudiate any claim that may be forthcoming under the policy
and leave the insured to deal with the third party alone.


(SSH) Personal liability cover


Liability insurance is aimed at commercial organisations operating within the equine industry. The
policy differs from personal liability cover to protect the individual in the event of he or she being
negligent when handling a horse. This cover is available on the market and, in fact, some clubs or
societies provide it to their members. If you ride, you must ensure that you have personal liability
cover.


SAQ 1. Distinguish between commercial and private liability cover.




1
    A warranty is a condition on the policy that has to be complied with exactly.
(SH)4. Cover for the Horse


Various classes of cover can be obtained for the horses that you own. These could include death
following any eventuality, or for specified perils. Cover can also be obtained for medical expenses
following sickness or disease. Some underwriters will also provide cover in respect of barrenness
or stallion infertility.


A number of insurers in UK and Ireland offer bloodstock cover. Technically bloodstock
insurance provides cover for thoroughbreds. That is their lineage can be shown. Lloyds of London
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were one of the original underwriters of this type of risk. Cover is also required for animals which
are not thoroughbreds and this is also provided on the Irish market. The policy cover is fairly
similar thus we will go through a bloodstock policy bearing in mind that the cover afforded to other
animals is similar but they might not required all the option offered to thoroughbreds.


(SSH)4.1 Standard Bloodstock Policies


A standard policy contains four sections—three relating to the horse itself and one dealing with
liability.


(SSSH) Mortality


Section 1 covers the mortality of the animal. It includes the death of an animal during the period
of insurance or for thirty days after its expiry. The cause of death can be as a result of accident,
illness or disease. There are certain exclusions that relate to the care of the animal. For example,
the policy does not cover death caused by any surgical operation under local or general
anaesthetic unless conducted by a qualified veterinary surgeon. Also, intentional slaughter is
excluded, unless the company agrees to the action or a veterinary surgeon recommends that the
animal be destroyed following an incurable injury or disease. The maximum amount payable, in
the event of death of the animal, is the sum insured or the horse’s value, whichever is the least.
No definition is given as how the value is to be calculated. As the policy is one of indemnity the
correct sum insured is the market value of the animal. This may have to be reviewed each year
when the insurance policy is renewed as the value of horses can change. If a loss does occur

2
 If you visit Lloyd’s buildings in London you will find on show one of the original underwriter’s books showing the
name of horses that have been insured as well as some of the claims.
under this section of the policy the insured will be required to prove the value of the animal on
death.


(SSSH) Theft or straying


Section 2 covers theft or straying of the animal. It also covers death as a result of theft, malicious
or wilful castration of the animal or recovery costs up to £200. This does not include theft by or
assisted by employees.3


(SSSH) Liability cover


Section 3 covers liability for injury to persons or property arising out of the use of the horse.4The
cover is similar to that offered by a standard liability policy.


(SSSH) Surgery fees


Section 4 covers life saving surgery fees and post surgery care up to £2,000 for each insured
animal. It excludes all surgery not carried out in an attempt to save the animal’s life and surgical
costs in connection with any elective, preventative or routine treatment.


(SSSH) Conditions


It is a condition of the policy that the animals insured are sound in health and free from any illness
or disease at the inception of the policy. If this exclusion was not included, owners whose animals
were in bad health or regularly had to visit the veterinarian could obtain insurance, causing claims
to increase.


SAQ 2. List the four sections included in a standard bloodstock policy.


(SH)5. Other Risks



3
  The theft of horses is quite common as can be seen from the web page:
 www.iea.com/~adlinkex/HP/stolenhouses/index.html.
4
  This has been discussed in topic 18.
(SSH) Working from home


Care should be taken to ensure that property is also adequately covered. Various brokers offer
specialised cover depending on the nature of the business that is being carried out. Such cover
includes buildings and contents of the premises as well third party and employers liability. If you
are operating a business from your home, you must make sure that your insurer is advised of this
so that the correct cover can be arranged. You will need a policy covering your private dwelling
house, both buildings and contents, that has been endorsed to show that the insured is operating
a business from the premises. The policy can also includes care, custody and control terms. This
is required if you stable an animal for somebody else. It provides liability cover for horses that you
are looking after for another so that if the animal is injured due to your negligence, you have
insurance protection.


(SSH) Tack


Tack cover is often required. This policy normally covers named perils including theft. Tack
includes saddles, bridles, bits and other riding equipment but does not include clothing or farm
equipment.




(SSH) Events cover


If you are in the business of organising point-to-points, shows, trials or gymkhanas then you will
be concerned with the success of the event. Cover can be obtained for the cancellation of the
event for a variety of reasons. A major concern in Ireland is the weather and events can often be
cancelled because of rain or windstorms. A pluvius policy will provide protection for this
eventuality. In addition, cover can be obtained for property such as marquees, tents, cups and
trophies, as well as money. Personal accident cover is provided for voluntary helpers. A most
important aspect of events cover is liability as large crowds would be expected to congregate at
the show and injury could be caused if nor organised properly. Just to illustrate the importance of
the liability cover I will tell a woeful tale of a case I handled. Two young ladies were working in
partnership together to organise shows of various types and on one occasion had been employed
by a government board. The show was an all day event which included all sorts of activities. One
of these was the world rolling pin throwing championships. During the course of this event a
young four old girl ran into the throwing area as a pin was being thrown by a contestant. The pin
hit her between the eyes and she was unconscious for eight years. This catastrophe was caused
because the two young ladies had failed to consider the risks involved with young children and
make the necessary provisions to ensure their safety. These two young women were devastated
and their career was ruined. Not only that but the young girl lost eight years of her life and suffered
severe brain damage.


(SSH) Stallion fertility cover


Stallion fertility coverage guarantees that a certain percentage of mares conceive from the
service of a stallion. This provides protection to a horse breeder who has rented a stallion for the
purpose of covering his or her mares. The cost of service can be extremely high so protection is
needed if the mares do not foal as a result of the stallion being infertile. This cover is purchased by
the owner of the mares.


(SSH) Stallion availability insurance


Stallion availability insurance covers failure of the insured stallion to service and impregnate a
mare during a minimum of two oestral periods of the stated breeding season. This cover is for the
stallion and also covers:


   death
   temporary or permanent disablement
   inability to provide live sperm.


This cover is purchased by the owner of the stallion.


(SSH) Barrenness of mares


Not only does the infertility of stallions lead to failure in producing offspring but also the
barrenness of the mare. A policy can be obtained that compensates the owner of a mare if it fails
to conceive from the service of a specific stallion. Once conception occurs, there is still a risk that
the foal will not be born alive. Again, insurance comes to our aid in providing financial protection if
there is the loss of an unborn foal due to the absorption of the foetus, still birth or failure to survive
up until a specific age.


SAQ 3. What types of insurance cover do you think you would require if you were organising a
showjumping event?


(SH)6. Summary


In this topic, various types of cover applicable to the equine industry were discussed. These, as
you saw, were variants on the standard covers issued by the insurance industry. These special
policies deal with property, pecuniary, liability, livestock and personnel cover.


The main aim of the insurance market is to provide the equine industry with the fullest cover
possible so that events and animals are protected. In this topic liability cover was discussed fully
as this is a very important risk faced by all individuals or organisations involved in the equine
industry. It was pointed out that there was a difference between the policies issued to the
individual horse rider and that offered to a commercial concern yet both are essential.


Various types of policies are issued to deal with the risks faced by the animals themselves. Thus
bloodstock cover is provided for thoroughbreds and similar types of coverage for other animals.
You learnt that these types of policies covered four main areas. These were:
   Mortality cover
   Theft or straying
   Liability
   Surgery fees


In addition the risks associated with breeding are also provided for with different types of policies.
A policy can be purchased which covers the failure of the stallion to do its job and another for the
deficiencies in the mare.


Cover for events such as shows, gymkhanas, races, etc were also discussed. The importance of
ensuring that financial protection was illustrated by a very sad case.
You should now be in a position to know what types of cover are available for members of the
equine industry.