7 Factors That Affect the Cost of Horse Mortality InsuranceSeptember 19, 2019
We get asked a lot, “How much will it cost to insure my horse?” To horse owners, it seems like a relatively straight-forward question. However, the short answer is, “It depends”. That’s not an insurance agent hedging, as you might be prone to expect. In fact, each company’s rates are straight-forward and getting a quote is simple. The reason why the answer is “It depends”, is because there are multiple factors that affect the cost of horse mortality insurance.
Ultimately, it is up to you to decide the levels and amount of coverage you wish to purchase. Given that each individual’s situation is different, the total cost will vary. There are several things that will contribute to the final premium tally and you will need to take into consideration your circumstances to determine how much equine insurance you wish to purchase. Here are several factors that affect the cost of horse mortality insurance:
1. What is the value of your horse?
If you just bought your horse, the maximum dollar amount you will be able to insure is its purchase price. After your horse has a breeding production record, show winnings, additional training, etc. you may be able to justify a higher limit of equine mortality insurance. You may, however, choose to insure your horse for less than you paid if you just want to take away a bit of the financial “sting” of losing your horse.
The value for which you wish to insure the horse is one of the biggest driving factors that affect the premium. This is because the annual mortality premium is calculated by multiplying a percentage rate by the insured limit of the horse. It’s easy to follow the logic that more expensive horses cost more to insure.
2. What is the nature of the use of the horse?
Another one of the factors that affect the cost of horse mortality insurance is how your horse will be used. If your horse is a quarter horse used for pleasure riding, you will receive a lower rate than a quarter horse used for breeding, for example.
The reason for this is that more fatalities occur within quarter horses used for breeding than quarter horses used for pleasure riding. The rating factors for usage vary from breed to breed. But, as a general rule, horses that are used in higher-risk activities will cost more to insure than their leisure-use peers.
3. What is the breed of your horse?
Statistically, certain breeds are responsible for higher numbers of mortality claims. Due to this fact, they receive a higher insurance rate because, again, statistically speaking, they are more likely to result in a claim for the insurance company. For example, ponies have longer average life-spans than draft breeds, so the rate to insure a pony will be less than that of a draft horse.
4. What is the age of your horse?
The age of a horse factors into the probability of loss, so it is one of the factors that affect the cost of horse mortality insurance. Very young and very old horses are the most susceptible to mortality.
For this reason, foals aged 24 hours to 180 days are some of the highest-rated horses to insure. When deciding to insure a foal, it is important to remember that the foal rate will apply for the entire annual policy term. Owners who choose to wait and insure foals after 180 days can enjoy the standard rate.
Most Equine Mortality Insurance companies will begin to apply “overage surcharges” at, or around, 15 years of age regardless of the breed. These surcharges increase thereafter with each passing year. Overage surcharges can pretty quickly double a mortality premium. So, by this point in a horse’s life, many owners either consider that they have received enough use from their horse to consider them “paid for” and drop the coverage or they may choose to reduce the limit of insurance in order to offset the additional costs associated with the horse’s age.
Regardless of the purchase price that was paid years prior, from a practical risk management standpoint, it is always important and advisable to balance the costs of insuring the horse by making an honest evaluation of the horse’s market value and the costs associated with replacing it.
5. How many horses are you insuring?
If you are insuring a number of horses, some companies may be able to offer you a herd policy at a reduced rate. These options should be considered, but they must be carefully weighed. Your insurance agent can help to explain the nuances of these types of policies.
Often, in exchange for a reduced rate, they will come with a deductible of some kind, which individual mortality policies do not typically have. Also, these policies usually aren’t the best option for equestrians who own numerous high-value horses, because the premium to insure the whole herd makes it cost-prohibitive. Scenarios exist where a horse owner could go without a herd policy, have one horse die per year, and still be better off financially than if they purchased insurance on their entire herd.
These types of policies make the most sense if horse owners are concerned about losing an entire breeding operation to a catastrophic event such as a barn fire. In most cases, however, it is advisable for owners of multiple horses to determine the most important horses in their herd and insure the few that are highly consequential to continuing their operations or revenue streams. Again, this is where an experienced agent will be able to help the equestrian determine the right path for their operation.
6. Do you want major medical coverage? How much of it?
Oftentimes, a major medical endorsement added to an Equine Mortality Insurance Policy can cost more than the mortality coverage. After all, more horses get sick or injured each year than die. If this wasn’t the case, many vets might find themselves out of business. As such, major medical coverages get utilized more than mortality coverage.
Since the basic veterinary needs of horses used in most applications are similar, major medical and surgical coverages are offered at a flat rate and are dependent upon the level of coverage purchased by the horse owner. Most companies offer various levels of coverage, from as little as $5,000 to as much as $15,000, and the cost varies with the coverage amount. Some insurance companies also offer catastrophic accident or illness coverage that is limited to $5,000 and is far less expansive in what it covers than is a Major Medical and Surgical endorsement.
Whether or not you choose this type of coverage is highly dependent upon your own individual financial circumstances. If you are in a position to cover the expenses associated with veterinary care and just wish to insure your horse for the unfortunate circumstance where it suddenly dies, you may decide to save the premium and forego any kind of medical endorsement. However, horse owners should be aware that when they purchase a mortality policy, they are agreeing to provide proper and immediate veterinary care to their horse in the case of illness of injury. The failure to do so can potentially void a mortality claim.
7. Are you importing your horse?
In the case of imports, especially when coming from overseas by way of airlines, it is advisable for owners to purchase Trip Transit coverage. Horses that come from abroad have stressful journeys ahead of them and usually will be required to undergo a quarantine upon arrival. Trip Transit is an endorsement that Equine Insurance Companies offer to owners and it is really quite affordable. However, it will be an added cost to your first year’s premium amount.
As you can see, the cost of Equine Insurance really “depends” and there are several factors that affect the cost of horse mortality insurance. Premiums can be based on rates below 3% of insured value and as high as 8%, or even higher. Equine mortality insurance can be one of the best ways to protect the financial investment you have made in your horse. It can also be quite affordable and easily amortized into your annual horse budget.
It’s important to have a conversation with an insurance agent who is experienced in writing equine insurance so you are aware of the coverages available, the policy exclusions, your duties as a policyholder, and reasons why you need equine mortality insurance. An experienced agent will also help you to navigate the waters of policy options so that you end up with a customized policy that meets your needs and makes the most sense for your situation.
Ruhl Insurance has been providing equine enthusiasts with comprehensive insurance options for decades and our licensed insurance agents have years of personal experience with horses. If you are looking for an equine insurance agent who can truly “speak your language”, feel free to give us a call at 1-800-537-6880 or 717-665-2283 and get a quote today.
Disclaimer: Information and claims presented in this content are meant for informative, illustrative purposes and should not be considered legally binding.