4 Common Mistakes to Avoid When Buying Horse Farm InsuranceSeptember 24, 2020
Although equine husbandry presents some inherent risks, there remains a lot of confusion about what liability to customers, clients, or the general public is assumed by an equine operation. Furthermore, many equine operations are significantly underinsured when it comes to their property assets, including their buildings, equipment, tack, and even hay and grain supplies. These are some common mistakes to avoid when buying horse farm insurance to keep in mind the next time you are shopping for comprehensive equine insurance coverage:
Mistake #1 – Insuring a Horse Farm or Commercial Equine Operation on a Homeowner’s Insurance Policy
Insuring an equine operation with a Homeowner’s Insurance Policy is one of the most common mistakes to avoid when buying horse farm insurance. Initially, the price looks very attractive. The problem is that for larger equine farms and commercial equine businesses, a homeowner’s policy leaves significant property and liability coverage gaps that can be detrimental to the future of your equine pursuits if a claim were to arise.
Even in the rare case that a Homeowner’s Policy affords some level of protection for the added risk exposure of having horses on the property, these policies will typically set a limit to the number of horses that are kept at one or two. A Homeowner’s Insurance policy will provide you with Personal Liability, but it does not provide coverage for any commercial equine pursuits. For instance, if you are giving lessons, the equine professional liability risks created by this equine business activity will not be covered on your Homeowner’s policy.
A Homeowner’s Policy may also have a hard time properly insuring the property assets that are present at your equine operation. There may be limitations on your Homeowner’s Policy that exclude property coverage to outbuildings that are employed for agricultural use. In other cases, 10% of the amount of coverage that is written for your dwelling structure to insure your outbuildings can be a completely inadequate limit if you were to lose even a small horse barn with several stalls. For the above reasons, and more, a Homeowner’s Policy is almost never the best way to comprehensively insure any equine operation.
Mistake #2 – Not Purchasing Liability Insurance Because of State Equine Participation Laws
The equine participation laws within states have been a cause for confusion in many cases. There is a lot to unpack there, and a lawyer is better suited to explain the nuances of these “new-ish” laws. In short, Equine Participation Laws should be looked at as a first line of legal defense, but not your entire legal protection. There are numerous things to keep in mind regarding these laws, and ultimately, they should not be looked at as a substitute for Liability Insurance coverage.
Many State Equine Participation Laws Do Not Include Children
First, in many states, the equine participation laws do not include children participants. It is common for minors to be some of the most active clientele at a horse farm or boarding stable. So, when this is the case, these participation laws will likely not provide an adequate legal defense.
They Don’t Cover Many Risks Common to Equine Events
Secondly, most of these laws are written in a way that requires a person who is participating in an equine event to assume risk, to a reasonable degree. However, scenarios can occur where people could be insured who weren’t necessarily willful participants in the equine activity.
For instance, if your horse spooks at a show, jumps the fence, and injures spectators, a court would have to decide if the act of spectating outside the ring was a risk that the injured party should have been able to reasonably foresee and assume.
What if your horse runs away and injures someone on the midway at a fair who wasn’t even an equine event spectator? As is evident, there are many scenarios that could arise that could ultimately fall outside of the scope of these limited equine participation laws. Moreover, having equine liability insurance provides you with legal defense paid for by the insurance company.
So, even in circumstances where participation laws may be applicable, without liability insurance, you would be left footing the bill for your attorney out of pocket. This is an expense that will invariably be more costly than an insurance policy.
Mistake #3 – Purchasing a Liability Policy and Forgetting About Property Insurance
Many horse owners and equestrians understand the need to purchase liability insurance. But, they often don’t take the time to consider the value of their property assets. Farm structures, such as stables and covered arenas including footing; farm equipment, such as tractors and manure spreaders; tack items like expensive saddles, bits, and bridles; hay and bedding; etc. all can add up to tens and hundreds of thousands of dollars.
It can be incredibly difficult to bounce back after sustaining a loss to a vital building in your commercial equine operation. Without the proper property protection from a Farmowners or Agribusiness policy, an equine business or horse farm owner will be looking at paying to reconstruct or replace lost property items out of pocket.
The feasibility of this will depend on the individual policyholder. But, it is safe to say that it would put a damper on your business if you ended up looking at a large unexpected expense due to a devasting property loss.
Mistake #4 – Forgetting about Care, Custody, and Control if You Run a Boarding Stable
Care, custody, and control insurance is a liability coverage that provides payment for non-owned horses that are in your possession and are injured or lost due to what can be deemed as your “negligence”. If you are running a boarding operation, Care, Custody, and Control is a coverage that you do not want to forget.
Imagine a scenario where you forget to latch a paddock gate and a client’s horse gets on the road and is struck by a car and killed. Your liability insurance will cover losses to the driver’s car or costs associated with any bodily injury that was sustained. However, your standard liability coverage will not provide payment for the loss of property (the horse) sustained by your client.
To ensure that you have coverage for these types of losses to horses boarded at your farm, you need to add Equine Care, Custody, and Control coverage to your policy. It is a valuable coverage for boarding operations that should not be overlooked.
There are many important things to know about horse farm insurance. These common mistakes to avoid when buying horse farm insurance are in no way the only potential pitfalls you may encounter when purchasing equine insurance policies. Horse farm and commercial equine insurance are niche insurance products, and that is why it is imperative to discuss the details of your operations and your insurance needs with an experienced equine insurance agent.
We are pleased to say that our agent force is comprised of many equine owners who have many years of experience writing this type of coverage for a wide range of equestrians and businesses of all sizes. If you would like to discuss the horse farm insurance and other insurance options available for your equine farm or business, give one of our Agricultural insurance agents a call at 1-800-537-6880 or 717-665-2283.
Disclaimer: Information and claims presented in this content are meant for informative, illustrative purposes and should not be considered legally binding.