Protecting Yourself And Your Investment
Just as you wouldn’t think of purchasing a new automobile and driving without insurance coverage, when you make the decision to own a racing American Quarter Horse you also need to make sure that you and your investment are insured. When looking to purchase insurance, there are three primary considerations: liability insurance, mortality insurance and workers’ compensation.
Liability Insurance
Ownership of a horse can cause an increase in your personal liability exposure for injury to others or property damage to others due to the activities of the horse. As the owner, you might be held liable for injury to others due to the activities while riding, or for the actions of the animal when you have it stabled or pastured.
For example, if you or your trainer is leading your horse in a crowded area and a loud noise spooks the horse and it kicks a patron, you could be held accountable for that action.
The actions of the horse or your actions with the horse causing injury to another person can lead to legal action against you. If you are found liable, your insurance will cover any judgements against you. To protect yourself against climas of negligence or wrong doing, you need general liability coverage for horse-related occurrences.
In most cases, personal homeowners, tenants or farm owners liability policies will not provide coverage for your personal liability for horse related accidents. Consult your agent to see if your coverage could be extended to cover your equine exposures.
Most homeowners and tenants liability policies might exclude business pursuits. Therefore, if there is an intent to do business (i.e. owning a racehorse under a sub-chapter “S” corporation or partnership), then your policy might not cover you. Farm or ranch policies naming you personally and your corporation or partnership as insureds should extend to cover both you and your corporate liability. Again, check with your agent to be sure your policy specifically does not exclude racing.
Mortality Coverage
Whether you decide to insure your horse for death is an individual decision. Most mortality policies cost anywhere from 5.5 percent to 7.5 percent of the animals’s value while racing and 3.7 percent while the horse is used for breeding or not at the track or in race training. There are two types of mortality insurance.
1. Full Mortality - Also known as “All Risk,” this type of policy covers the death of the animal by accident, sickness or disease. This is the most expensive, but covers such things as death by colic or other illness, as well as any accidents.
2. Named Peril Accident - This type of coverage would only apply to the death of the animal by specifically named perils such as fire, lightning, windstorm or accident during transport. Any other causes of death would need to be specifically named on the policy.
In nearly all cases, mortality coverage is paid at actual cash value. Therefore, you should keep accurate records of your horse’s performance to substantiate the value in case of loss.
Workers’ Compensation
Workers’ Compensation insurance covers you should you be required by law to make payments to an employee who is injured in the course of work. This form of insurance varies from state to state, and you should become familiar with the workers’ compensation requirements of the state in which you are racing.
At the racetrack, some employees might be independent contractors and not considered your employees for workers’ compensation purposes. Again, check with that particular state or better yet seek the advice of an attorney for guidance on who might be considered your employee.
AQHA Corporate Partner Markel Insurance offers a variety of insurance plans for horses and owners. You can call Markel toll-free at (877) 818-AQHA or visit their Web site at horseinsurance.com.
