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August 31, 2010

Insurance For Horse People: Liability Insurance Isn't Just For The Professionals

You need more than a sign to protect yourself from a lawsuit. Photo by Lisa Slade.

Curious about insurance for horse owners? Check back every Wednesday through Sept. 8 for this three-part series that will cover horse insurance, liability insurance and farm insurance. Sponsored by Taylor Harris Insurance Services.

You double check to make sure the stall doors are latched tight, you top off water buckets, and you pick rocks out of your ring. You attend to every last detail when you’re protecting your horses from harm, but what are you doing to protect yourself?

Accidents happen, and—as every horse owner knows—they seem to happen more frequently when there’s an equine around. That’s why getting a liability insurance policy just makes good sense. Whether you’re running a large lesson and showing facility, or you just board a few horses on your farm for other owners, it’s essential to protect yourself from a lawsuit.

“In general, if you have more than three or four horses that you yourself own and ride for pleasure, a regular home-owners insurance policy isn’t going to cover it, even if you keep them at your home,” said Debi DeTurk Peloso, a horse insurance specialist with the Markel Insurance Company.

Covering your activities with a general liability insurance policy is a good idea, and if you run any kind of business—such as boarding, teaching, or training—you should look into a commercial general liability policy. Either general liability policy protects the named insured (the person holding the policy) against bodily injury and property damage lawsuits arising out of the operation they have declared, whether it be pleasure riding, boarding, training or teaching. That coverage follows the named insured parties wherever they go, not just on the property where the business is run. So, if you’re teaching at a show away from home, your general liability policy covers you.

If you’re a professional trainer and you’re running a boarding and training business out of a rented farm you don’t own, you should have a commercial general liability policy that protects you, as the primary named insured, and the landowners, as additional insured parties named on the policy.

“The named insured is responsible for paying the bills, but let’s say a lawsuit was brought after a student falls during a lesson, and the person sues not only the person operating the business and giving the lesson, but also the landowner. Then the policy would respond for both if the landowner was named as an additional insured individual on the policy,” Peloso said.

In general, the insurance company holding your general liability policy needs to know what activities are taking place, i.e., a small boarding operation or a busy lesson program.

Ask These Questions About Your General Liability Insurance

  • Limits

A general liability insurance policy protects the insured persons from financial ramifications arising from civil lawsuits. “A good general liability policy pays to defend you, investigate occurrences and then pays up to the policy limits,” Peloso said.

“Let’s say you have a $500,000 limit, and it cost the insurance company $100,000 to defend you and to investigate, then there is still $500,000 there to pay any award. That’s called paying outside the limits. Investigation and defense costs are paid outside the limits.”

Different insurance companies have different levels of limits for general liability policies—the limit is the amount the policy will cover for each incident. You need to decide which limit of coverage is best for you, and that decision rests on your assets and your possible risk level. “In general, you look to protect the level of assets,” Peloso said.

“If you have an older pick-up truck, a saddle you’re fond of, and that’s it, you would be perfectly happy with a $300,000 limit. If you have a beautiful farm with land worth quite a bit, you probably would want to look at a $1 million limit. One of the major problems we have in liability lawsuits is horses loose on the road. Another thing the insured party should ask himself is: ‘How good is my fencing?’ and ‘How far am I off major roads?’ ”

  • Premiums

Premiums—or the amount you pay per year for the policy coverage—vary even within the coverage limits, depending on the amount and types of activity you’re engaging in.

“If you had a couple of boarders, 1-2 horses of your own and weren’t giving any lessons, or, if you have no boarders, one school horse and gave students some lessons on their own horses in a small operation, you’d probably be around the minimum premium. It goes up from there depending on the volume of activity and the limit set,” Peloso said.

Make sure your insurance company knows about all the activities on your farm—if you start boarding horses and don’t alert them to add boarding to your policy, then you’re not covered for that activity.

Asking participants in lessons to sign a standard liability waiver and asking boarders to sign a standard boarding agreement are good ideas.

“We strongly recommend it because it’s certainly a huge help in the event of a lawsuit. No one can sign away their right to sue, but in general, having a waiver is an excellent thing, as is a boarding contract or agreement which just spells out the understandings of each party. It’s just good business sense,” Peloso said.

Am I Running A Boarding Business?

If you have ANY horse on your farm that you don’t own, you’re technically running a boarding business, even if the horse belongs to a friend who doesn’t pay you anything.

“Adding the boarding coverage when you have any non-owned horses becomes pretty important because even that plain vanilla homeowner’s insurance policy that might cover the three or four owned pleasure horses, absolutely won’t cover any boarding exposure,” Peloso said.

“Then, you absolutely need the commercial general liability policy. It’s still going to provide liability protection for any personal pleasure activities and also for the business of boarding horses—people coming to ride their boarded horses, horses getting loose on the road and getting hit by a car, or a boarded horse kicking someone.”

If you’re running a big boarding operation with employees, it’s a great idea to add a care, custody and control policy to your general liability policy. This optional coverage extension “is protection for the named insured if the boarder alleges that the named insured somehow hurt or killed the animal,” Peloso said.

“It provides a lawyer if the boarder alleges that you hurt or killed the animal and covers up to whatever the policy limit is if in fact, the owner is found somehow liable,” she continued.

Keep in mind that a typical general liability policy doesn’t cover you if you’re transporting someone else’s horse. “Your auto policy has damage coverage for the vehicle, but absolutely nothing for the horse if it gets hurt,” said Peloso.

A care, custody and control policy does cover trailering other peoples’ horses to some extent if you inform the insurance company that you’re doing so, and they add it to your policy. But care, custody and control doesn’t protect any kind of commercial trailering venture.

The Ins And Outs Of A Lesson Program

If you include teaching on your general liability policy, you’re covered for teaching lessons.

“If you’re teaching on school horses—horses provided by you—or if you have students coming to you on their own horses, you need to declare that,” Peloso said. “The riding lessons to students on their own horses is a little bit cheaper, since it’s awfully hard for someone to say that you over-mounted them if they’re on their own horse.”

Once you’re covered for teaching on your general liability policy, that coverage extends to other premises.

“An example of something that’s not covered unless you declare it in advance is if you have a little boarding or lesson operation and decided to take a pony to the local mall for pony rides to the general public. I can cover it, but not if I don’t know about it in advance,” said Peloso.

Hosting a competition can also expose you to liability that isn’t covered in your general liability policy, but you can protect yourself.

“If you decide to have a horse show—if it’s only your own kids, and you don’t invite the public, then it’s part of your regular lesson program. But if you open it up to other barns or invite the public through advertising, that’s a public day and you better call the insurance company. Usually, those charges are by the day. $75 a day is an average round figure for a small public event with few spectators,” Peloso said.

Private Horse Owner Policies

Let’s say you’re a horse owner who boards your horse at a facility. Are you, as the horse’s owner, covered by that facility’s general liability policy if your horse kicks someone and hurts him or her? No, you’re not. That’s where a private horse owner policy would come into play.

In a private horse owner policy, the owner is listed as the named insured for the horses he or she owns. There are similar levels of limits of coverage as a general liability policy.

“You’re protected for whatever horses are listed on that policy by name, and it follows the horses anywhere they go. They don’t have to be in your care,” Peloso said.

You can attach a liability policy onto your horse’s mortality or major medical insurance policy, but you can also purchase it separately.

Insurance In Action

It’s every horse owner’s nightmare: A horse gets loose, wanders out into a busy road and causes a car accident. Unfortunately, insurance companies deal with this situation all the time. And it’s one that can create a firestorm of lawsuits.

“Typically, the injuries in the car are pretty serious. Although the driver’s auto insurance has bodily injury coverage, typically, the person who hits the horse—or their heirs—sues the farm, because the horse shouldn’t have been loose on the road,” Peloso said. “The liability insurance policy is there to investigate the occurrence, hire you a lawyer and work with you to get the suit either dismissed, or to cover you if you’re found liable. If you’re the person caring for the horse, and it’s found that your fencing could have been better, someone left a gate open, or a tree fell on the fence and you didn’t inspect it and fix it so the horses got out, then you’re probably going to be found somewhat liable for what happened. So, the policy would cover the damages.”

But you also have to think about the other lawsuits that could arise. If it’s a horse boarded with you by its owner, that owner could sue you if the fencing was defective. A care, custody and control policy added onto your general liability policy would cover that.

And the driver or their heirs can also sue the horse owner. That’s where a private horse owner liability policy comes into play.

 

 

 

 

 

 

 

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