Liability InsuranceBetter Safe than Sorry,Part II

Anyone that operates their horse operation as a business needs to seriously consider obtaining a liability insurance policy. Because of the inherent dangers present when interacting with horses, the liability insurance policy will protect the equestrian from ...Anyone that operates their horse operation as a business needs to seriously consider obtaining a liability insurance policy. Because of the inherent dangers present when interacting with horses, the liability insurance policy will protect the equestrian from ...

Story originally posted by: Michael Beethe, Esq.

Anyone that operates their horse operation as a business needs to seriously consider obtaining a liability insurance policy. Because of the inherent dangers present when interacting with horses, the liability insurance policy will protect the equestrian from having to pay a large judgment to an injured party. Non-professionals should carefully review their homeowner’s policy before relying on them. Any type of business activity with the horses could exclude coverage under that personal policy. Further, some policies specifically exclude injuries sustained while interacting with horses.

Part I of Liability Insurance – Better Safe Than Sorry addressed the overall issues of liability insurance, including who needs to obtain liability insurance. This second portion of the article will address different types of liability insurance helpful to equestrians, as well as dealing with your insurance company to procure and administer your liability insurance policy.

Types of Policies

Now that you have decided you need liability insurance, you need to ensure you have proper coverage. Your coverage will depend on the type of operation you operate. The following are several types of policies available to the equestrian:

A. Commercial Equine Liability. The commercial equine liability policy is a comprehensive insurance specifically designed for equestrians. The equine industry consists of many unique liability exposures that many standard business policies exclude or limit. This policy will cover claims made when someone is injured on your property, by a horse under your control or when under your instruction. The commercial policy will vary in its coverage and cost, depending on the types of activities conducted in your business.

B. Care Custody & Control. This policy proves essential for the equestrian who trains or boards horses. Anyone who takes on responsibility for another’s horse should have this type of coverage. This policy pays for all amounts you are legally obligated to pay (up to your policy limits) for injury, theft or death to horses under your care, custody or control. This type of policy generally does not provide coverage for any horses owned by the person taking out the policy. Like other policies, the insurance company will also provide your defense if you are sued.

The cost of this policy will be directly related to the number of horses covered and the desired coverage amount. Many care, custody and control policies also include coverage for hauling other people’s horses. This is a very important aspect of this type of insurance, as it will negate the need of obtaining insurance for hauling horses. Because the care, custody and control policies vary greatly, you should carefully examine your policy to ensure you have proper coverage.

C. Umbrella Policies. Umbrella policies are often misunderstood. An umbrella policy increases the policy limits on some or all of your existing insurance policies. The umbrella policy does not cover any additional types of hazards. For example, an umbrella policy cannot and will not convert a homeowner’s policy into a commercial policy. Instead, for example, an umbrella policy can increase your liability insurance from $250,000 to $500,000. This policy will give excess protection, on top of the existing protection. The umbrella policy will help to protect you from the catastrophic loss, which should be a concern in today’s litigious society.

D. Horse Trainer/Instructor Liability. Horse trainer liability insurance provides personal liability protection for trainers when bodily injury or property damages occurs as a result of a horse in training. Instructor liability insurance provides protection for riding instructors who operate as independent contractors. This would include those who travel to different barns give riding instruction. Instructor liability insurance would most likely not be necessary if you have the horse trainer liability insurance.

E. Other types of policies. There may be additional or alternative policies which may better suit your particular needs. As will be discussed in more detail below, you should consult a qualified equine insurance agent to discuss the best policies for your operation.

Your Insurance Company

Your insurance policy is only as good as the company that insures you. Thus, you should know the company that writes your insurance policy. This is not always the insurance agency from which you purchase your policies. Before using a company, you should research the quality of the company. This can be done by researching the company on the internet, contacting certain insurance agencies or consulting with industry specialists to determine which company will best meet your needs.

Your Insurance Agent

Your insurance agent provides an important service to your horse operation or business. It is important that you trust your agent, and that you understand the role that your agent will be taking in this transaction. You must keep in mind that the standard insurance transaction creates a three-party relationship between the insurance company, the agent and yourself. The agent’s role is that of an intermediary, but carries with it several agency duties. The agent has many obligations, including:

• Determining the client’s needs and requirements• Providing appropriate options of insurance and advise• Understanding and explaining the client’s risks• Update the client on coverages and lapses• Servicing the client on an on-going basis

It is important to understand, however, that the insurance agent can only work with the information that you provide them. Thus, it is essential that you provide a full picture of the types of activities in which you participate. Failure to fully inform the agent of your activities will result in inadequate or insufficient coverage. Further, if an insurance company discovers that you have misrepresented to them the level of risk involved in your operations, you may loose all coverage and have claims denied.

Read Your Policy

Once you and your agent have met, and you have obtained your liability insurance policy, you need to read and understand your policy. Legally, you have an obligation to read and understand the coverage of your insurance policies. The hard part is that the policies are long and complicated. Fortunately, most companies now write their policies in "Plain English", or at least plainer English. While it may be a difficult, you need to take the time to review your policies to ensure they cover what you intended to have covered.

Many in the horse industry will not read their policy – they will file it away, hoping never need to see it again. The problem arises when the policy is needed, and it does not cover what was intended. In order to protect against having a policy which does not cover what you intend, you need to understand your policy. At the very least, if you cannot force yourself to read the policy, you should discuss your concerns, needs and expectations with your insurance agent. Discussing this after an accident can often prove costly.

When There Is A Problem – Notice Requirements

All insurance companies require the insured party to timely notice of all significant issues regarding the insurance policy. Anytime you are aware of a potential injury or claim against the insurance policy, you need to immediately notify your insurance company. Failure to give timely notice of injury or a potential claim presents the largest area of controversy with insurance companies. Some studies show that improper notice as the largest single reason that insurance companies refuse to pay on insurance policies.

Why The Insurance Company Requires Notice. Insurance companies require prompt notice because it has an interest in the investigation and handling of the injury. Insurance companies will often monitor investigations of accidents, and sometimes conduct their own investigation. For example, if a rider suffers injury when falling from a horse during a riding lesson, there may be a need to investigate this accident to determine the fault of the accident. This investigation may need immediately attention, and could have significant impact on a future claim by the injured party. If the insured fails to give the insurance company proper notice, then the insurance company has not been given the opportunity to investigate and properly prepare to defend claims made by the injured rider.

What Notice Is Required. Each policy will have different requirements, but it is safe to say that you should notify the insurance company immediately for all matters which may bring your insurance policy into play. You should also ensure that you contact the proper person with the insurance company. Most insurance companies now have lines which are open 24 hours a day to take calls of injuries, which means there is no reason to delay notification of the insurance company.

Judgment Calls. The insurance policy will clearly identify when the insured must contact the insurance company regarding a potential claim. Sometimes a minor occurrence takes place, and the insured must determine if they should notify the insurance company. This decision should be based on a variety of factors. When in doubt, however, contact your insurance company.

ConclusionPart I of this Article discussed the basics of liability insurance, explaining who needs to be concerned with obtaining liability insurance. This Part II detailed the type of liability insurance policies available to equestrians. This second portion of the article also details the relationship that you will have with your insurance agent and insurance company through this process.

Horse owners find insurance an important part of the involvement with horses. To properly use this tool, however, a complete understanding of different types of policies and coverages is essential. Complete understanding of your policy can only be obtained by reviewing your policy. In order to benefit from your insurance policies, you must follow all of the requirements of the policy. Most importantly, proper notification of any potential claim under the policy.

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