The rodeo season has hit full swing. Whether you’re a weekend warrior or a long-time veteran of the rodeo road, one thing is sure to hold your constant attention: your horse’s health and security.
Equine insurance can be the helping hand during straining situations, but it can also be the cause of worry-filled days spent trying to decipher your policy’s legal jargon. Barrel Horse News caught up with some of the leading equine insurance agencies in the business to shed light on frequently misunderstood issues, as well as a leading breeder to bring you the low-down on his personal experience and how to use equine insurance to your optimum benefit.
What is Equine Insurance?
Equine insurance was developed to help you recover from the loss of an equine athlete due to natural causes, disasters, theft, injury, and many other unforeseen situations, which could leave you in financial distress. Unlike insurance you would purchase for your home or rodeo rig, the equine insurance world is very small with unique policies that are flexible to fit specific needs.
While only a handful of major players underwrite and pay claims, the number of agencies carrying equine insurance is much broader. Fortunately, the ever-entwined rodeo community is home to agencies dedicated to performance horse coverage, including a few specializing in barrel racing and rope horses.
“One thing people don’t know is there are only five or six A-rated companies writing equine insurance in the entire country. It’s very much a niche market,” said Marvin Tavarez, owner of Plains Horizon Equine Insurance.
Tavarez has been in the horse insurance business for more than 14 years and is actively involved in the equine industry as a member of the Professional Rodeo Cowboys Association and the American Quarter Horse Association.
Where to Start?
First, find an agent and choose a company. Select an agent who can help you decipher the legalese of different policies and is knowledgeable in your specific discipline.
“You really need to have an agent who is looking out for you and not just trying to sell a policy,” said Kenny Nichols, owner of Nichols Quarter Horses, a leading breeder with Equistat reported earnings of $401,041 at press time.
Ask around about the reputation of the underwriting company. Research their coverage options and verify the company is a licensed and admitted carrier in your state.
Choose the company and agent best suited for your specific needs, then narrow down your policy options. Ask your agent to explain the policy and confirm the explanation in writing. Remember, insurance policies are in fact contracts and might be required to stand up in court.
The amount of financial risk you are willing to expose yourself to will influence which policy you choose. The more add-ons or endorsements you select the more protected you’ll be, but also the higher your premiums. Most equine insurance companies can offer policies designed specifically for your needs, so communicate freely with your agent.
“A lot of it depends on what kind of horse you have and what are your needs,” Tavarez said. “Every case is unique and a lot of things can affect rates. I want people to call me, because we can do things, tweak policies and add endorsements to add coverage in order to make things work for the client.”
You must first have basic coverage before selecting any add-ons. Full mortality and theft is the standard policy for most equine insurance coverage. Generally, this covers you in the instance of death or humane euthanasia of your horse due to accident, illness, or disease occurring during the policy period. In most cases, some form of emergency colic surgery is included for horses 90 days through 15 years old and with no prior history of colic.
“Policy holders should understand the mortality policy is not a health insurance policy,” said Lyndia Cotton, president and founder of LCI Livestock Insurers. “The mortality policy is normally a 12-month policy period (reconsidered annually). It is a type of life insurance policy structured specifically for equine.”
Cotton is a lifelong horsewoman and competitive barrel racer in all levels of competition, from the Women’s Professional Rodeo Association to the National Barrel Horse Association. Along with co-owner Susan Sartain, the LCI group represents competitors through extensive experience in both the insurance and equine industries.
Basic mortality rates are usually a published rate between 3 and 4 percent, but in certain situations can be as high as 10 percent, depending on age and use of the horse. Premiums are based on horse value, which is multiplied by the insurance rate to determine the premium you will pay periodically.
One way to establish value of a horse you’ve owned for six months is to use the purchase price. If the horse was homebred or purchased as a prospect, figures such as training costs, money earned, winning records, breeding fees, or open market standards are generally used to evaluate the horse’s value. Moreover, if you have owned the horse for a longer period of time and wish to up its insured value, winning records and money earned can be factored into the equation.
“Some of these barrel horses running at the NFR, they are six figure horses, but does everybody insure them for that? No. Who wants to pay those premiums?” Tavarez said. “I ask what they can live with, so I can bring it down to something they can afford.”
“Once you get past full mortality and theft, you need to really start analyzing where you want to go with coverage,” said Chuck Dunn, owner of Dunn Insurance. “At that point, coverage options start varying pretty drastically.”
With numerous years involved in the industry with D&G Productions, the long-standing production company of many barrel racing events, it was only fitting for Dunn to begin his own insurance business specializing in protection for barrel racing and rope horses. Dunn says although basic coverage has become standard, knowing what type of coverage and add-ons are feasible for you is vital.
Add-on coverage is popular among many competitors. Colic surgery endorsements cover the cost of emergency colic surgery, including miscellaneous extras such as post-op hospital care, vet fees and medications for up to 50 percent of the expenses to a maximum of $5,000, according to the Plains Horizon policy. Pay attention to payment details in your coverage, because according to Dunn, some policies pay a percentage while others start paying on the first dollar, up to a set amount, usually $3,500. Other endorsement options include: major medical, guaranteed renewal, stallion accident, sickness, and disease, and prospective foal. Specially designed coverage can also be created for embryo transfer, frozen semen, and an option to extend the territorial limits of your coverage.
Guaranteed renewal is the most overlooked endorsement, according to Tavarez. It is an endorsement stacked with a mortality policy, to extend coverage of your horse in the case of a life-threatening accident, illness, injury, disease or disability during the policy period. Notify your agent and renew coverage, because by doing so your horse is guaranteed a continuation of current coverage through age 15 for the original agreed upon value.
The most popular add-on coverage is major medical. This endorsement covers medical and surgical procedures required to treat illness, injury or disease. Covered expenses may include colic surgery, laceration suturing, anesthesia, hospitalization, X-rays, lab tests, and medication. These coverage options vary within policies and companies. Most major medical premiums are determined in increments based on amount of medical coverage desired. For instance, major medical coverage worth $7,500 in coverage would cost $300 with a $300 deductible per occurrence according to Plains Horizon Insurance. The total amount of medical expenses an insurance company will reimburse you for in one year can range from $5,000 to $15,000, again depending on the agency and policy you choose.
Preventative health expenses such as vaccinations, worming, and dental work are not covered. Cotton says performance enhancement procedures, such as hock injections, and pre-existing conditions or previous injuries are also excluded by most policies.
“You have to think about what you want covered for your horse and read that coverage,” Nichols said. “Ask questions about what your policy does before you start paying premiums and before you add major medical. Find out if there is enough coverage in the policy to justify your premiums.”