A drive down Old Frankfort Pike takes tourists and Lexingtonians past millions of dollars in horseflesh on any given day. The high-priced Thoroughbreds inhabiting the pastures in and around Lexington don’t just have access to some of the country’s best veterinary care — many also have their own health insurance policies.
According to a economic impact study released in 2013 by the University of Kentucky, equine insurance premiums totaled around $41 million in a single year for Kentucky’s horses, and 77 percent of that capital stayed in-state.
The simplest and most popular type of insurance related to horses is mortality insurance, which is designed to prevent a horse’s owner from losing his or her investment if the animal dies unexpectedly. Contrary to popular belief, this type of protection is not just for the seven-figure racehorses.
“We insure horses from $5,000 on up; it just depends on each person’s circumstance. It’s a financial situation, of course, but there’s also some emotional attachment,” said Joe Brown Nicholson of Nicholson Insurance Agency in Lexington. “[It comes down to], if the person had to replace the horse, are they in a financial position to do that?”
An insurance company will base its initial valuation of the animal on the amount the owner paid and adjust the number if the horse does well in competition or in the breeding shed. The owner then pays a percentage of the horse’s value annually as a premium.
Major medical or surgical insurance is also available to horses, and Texas-based equine insurance agent Jim Lane said he encourages clients to think long and hard about the service, which can run a few hundred dollars per year. Treatment or hospitalization for serious illness or injury can climb into the thousands of dollars quickly, sometimes leaving overwrought owners to make the difficult choice between a emergency procedure they can’t afford or having a horse euthanized.
Horses don’t have a plastic insurance card in their tack trunks; instead, owners pay for the horse’s treatment and are reimbursed by their insurance companies. Owners cannot be reimbursed for elective treatments such as chiropractic adjustments or supplements, and it won’t cover complications related to elective procedures. The coverage is available in a variety of limits, and owners pay an annual fee based on the limit they choose.
Older horses or those at greater risk for illness might be restricted to surgical coverage, which limits the possible maladies that are covered. Some insurance agencies set age limits at which a horse may no longer receive medical coverage.
Because the patients involved can’t give an account of their illnesses, insurance companies rely on veterinarians to keep agents informed about how a horse’s case is progressing. Agents don’t often opine on medical decisions (other than perhaps to suggest consultation in difficult cases), but staying in the loop helps them understand the bill they’ll sort out later later. Leaving an insurance company in the dark during an emergency or failing to report a horse’s complete medical history can be grounds for a claim denial. Owners are often told that in an emergency, their veterinarian should be their first call, and their agent should be the second.
Even at the most fastidious barns, horse people know their animals can find a way to get themselves into very expensive trouble.
“I’ve had everything from snakebites and spider bites to colic, founder, pneumonia,” Lane said. “I tell people that horses do dumb things. You can do everything with these things, thinking you’re protecting them, and they’ll still get hurt. There’s nothing textbook about horses.”
Liability is also a big insurance consideration with any type of equine operation. Animals can injure human workers, human visitors to a facility, or even each other. They can damage property at home or away. One Georgetown reining horse trainer recalled an out-of-state show where one of his barn’s horses got loose while pulling a cart and panicked, running into a parking area and scraping some competitors’ trucks along the way. The horse was fine, but his owner was on the hook for the repairs.
At Kentucky’s racetracks, horses and humans are housed closer together than they are at a farm, and that presents a higher liability risk, said Nicholson.
“Some people are under the misconception that a homeowner’s policy or a personal umbrella policy would cover for their equine business, and that’s not the case,” said Nicholson. “There should be a specific policy for the equine owner and his racing or breeding operation.”
Owners passing up mortality insurance for a horse must often think twice before skipping out on liability insurance.
“With a mortality policy, we know what the extent of the policy is. With a liability situation, the liable amount is dependent on whatever a judge or jury says, so it’s an unknown factor,” Nicholson pointed out. BL