Insurance

To keep the horseracing industry on the level – and especially to prevent financially motivated (and otherwise unnecessary) destruction of unwanted horses – the kind and amount of insurance coverage available for the thoroughbred racehorses is very limited. For example, there is no case (except at some horse farms, as mentioned previously) in which an owner can be compensated, by any kind of insurance, for injury to or loss of use of his steed. That bears re-reading. Nobody – not the jockey, not the trainer, not the racetrack, not another horse or rider, not a stable hand, not a veterinarian (and not any of their insurance carriers, personal or otherwise) – can be held financially responsible in any degree for injury to or the loss of use of your racehorse, unless negligence or intentional harm is proven.

What is more, there is no set premium on any type of insurance concerning racehorses. The insurance company is not merely underwriting the “simple value” of the horse, but the history of the trainer and in fact the moral character of both the owner and the trainer.

That said, there are several kinds of insurance to protect you and your “equine investment” that should be considered by you and your trainer.

MORTALITY INSURANCE

This is really the only form of “collectable” insurance available on your horse, but it is subject to a number of qualifications. The most important qualification is that you, per most policies, must have done everything possible – regardless of cost – to save the horse’s life, or you may not be able to collect on your policy. READ THE TERMS OF YOUR POLICY CAREFULLY. If there is anything mystifying to you, have it explained to your complete satisfaction by your broker, and negotiate an adjustment to the policy if you feel the policy is inadequate for your peace of mind.

As a rule, the premium for mortality insurance on racehorses is about 5% of the value of your horse, and IF you are paying the appropriate amount in premium, you can be assured of re-couping at least the market value of the animal in the event of its death or necessary destruction.

Mortality insurance covers your horse in the event it is lost, killed or has to be destroyed for any reason, such as in transport, or as a result of poisoning or kidnapping, or from severe injury or disease. However, any mortality that is inexplicable or could conceivably be “malicious or willful injury caused by the insured” – i.e., slaughter for economic motives – will be heavily investigated, and the claim likely be denied.

Post-mortems are de rigueur in mortality claims. They must be ordered by you, in a timely fashion (i.e., as soon as possible), and performed by a private vet at your expense. Also, “necessary destruction,” whether on the track or in the barn, is not a matter of discretion up to you or your trainer: you must have two licensed racing veterinarians vouch – either before or after the horse’s destruction – that your animal could not survive its injuries, or was in a state of suffering that could not be relieved. (You will need this proof not only for your insurance carrier, but also for the official veterinarian at the track, who will require a full inquiry into the death of any animal in his purview, whether it’s an exercise pony or a million-dollar stakes horse).

A Cautionary Note: No matter what you consider the value of your horse – in fact, no matter how high the premium you have been paying – the insurance company will assess the “market value” of your horse at the time of its death and may adjust the reimbursement down accordingly. The insurance company, however, will not adjust reimbursement UP if you have been paying the premium on a lower dollar amount than your horse was worth.

First example: You have dropped your horse in price and entered it in a claiming race with a claiming price less than the horse is insured for. If the horse dies as a result of the race, you will be reimbursed for no more than price for which you were willing to let the horse be claimed. Clearly, then, if you are dropping one of your horses in class (for whatever reason), you should immediately request from your insurance broker a commensurate drop in your “sum insured” and thus your premium.

Now take the opposite case: if you have a horse that is skyrocketing in class (for whatever reason), but you are paying a premium commensurate with a lower class, the insurance company will not “adjust up” automatically to the horse’s value at the time of death (in other words, it’s a one-way road). Worst case: you could have insured your two-year-old for $32,500, then gone on to race him and discovered he was a stakes winner worth (possibly) millions in combined racing and breeding potential – but if you had not readjusted your premium on the horse since his policy was written, you would only recover $32,500 upon his death.

In other words, it behooves the astute owner and trainer to periodically re-evaluate the mortality premiums being paid on all the horses in their stable.

Another cautionary note: The wording of most mortality policies clearly indicates that the owner or trainer must notify the insurance company or its agent of any dramatic change in the horse’s health or condition. The existence of an abnormality or malaise that is unreported can adversely affect – or even nullify – a mortality insurance claim.

An interesting note: The higher-priced the horse, the lower the premium for his mortality insurance may be. In fact, this is quite logical: if you own a stakes-caliber runner, the probability is that the horse will be watched more closely, better cared for, and more cautiously handled… meaning that the risk for the insurance company should be reduced, and the premium lowered accordingly.

CLAIMING INSURANCE

As has been previously explained (see “Claiming”), whoever wins the draw in a claiming race is completely liable for the horse they are claiming as of the instant it leaves the starting gate. If the horse has to be destroyed as a result of injuries sustained in the race (within 24 hours or 48 hours, depending on the terms of your policy – and with cause confirmed by two licensed racetrack veterinarians), the claiming owner must still buy the “dead” horse for the pre-agreed claiming price, and even pay the expense of having it removed from the racetrack. In terms of insurance, there is nothing “automatic” or even probable about reimbursement in this case. IF you already have a horse (or horses) at that track which are covered by an annual policy, ask your broker whether or not your policy extends to other horses you may suddenly acquire (i.e., claim). If not, you may want to take out claiming insurance before you enter a claim on a new horse. One problem: you may not be able to get it. Claiming insurance is the loss-leader in equine insurance. It is extended only as an accommodation to owners with large stables already insured, or to trainers with good histories and good relationships with the insurance carriers. IF you can land Claiming insurance, it will cost only .85% to 1% of the claiming price listed for the horse (obviously, a good investment).

SPECIFIED (OR “LIMITED”) PERILS INSURANCE:

Coverage of this type is less expensive but is typically limited to perils from “fire, windstorm, lightning and transportation.” Not covered is any loss due to death from disease or injury (i.e., colic, broken legs, cancer – anything “medical”).

As a rule, the premium for mortality insurance on racehorses is about 5% of the value of your horse.

MEDICAL INSURANCE

Coverage for surgical or medical expense is not currently available for racehorses. Medical insurance IS available for breeding stock, and for young horses not yet in training.

OWNERS’ LEGAL LIABILITY INSURANCE

This type of policy is increasingly popular in a culture that is increasingly litigious. It protects you, the owner, from claims against your person or estate by “third parties” suing for property damage or bodily injury inflicted by your horse. For example, if a fan is standing too close to the horses in the saddling ring and gets kicked by yours, he is – however unjustly – likely to sue you for damages. Your homeowner’s insurance will not cover such a claim, nor will there be any appreciable help from the insurance policy of the facility (i.e., the racetrack, farm or training barn) where the incident occurred.

“Legal Liability Insurance” is bought in increments (up to 2 or 3 million dollars), with the premiums based on the number of horses being insured at one time:

$1 million worth of liability coverage for 1 to 5 horses costs about $750.00 per year. That amount of coverage for 6 to 10 horses would cost approximately $1,000.00 per year.

$300,000 worth of liability, for 1-5 horses, would be about $350.00 per year; for 6-10, figure about $500.00 per year.

If you have vulnerable personal assets of any considerable amount, this type of insurance is clearly worth looking into.

WORKERS’ COMPENSATION INSURANCE

Through a well-planned structure of subsidies, California has been able to keep workers’ compensation insurance costs to horsemen under control. The program is funded by money generated by statute, trainer contributions, and the purse accounts at the various venues throughout the state. The California Thoroughbred Business League (CTBL), a group comprised of racing associations, horsemen’s organizations and fairs, is responsible for overseeing funds that are utilized for providing workers’ compensation relief to California horsemen. Insurance is provided through Finish Line Self Insurance Group, who have handled workers’ compensation for Thoroughbred horsemen since 2011.

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