To an uninvolved economy major it might seem a no-brainer: Don’t waste $300 a year to insure an $800 item. But we’re not talking about a used car. What if your horse becomes ill, and surgery could save his life? Could you afford the $4,000 cost?

Rather than risk putting yourself through that decision and maxing out your credit card, consider equine insurance. Although human health-care insurance may be reaching national-crisis levels, the animal side of things still looks pretty darn good in comparison.

Put It To Use
Get full coverage Use agreed-value coverage; rewrite as necessary. Skip loss of use

Pick An Agent First 
The first step is to find an agent you understand and feel comfortable with. Stick with equine agencies. They know their horse terminology and can help address your specific needs. Ask around, calling veterinarians, clinics and friends. Read advertisements.

The Internet is helpful, as many insurance agents have thorough sites that include sample policies.  Some, like Hallmark Equine and Smith-Embry, even offer online quotes. Once you narrow down your search, pick up the phone and talk with the agent.

A good agent will help you sort through the finer points of each policy and make recommendations. Agents can either represent one company or many.  As long as your agent is an equine specialist, it doesn’t matter how many companies he or she represents.  What is important is that the agent understands that you will want different coverage for the broodmare you’re sending away to be bred and the lesson horses you keep on the farm.

A. M. Best Ratings

Think of A.M. Best as the Horse Journal of insurance companies.  A.M. Best rates companies according to their strengths, and their scale goes from F (In Liquidation) to A + + (Superior.)  You don’t necessarily need a company with an A + + rating—and there are not too many—but there are plenty who achieve an A.  Stick with those. Their easy-to-use website is at www.ambest.com.  You do have to register to see the ratings, but it is free.  Simply enter the name of the company you are researching, and the search engine will return its rating.  Remember: You’re looking up the insurer, not the agency.  So look for United National, not American Equine, for example.

Getting Quotes
Beverly Smith-Embry, of Smith-Embry Insurance Associates, says that many equine insurance companies have exited the insurance market over the past few years.  While in the past, there were about 50 underwriters for equine insurance, there are now only about five, and their backing can typically be traced back to Lloyd’s of London, one of the world’s largest insurers, says Dick Grossman, president of Continental Bloodstock.

Realizing the number has shrunk will help you understand why you may contact several agents to only obtain the same quote. The smaller field can make it tougher to insure a less-than-healthy horse. Exclusions are required for prior-health conditions, and companies have tightened their underwriting requirements on each risk submitted. Any anomaly, no matter how  insignificant, must be disclosed.

Smith-Embry says that on a positive note, the fact that many agencies no longer require a vet exam for lower-valued horses (usually less than $50,000) has freed up vets’ time and saved customers money, since they no longer have to have insurance exams every year at renewal.  Instead, the owner’s health statement  provides documentation for any prior health conditions and with full details provides the insurance company underwriters sufficient information to review each risk.

EQUINE VALUES
One of the first steps in insuring a horse is determining his value.  Of course, your horse is priceless to you.  But how much would he cost if you tried to buy him today?  You can contact an equine appraiser, but in most cases, your agent will help you figure it out.  What you bought him for is the first guideline, but his training, show records, breeding record, and appraisal are all factors as well.  Value increases with show, race, performance or breeding records.  Some companies use formulas.  For example, a stallion could be valued by the number of mares bred, times his stud fee, times a factor of 3. 

Age is another factor.  Companies will generally offer full mortality up to age 17 or 18.  Rates may increase once a horse is over 12 or 15.  When cost becomes a factor, you’ll start decreasing the amount of insurance to the fair-market value of older horses.  You may also decide on special accident or specified perils on older horses.  

A policy may be for the agreed value of a horse, which means that you would be reimbursed for the amount mentioned in the policy.  If your horse is insured for the actual cash value or fair-market value, he is insured for his worth at death, which could be more (added training, show wins) or less (companion animal). 

Insurance-Policy Players

The insurer: The company that backs your policy.  The underwriter: The company that sets the rules and rates for the policies.  The agent or broker: The person who sells the policies.  There are hundreds of equine-insurance agents but only a few insurers.   For example, Hallmark Equine Insurance Agency uses American Equine Insurance Group (AEIG) as an exclusive underwriter. AEIG, in turn, is represented by many independent brokers/agents. You deal directly with the agent or broker.

This means that if your $10,000 horse is insured for his agreed-upon value of $10,000, you collect that $10,000 even if he spends the last months of his life on stall rest from an injury.  But if he’s insured for his fair-market value, you would collect much less—an injured, “useless” horse isn’t worth $10,000.  We recommend you stick with the agreed value, and get your policy rewritten if training or athletic achievement changes his value substantially.

Policy Types
What kind of insurance do you need?  Mortality insurance reimburses you if your horse dies. Most policies cover any cause of death, from colic to fire.   But only buy as much coverage as you need.  You can keep your premiums (what you pay each month) down by insuring 75%.  The reverse does not always work: You may not necessarily insure your horse for much more than he is worth, unless you can prove this added value when you file the claim.  Insurance companies will not pay on a mortality policy if you decide to put your horse down without trying to save his life.  This means you may have to do all you can to save him. You could wind up with medical bills as well as a dead horse, if you only have mortality insurance. 

Mortality provides coverage for death of an animal resulting from accident, injury, sickness and disease.  Major exclusions in mortalities policies are usually neglect, intentional destruction, war and nuclear explosion.  Some companies require that your horse be given the West Nile vaccine, and some require Quarter Horses, Appaloosas or Paints with Impressive ancestry to provide negative HYPP test results before they will sell you mortality insurance.

A subset of mortality insurance is called loss-of-use.  It’s mostly used for expensive show horses or racehorses.  If you insure your jumper for loss-of-use, it means that you want to collect if he can no longer jump.  But many policies dictate that the insurance company can take possession of the horse in that case, or you would take a lower reimbursement fee.  This means that the company could take the jumper (who, let’s say, has the potential to be a great dressage horse) and sell him.  We don’t see this as commonly useful.

Limited mortality coverage provides coverage for death of an animal resulting from “perils,” in insurance terms, such as fire, lightning, vehicular collision, extreme weather such as hail, earthquake, or flood, theft, or a building collapse.  (Some companies include theft under their regular mortality coverage.)  This is a good option if you want to insure an older horse, but it’s otherwise not too helpful. 

Major medical insurance is not based upon the horse’s value, since veterinarians charge based on the cost of the procedure, not the value of the horse. 

Major medical does not include things like teeth floating, worming, pre-purchase exams, or other everyday procedures.  It also excludes any surgery you elect to do, such as having a Caslick’s done on a mare, cosmetic surgery, and any congenital condition like a contracted tendon.  Sometimes colic patients can’t be insured until a certain amount of time has passed since their last attack.

Don’t assume that a horse who has been hurt or ill can’t be insured, however.  An old injury or preexisting condition can mean that you wind up with a 12-month exclusion for that specific ailment, assuming that it will heal.  If your horse has a bowed tendon, the policy will exclude that bow for a year, but then include it.   

Surgery-only policies will cover your horse’s surgical bills, but not the tests and care that come along with it. Surgical insurance is available to add to the mortality policy for those who don’t want major medical or for those horses that aren’t eligible for major medical.

We think this policy type is somewhat penny wise and pound foolish, because the amount you save is disproportionate to the amount you will spend if something does happen to your horse.  Get full coverage insurance, or add a surgery-only policy onto a major medical one to give you more coverage in case of surgery.

Colic often used to be covered under a special clause, with some insurance companies providing emergency colic surgery coverage automatically with mortality insurance, whether or not you buy major medical.  Blue Bridle, Horse Insurance Specialists, Hallmark, and Smith-Embry all provide some version of this.  Maximums are usually around $2,500 - $3,000.  

Grossman says that this practice is growing less common as companies include colic surgery as part of their major medical coverage.  He says that it was originally designed to encourage owners to react promptly to save the life of the horse when colic struck. 

Lance Allen, the president of Agri-Risk, says that they don’t offer colic riders because they have found it to be less than satisfactory in terms of what is actually paid for on the customers’ behalf, and it increases the initial cost of the mortality policy for the consumer. 

We agree and think it’s better to go ahead and get major medical insurance, because plenty of other things can happen to your horse besides colic, and major medical covers more than the bonus colic coverage does. 

The cost of surgery and follow-up care can be astronomical.

If you’re insuring a foal, you will find that the rates for babies from 24 hours after birth to 30 days of age is higher than the normal rate.  The risk is greater for young horses whose immune system is sometimes less likely to ward off and recover from illness.  Many people insure foals for the cost of the breeding.

Premiums
How much will all this cost?  To say “it varies” understates the case wildly.  In the broadest terms, mortality coverage will often run somewhere between 2 1/2 to 4 percent of the horse’s value.  So if your horse is worth $10,000, you will pay somewhere between $250 and $400 a year in premiums.  (Many insurance companies have a minimum of $200 a year in premiums.) 

The rate can also fluctuate depending on factors such as usage, age and breed.  As you can imagine, a racehorse would have a higher rate than a trail horse, because his life involves more risk and harder usage. 

Avoid excess and surplus line carriers.  Their rates look appealingly cheap, but the taxes that get added to their premiums make them expensive.  Also, if a surplus company defaults, the state insurance won’t pay your claim. 

Once your horse is insured, keep your agent abreast of any problems.  Every policy says that if there is a malady that is out of the normal stream of things, the owner needs to inform her insurance company.  So cover yourself and report any problems to your agent.  Then, the ball is in the court of the company to follow up on the incident.  Don’t violate the integrity of your policy’s coverage by withholding information.

Bottom Line
If you don’t think you can afford to pay for every potentially lifesaving step at a time your horse becomes ill, get major medical insurance, which goes hand-in-hand with mortality insurance. Mortality insurance will give you the funds to replace your horse if he dies, which is why we think agreed value is a wise policy choice. But, unless your horse dies of a sudden accident, major medical coverage is doubly vital.

Regardless of the original cost or value of your horse, his potential bills are the same as those of the costliest racehorse. We believe that in most cases, you can keep it simple and not buy extra surgical coverage or loss-of-use policies.  So, stop procrastinating and get that policy you need.