Insurance, Part Dos

I was going to do a post script in the comments of my last post, but after an illuminating discussion with the agent, I thought I should just spread the wealth (if a modest amount of information - from a salesmen - can be considered wealth).  If nothing else, I suppose it's interesting...

Thank you to everyone who commented on the last post, it's amazing how much I rely on the hive mind of experience when approaching something I have little to no experience with in horsey land.  Oftentimes anecdotal evidence is all I've got.

It's clear to me that if you ask a herd of horse people "should I get Loss of Use coverage?"  You could simplify their answers into one, dull roar of "NO."

And I understand that.  I really do. 

It makes sense,  it makes sense that its hard to prove a claim for payout, that the vet exams are crazy and that it's hideously expensive for not that great a benefit...

But there was just something in the back of my brain that was still intrigued by it...

So with full acknowledgement that I am (somewhat) looking for an answer that reinforces what I want to hear... after a bit more digging - here's what I've found out.

Loss of Use as a category of coverage, has changed pretty dramatically in recent years.  The traditional coverage, (and as I recall it from my Junior years), was extremely expensive, with premiums that surpassed the cost of mortality and medical, usually averaging around 6-12% of insured value, depending on the declared "use." 

Once established, Loss of Use would pay out (usually 80-90%) for anything that ended a horse's career.  Arthritis, soft tissue, trailer accident, old age, you name it.  The product was aimed at the top competitive sport horses (really those competing at international levels).  Meaning that both the realistic insured value, and the cost of campaigning such a horse was well beyond the expenditures of the average mortality/medical purchaser. 

Because "cause" was so broadly defined, and included "internal" issues such as arthritis, the initial vet exams were extensive, often significantly past what a normal PPE would require (though maybe not if you were investing in an International Grand Prix star...).  This makes sense when I think about the insurance companies needing to know if there were any signs of degeneration or hints of conformation issues that would lead to joint issues/breakdown/etc. 

Additionally, the high payout values meant that paying a claim was a very expensive decision for underwriters, so often there were second opinions needed, affidavits signed, etc. 

Basically, everything about traditional Loss of Use was in line with the horror stories I've heard from both vets and other owners. 

But

It seems as though the product itself is rather different these days.  I'm not certain, but I don't think that any company offers the old Loss of Use product I've just described anymore. 

Instead, it has evolved into an "external" Loss of Use coverage, that will not pay for things like arthritis, or kissing spine, or any degenerative condition.  What it does cover is any "accident" or sports medicine injury.  You horse falls in pasture, your horse whacks it's leg on a fence, your horse flips over trying to load in the trailer, you horse contracts a respiratory virus that leaves permanent damage... Basically anything that happens to your horse, is (in theory) covered.  Because those internal, degenerative issues are no longer covered, the extensive initial vet exams also disappear.  They don't need squeaky clean x-rays, because.. well, they doesn't impact their liability.

My immediate question about the new coverage was Prairie: Soft Tissue injury, but without a discernable "accident"... more of a slow sprain or overuse injury.  Is that covered? How long do you wait to pay a claim, how do you even make a claim?

Essentially, she is my litmus test.  Would Loss of Use pay out on Prairie if I had it. If no, I don't want it for any horses going forward... if yes... that's interesting.

It appears, given my description of Prairie's scenario, that Loss of Use would likely have paid out on her current injury (in addition to medical also having covered the diagnostics and treatments... facepalm). 

Spa days like these would have been more affordable...

One of my concerns was the argument that a soft tissue injury could be possibly attributed to conformation and not considered a sports injury... But the agent said that she's never heard of such a thing. 

In exploring the issue of making a claim further, she clarified that second opinions are no longer part of the process, it's simply a matter of the treating veterinarian declaring "horse not sound." 

In Prairie's case, my vet would need to send a letter accompanied by a record of treatment and diagnostics performed.  Prair would probably need another ultrasound so show that there is still damage to her suspensory, but that's it.

But what about injuries that just take 4 years to heal? Do claims have to wait a certain amount of time??

Maybe.  She said she hasn't seen a claim (with the current product) ever ask for more than six months of rehab before paying out.  Which means we would just being coming up on the long end of that time frame...

Certainly something to think about. 

Also important to remember that payouts have been reduced to 60% of insured value... so you don't get full replacement cost... but I heard one other owner describe the payout not as shopping money for the next horse, but $$ toward the happy retirement of the one who lost their job - an interpretation that resonates with me from a planning perspective.

So, for my purposes (peace of mind), the newer Loss of Use product is still very intriguing to me.

As a parting thought, the agent offered one more thing to think about - which is that she's seen a lot of owners choose to add Loss of Use for the first year or two with a new horse (especially imports they may or may not have seen in person...) while they evaluate how "sound" of an animal it is.

Again, maybe I'm looking for reasons to pull the trigger, but especially when I think about the notion of a horse who is (maybe) younger, and (maybe) doesn't have an established show record to suggest prolonged soundness at a certain level of work... It doesn't seem all bad...

So that's my update on Loss of Use.  Reduced coverage and reduced payouts have simplified the process of obtaining it, and also claiming it.  Those changes also allow insurance companies to offer this type of policy at a much more affordable rate than the original policies that were really designed for only the really expensive, really elite athletes in our sport.

In the end I think my decision as to whether or not I add a Loss of Use policy to Mortality and Medical coverage will depend on who the new horse is and what they've done. 

Food for thought.