The Insurance Question

The Germany trip is getting closer, and my to-do list is (slowly) getting checked off.  Some things are easy (get new gloves that don't smell like dead rats).  Some things are harder (get a haircut).  Why scheduling and actually getting a haircut is an insurmountable task for me, I don't know.  but it is.

Also on that list is getting my ducks in a row for an insurance policy that's ready to bind asap.

In all likelihood, even if we find a magical unicorn beast that we love, the deal will probably not be finalized until I'm back in the states. But if it is.... I want to have an insurance policy ready to bind.  Immediately.

Looming in the back of my mind is a friend bought a spectacular horse overseas only to have her arrive with a career ending suspensory injury.  Whether it occurred before or during transit, she'll never know, but the horse wasn't insured during travel and everyone was sad. 

You might remember that Prairie is also not insured.  Not ideal when dealing with soft tissue injuries... but formerly my "herd" was large enough that I consistently beat the annual premiums by paying my own vet bills and I have always carried a "rainy day vet fund" for emergencies.

Now, with a diminished herd of one, a potentially expensive horse purchase, and the taste of freshly written checks to the vet in my mouth - the new horse will for sure be insured. 

The question is - for what and how much.



How do I love thee, let me count the ways.... in dollars.

For those who haven't dabbled in the insurance realm, most horse owners are primarily concerned with acquiring major medical coverage.  Insurance companies are smart, and know that there is NO MONEY to be made betting on the chance that horses might stay sound (hahahahahaha), so medical coverage is only offered (to my knowledge) on top of mortality coverage.  So mortality becomes your primary policy, and medical is a box to check on top of it. 

Mortality seems to have a fairly standard going rate of 3.5% of insured value for a competitive sport horse (or $3,500 for a $100k horse). I'm using a $100k valuation because math is really easy that way. 

Medical is relatively cheap, and seems to vary from $400-$1000 depending on your state, co-pay and annual limit options.  in Washington, for a $100k horse, no co-pay, higher deductible and a $15,000 limit it is about $500.

However, since lots of owners seem to use mortality as a stepping stone to medical, many choose to under-value their horse in order to lower annual premiums.  Many I've spoken to operate under the assumption that while an accident resulting in death is not that likely.... budget crippling vet bills are almost a certainty.

So, why would you want to properly represent your horse's market value?  Well, if you are adding "Loss of Use" coverage, which exists to reimburse (part) of your horse's value if something happens prevents them from doing their job (let's say jumping) but doesn't kill them (like, let's say a soft tissue injury...). 

The ins and outs of Loss of Use vary from agency to agency, but typically they cost between 2% and 4% of insured value and most pay out between 50% and 65% of your horse's insured value if the claim is honored.  Some have clauses that allow the insurance company to become the legal owner of the horse, and others offer a lower payout that doesn't require you turn over your horse....

I have heard wildly different stories about Loss of Use claims.  Some say the policies are a money pit and it's nearly impossible to get the insurance companies to pay out (which I understand..) and others say that it has been what's allowed them to retire beloved partners while still providing some shopping money for a replacement...

I have a personal friend who got the Loss of Use payout on her eventer - only to have him return to competition soundness (several) years later and enjoy a second career at the lower levels...

I have also heard stories where horses were NOT sound for their upper level jobs, but could still perform at 2'6" so the insurance companies declined claims stating the horse was still a "jumper."  (this makes sense to me).

So it's all a matter of how you like to spend your money and where your anxiety rests at night. 

In general, my family LOVES insurance.  We insure everything, sometimes more than once!  We certainly aren't good enough to use it as an investment strategy, but we mostly operate under the assumption that you should buy as much insurance as you can possibly stand. 

So, to take this back to horses... let's look at what that might be. 

A dreamy $100k pony comes home with a $3,500 mortality policy, with an extra $500 for a medical policy... The company I'm currently thinking I will go with offers limited Loss of Use at a 2% rate, which is another $2,000 annually (providing a $60k payout).  That's $6,000 a year for fairly extensive coverage - a check that makes me choke a little bit to think about writing.  (of course, the total cost for a $50k horse drops to $3,250, a $20k horse to $1,800...)

But let's pretend you have a magical horse who never gets hurt and so you hardly utilize your medical coverage on a regular basis.  (if you find this horse, please tell me).  Even assuming no benefit from the medical coverage, you'd still have to pay 10 years of premiums, before you had put more in than you would potentially get out in a Loss of Use claim. (and that assumes 10 years of no career ending injuries).

TEN YEARS.

I know there are horses out there who manage careers much longer than that, but sadly I haven't had one of those since my pony back in middle school. 

So I'd love to hear if anyone has had any good or bad experiences with Loss of Use.  I'm still very much on the fence as to whether or not it's something that will offer peace of mind or if it's unlikely to ever be utilized...