Liability Insurance For Horse Owners

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With even frivolous lawsuits costing significant funds, you need to be sure you’ve got all your business needs well covered. We talked with Kate Masterton, a horsewoman and attorney, about why a seemingly backyard horse business should be concerned.

Do you need a stable license as soon as you keep even one horse who is not yours'

Stable licensure, as a general matter, is within the purview of states to regulate. Because in the United States horsemeat is not considered a consumer food product, there is no federal standard of licensure. So, it’s dedicated to state control. Not all states require licenses, and some states offer licenses as an optional credentialing device. It is important that you learn what the law of stable licensure is in your locality--I say locality because zoning laws, which are local — county, parishes — also can require licensing as a part of their zoning regulations. So it is important that you check on state stable licensing requirements and those in your particular locality.

The other thing you want to check on is whether your state law considers you to be ”in trade,” because you may need a trader’s license. In Maryland, stable licensing is optional, but stables that are licensed use it for credentialing to distinguish themselves as leaders within the equine industry.

What is the minimum you need to protect yourself if you board another person’s horse'

First, you should be adequately insured. That can encompass a number of issues. Sometimes, homeowners’ policies will cover injuries from horses and sometimes even from a horse not the homeowner’s. It’s important to read every insurance policy carefully to learn what is or is not covered. I also generally advise everybody--not just horse owners--as a means of asset protection to obtain an umbrella policy, which is intended to cover much of what would not be covered by your run-of-the-mill homeowner’s policy.

Homeowners may be able to add a rider — no pun intended — to a policy to provide coverage for equine operations, or they may actually have to purchase a farm-liability policy. There is tremendous variation among the states, because there is tremendous variation in insurance laws and in the way horses are treated under states’ laws. If in your state they’re classified for all purposes as livestock, then it’s unlikely that homeowners’ will pay.

If you’re boarding another horse, you should have a written boarding agreement, and ideally you want that agreement to cover every situation that is foreseeable, including failure to pay board.

It should include what medical care and documentation will be required before the horse may enter the property, such as vaccinations and proof of same. It should require contain a comprehensive release of liability. It should authorize the property owner to have full discretion when to call a vet, farrier, or other health-care professional, and provide that the horse owner agrees to pay whatever costs arise from the property owner’s exercise of that discretion.

What is the worst-case legal scenario that can happen if you board a horse'

The worst case is that you can lose everything. If you’re not adequately insured, if you don’t have adequate paperwork, if you are negligent, if your property is not titled so that it is protected from creditor’s claims against one individual property owner, someone can register a judgment and place a lien on that property. You could lose it all.

That’s why you want many layers of protection. You want the releases of liability. And if that’s not enough to prevent someone from suing, the insurance buys you a lawyer, not just a payment in case of a claim. The insurer steps in and mounts a defense, which is worth a lot. You could be talking $30,000 to $50,000 in legal costs. It’s worth mentioning that whenever you deal with horses you must be concerned with asset protection from creditors.

Proper titling of your real property can go a long way toward protection from creditors. For example, property held in an irrevocable trust, or as tenants by the entireties, cannot be reached by a creditor of one of the resident horse enthusiasts.

How do you protect yourself if you’re not a riding academy, but may give a few backyard lessons'

My answer is the same. Anyone going near those horses needs to give a signed release. Both of the child’s parents should sign that release. There should be a lesson agreement, just as you would have a boarding agreement, which addresses what is reasonably foreseeable. It is not only possible but likely that the student will fall off. Say so in the release. Some of the releases I write scare people, but the more completely you outline the hazards, the more likely your release is to stand up in court. So don’t be shy.

There is a special form of insurance for riding instructors, and the question should be asked, how much would that cost me' I believe insurance is one of the best investments you can make. If you’re only giving lessons to two neighborhood children, the premium may be laughably low, and well worth obtaining.

Remember, though, you can have all the documents in the world, but the best protection is having a well managed barn, and choosing with care whom you mount on a horse.

What is the cost for having these kinds of contracts drawn up'

It varies tremendously. It varies by area of the country, it varies with the expertise of the lawyers drafting the contract, and to a great extent it depends upon the client. Some attorneys charge on a flat-fee basis. Most attorneys who practice transactional law charge by the hour, and when an attorney charges by the hour, the client has a tremendous ability to control costs.

Some clients are well organized, provide the attorney up front with all information requested, and are generally efficient to work with. Others are quite the opposite, which can really drive up the bill. They badger the attorney with constant emails and phone calls, or they repeatedly change their mind.

My particular favorite is the husband and wife who can’t agree, and then they go back and forth. I have some relatively standard contracts, which can be done for a client in a minimal amount of time, but if people want special things provisions drafted in, the more costly it is likely to be.

The same is true if you are at a time of change in the law. Pending be fore the Maryland General Assembly at this time are proposals to alter Maryland from a contributory negligence state to a comparative negligence state.

Now we’ll have to start drafting in provisions to every concept contract which addresses comparative negligence, and shift that responsibility back contractually. It’s unclear whether courts would honor that. The law is constantly changing.

I have a newsletter I send out to my clients to keep them appraised of changes in the law.