Not all that long ago, a discussion began in our new barn about the cost of insuring the facility. My brother, John, asked the question, as he had experienced a fire on his farm that totally destroyed a building. He’s a crop farmer, so there were no animals involved, but the building was a total loss.
It was insured, but only for $240,000, and that policy had been in effect for quite some time. When he and his partner went to replace the building, they were hit with estimates from contractors beginning at $450,000. The building was never replaced.
So, as he was admiring our new barn, he asked what we had it insured for. “Well,” I said, “funny you should bring that up because I’m not sure we’re adequately insured. It’s been on my to-do list.”
“So, how much?” $80,000, which was the maximum the company would allow on our policy.
“You better think again,” he said. “This building’s got to be worth almost twice that.”
“But the insurance company wouldn’t go any higher,” I countered.
“Who’s your agent? What company?”
I gave him the name of the agent and the insurance company, and he said I had the wrong kind of company handling my insurance needs. I needed farm insurance, and that company doesn’t know a thing about it, which was probably why I had gotten such bad advice. He gave me the name of his agent.
“You heard about the horse who got out and killed last month, didn’t you?” he asked.
Yes, I had, and I was horrified.
“Well, they’re being sued for several million dollars, I heard,” John said. “Heard their homeowner’s won’t cover it. Are you insured for that?”
Well, we weren’t, but we are now. We were insured if a delivery man fell while bringing us our new saddle, but not if he got into a confrontation with the horse it was going to go on.
As it turns out, our policy had limitations when it came to farms and animals. I had asked questions at the time, but not really read the policy . . . It was sort of stupid on my part, as I realized that certain breeds of dogs raise homeowner premiums and that if your dog injures someone it could make him uninsurable. Why wouldn’t I think about horses?
Many of us think we have “good” insurance when in reality we don’t know because (thankfully!) it’s never been tested.
I remember a friend laughing about the “insurance” on her iPhone. She said she’ll never do that again. The screen cracked, so the insurance replaced the screen. About a year later, something else happened to the phone. They replaced it – because they had to – but the company said they would not insure her phones anymore. The insurance payments were almost the same as the cost of the accidents. So, was it worth having?
It is your responsibility to be certain you are adequately and properly insured – property and liability – and that you look at the policies every few years to be sure they still meet your needs. Remember, construction costs increase every year, as does pretty much everything else. By the time we completed our own enhancements to our barn, the insured amount was nowhere near what we needed. It’s now insured for $140,000.
So, your first step is to be sure you are adequately and properly insured, with policies that fit your unique situation (remember, Connecticut is considering horses dangerous now, so don’t neglect liability).
Your agent can help you with the assessment of the property and need for liability – but be absolutely certain you choose someone with a background in farms and, preferably, horses, too. Stolen tack might be replaced under your homeowners, but a loose horse who damages someone else’s property may not be covered. Find out.
Read the policy, and be especially careful if you’re looking at a “health or mortality” policy for your horse. We have heard many stories from horse owners who thought that an injury to their horse would be covered until they put in a claim and the insurer pulls out a loophole, usually an exclusion of a pre-existing condition.
If that happens you may find the battle to get your money isn’t worth the amount you have to pay the attorneys. You have options, of course. You can write to the underwriter, agent and the agent’s company. You will absolutely have to have submit veterinary records proving your point.
If that doesn’t work, you probably can contact your state insurance commissioner and present your evidence that this was not a pre-existing condition. There are forms to fill out and a small fee to pay, but it may be worth it. Most states take this type of issue very seriously.
You can also usually take an insurer to small claims court if it's a squabble over something like pre-existing conditions. It doesn’t guarantee you’ll get the money either, but it does make it official if you win the case. Most insurers aren’t going to want a case like that on record, so it may help. They may decide it's not worth the expense and bad publicity of fighting you. However, you're up the creek without a paddle if the amounts you set on the policy are not enough to cover your needs.
Paying insurance premiums isn’t a “fun” use of your money. It’s also something you hope you’ll never need. But it’s horrible enough to experience a loss of some type without finding out you weren’t adequately covered. And a liability case where someone was injured or killed could claim most of the assets you've worked your life to protect. Take a few minutes and check your policies, now, before you need them.
Susan Quinn, Esq., a dressage rider and Horse Journal contributor, wrote three excellent articles on insurance for us, and they won an American Horse Publications first-place award. They’ll help you ensure you’re insured properly.
Here are the links to those stories: