Introduction:
Insurance is like the airbags in your car, you hope that you will never need them but when you do it is too late to change them if they do not work. It is therefore worth spending a little bit of time and effort to make sure that you buy the appropriate level and type of insurance at the outset.
This guide is designed to assist horse owners wishing to insure their horse, in understanding the types of cover available and what you need to do to make sure that you have effective cover for your requirements. Please note this is a general guide and policy terms and conditions will vary from company to company. Please always read your insurance documents, they are often long and boring documents but it is the only way to ensure that you have the cover you want.
Main types of cover available:-
- Veterinary Fee Cover
- Death (All Risks Of Mortality)
- Theft
- Permanent Loss of Use
- Public Liability
Veterinary Fees Cover:
For many owners the vet’s fee cover is the most vital part of the policy as a result of the ever increasing cost of veterinary diagnostics and treatment over the last 10 years. The statistics are that 1 in 4 horses make a claim on the vets fee cover each year and the average claim exceeds £1000 and it is often the case that the vet’s fee claims outstrip the value of the horse. The increased level of claims in this area and increased costs of veterinary treatments have been largely responsible for the ever increasing premiums on horse insurance but it is probably true that most of us can get a vet for our horse quicker than we can see a doctor or obtain referral to a specialist. The other factor not often appreciated is that most claims are for lameness and 80% of the cost is for diagnostics not treatment and whilst the technology for diagnostics (MRI bone scans etc) has increased, sadly the number of treatments and cures has not progressed at the same rate. However without a correct diagnosis one cannot be certain that the treatment option chosen is the best one for the horse.
So what do you get for your money?
Vets fee cover pays for non-routine vets bills above an excess for an accident, sickness or disease that first occurs after the inception of the policy. This is probably the area where the cover varies most from company to company and policy to policy. The cost of this cover will increase as the demands on the horse increase for example vets fees for an intermediate eventer will be more expensive than those for a pleasure hack. Some companies offer a variety of different levels of vets fee cover to suit all budgets. No policy will pick up all the costs and some policies may have restrictions on diagnostics or alternative/complementary treatment and others may exclude cover for all incidents other than those caused by an accidental external and visible injury. Generally like most things in life you get what you pay for and a cheap policy may offer less cover, some economy packages offer very good value if you are willing to pay a higher excess or cover some of the Vet’s bill yourself.
The checklist when comparing vets fees cover options:
Limit per claim:
normally £2000 - £5000, some policies have an additional limitation of the value of the horse. e.g. Limit £5000 per claim or sum insured whichever is less. Therefore a £1250 horse only gets £1250 vets fee cover not the £5000 max limit!
Maximum limit during policy period:
Often unlimited but worth checking.
Excess:
The amount you pay is normally a fixed amount of £100 to £500 but can include co-insurance where you pay a percentage of every claim above the fixed excess.
Complementary treatment or hospitalisation limit:
Is either included for free or as an optional extra, this type of cover is often limited to a set amount dependant on your insurer.
Limits on Diagnostics:
Some policies limit diagnostics to very low amounts, and since 80% of the bills are often diagnostics, it is worth checking in your Terms & Conditions. Also look for limits on MRI scans as these are very expensive.
Accidental External Injury Only (AEIO):
A limited type of cover often applicable to Vets Fees Cover Page 4 Tel: 0845 230 2323 Email: ask@kbis.co.uk or visit www.kbis.co.uk Veteran (older horse) and budget policies. AEIO only covers for open surface wounds and conditions which are directly attributable to these wounds. There is no cover for sickness or disease.
Settlement time scale:
This largely depends on your insurer but should be relatively quick (within 1-2 weeks) provided all the right documents are received by the insurer.
Time limit:
On vets fee claims normally covered for 12 months from onset of injury or illness.
Making a vets fee claim:
Advise your insurance provider at the next opportunity during working hours. Most should accept this by phone, fax or e-mail. It is always best, where possible, to obtain an estimate of the cost of the proposed treatment from your vet. You should notify your insurance provider of the condition as soon as possible checking that there are no specific exclusions to your policy or requirements (in terms of diagnostic treatments) made by your insurer which may affect your claim. Typically your insurer will not confirm that a claim is covered by telephone, you should try to supply your completed claim form and preliminary invoices as soon as possible, this will help you to ensure that you know about any un-insured costs at the beginning of your claim. If your claim exceeds the maximum benefit (claimable amount) you will need to pay the vet for these additional expenses. It is appreciated that in emergency situations it is not always practical to provide a quote. A referral, surgery or complementary treatment may necessitate the owner obtaining prior approval from the insurers and you should make contact with your insurance provider at the earliest opportunity. After the initial contact by phone, details from your vet of the surgery/treatment or where the horse is to be referred along with current case history should be submitted to the insurers in writing (fax/letter or email).
Payment for veterinary treatment covered by an insurance policy can be made in two ways:-
- The Insurer will indemnify (pay) the assured (you) less the excess and any un-insured costs.
- The Insurer will indemnify the vet on behalf of the customer less any uninsured costs. In this instance you should pay your excess to the Insurer.
Option 2 may not always be available and is largely dependant on the insurer, please bear in mind that the insurer does not have any obligation to do this. Your vet should charge the same fees whether your horse is insured or not. Charging insured clients a higher amount than uninsured clients is ethically unacceptable. In all emergency and critical situations the welfare of the horse should be the primary consideration and appropriate action or treatment should be carried out in consultation with the attending vet.
All Risks of Mortality (ARM):
Pays out if the horse is killed, dies or has to be put down on humane grounds by a veterinary surgeon.
Sum Insured and Market Value:
Most policies pay out for the market value of the insured animal at the time of loss up to a maximum of the sum insured. When you first insure your horse, if newly purchased it is easy to determine the current market value as the purchase price. At renewal each year you should alter the sum to refl ect its current market value taking into account age, performance and competition results. This could save you money; if you are over insuring your horse you are paying more premium than you need to. Some owners of successful competition horses choose to under insure their horse to save money and only cover the horse for example at the cost of a youngster to replace it. However most insurance providers will not accept a high value horse that is insured for a nominal value just to get the vets fee cover as high-valued horses represent a higher risk.
Agreed Guidelines by the British Equine Veterinary Association and UK Equine insurers for the destruction of a horse on humane grounds:
These guidelines apply to the intentional slaughter (i.e. destruction on humane grounds), of a horse with insurance cover for mortality. They do not refer to uninsured horses, or when an owner wishes to have a horse destroyed for economic reasons. They do not apply for permanent loss of use, which is a separate benefit with entirely different procedures.
Basic principle:
In order to satisfy the requirements for a valid claim the affected horse will need to meet the following requirements: “[That] the insured horse sustains an injury or manifests an illness or disease that is so severe as to warrant immediate destruction to relieve incurable and excessive pain and that no other options of treatment are available to that horse at that time. Where a horse is exhibiting signs of severe and unremitting pain that can no longer be managed so that no other options are available for treatment, then it is the veterinary surgeon’s responsibility to destroy the horse immediately”. This essentially is to cover the emergency situation.
In all other cases, (that is where the horse can be provided with effective pain relief, if relevant), the insurer should be contacted to give their prior agreement or to allow a second opinion to be given by their consulting veterinary surgeon. If after seeking the consent of the insurer, the attending vet and the consulting vet cannot reach an agreement, the owner or the attending veterinary surgeon can seek a third opinion by contacting the insurance company again or by following the Complaints Procedure as set out in the Terms and Conditions
Following Destruction:
Most policies require an appropriate post mortem unless otherwise agreed by the insurer. Owners should contact the Insurer to see if it is required before the carcass is disposed of. If the insurer does not ask for a post mortem, the attending veterinary surgeon should positively identify the carcass and confirm the reason for destruction.
Responsibilities:
It is the owner’s responsibility to ensure that the Terms and Conditions of the insurance policy are adhered to.
The insurer’s decision to pay the claim:
The owner and their vet should recognise that their decision to destroy a horse may not automatically result in an insurer paying the insured value of the animal. Not all insured horses are covered for death and as a rule, insurers do not pay death claims for injury, illness or disease where clinical signs first manifest themselves prior to the start of cover. No insurer will confirm a decision to pay a death claim until full details of the claim, including the clinical history have been disclosed, received and assessed. If your horse is found dead or dies before it can be seen by a vet it is essential that the horse is positively identified by the veterinary surgeon against existing records. A post-mortem will normally be required to establish the cause of death. It is important that you contact the insurance provider as soon as possible to allow an independent inspection of the animal if required. With this in mind it is recommended that the carcass is not disposed of until the insurer has been contacted.
Theft:
This is normally included along with mortality cover. It is not a particularly common occurrence in the UK but it does happen: make sure you inform your insurance provider immediately. Nearly all claims will have an adjuster appointed to investigate the circumstances and payouts are not normally made until 90 days after the theft. In the event of a theft occurring you will also need to notify the police as a crime reference number is essential when processing the claim.
Permanent Loss of Use Insurance:
What is Permanent Loss of Use Insurance?
Permanent Loss of Use Insurance-covers the horse if it becomes permanently incapable of performing the tasks for which it is insured. The definition of specific use will vary depending on the individual policy and company, if the owner is not sure of the specific cover they should discuss this with their insurer.
There are two distinct types of cover sold: - Permanent Loss of Use due to accident, illness or disease or more limited cover for accidental external injury only.
The cover is normally sold as 75% or 100% of the sum insured and in the event of a claim you have 2 choices to either keep the horse in retirement and receive a lesser payment or choose to put the horse down and receive the percentage as covered by the policy ie 75% or 100%. The payment if the horse is kept in retirement, varies significantly from a simple reduction based on the residual value of the horse, but normally subject to a minimum of 10% of the sum insured or alternatively a fl at payment of 60% of the sum insured regardless of whether 75% or 100% cover was purchased.
Loss of Use covers an option that will carry a higher premium and at inception will normally require an up to date five stage vetting and depending on the value of the horse will generally require x-rays if over £10,000.
A claim for injury or illness must commence during the policy period and the Loss of Use must be established within the time limits specified by the policy. Loss of Use insurance does not cover for loss of value, lack of potential ability, lack of ability, blemish, behavioural problems or temporary incapacity.
When should a claim be made and what information is required?
Once it becomes apparent that a horse has suffered a condition that may lead to a loss of use claim the owner should immediately contact the insurance provider. A claim form and a report will be required by the insurer detailing the case history (including dates), diagnosis and prognosis including any possible treatments that may have been already tried or are available. This is normally a stressful time for the owner and prompt reporting and completion of the forms by your vet will make the situation easier for all parties.
What action will the insurer take?:
The insurer will normally arrange for the case to be reviewed by their veterinary adviser. The adviser will often discuss the case with the attending veterinary surgeon. From this the insurer will be able to decide if they wish to have a second opinion (examination) or form a plan of action in relation to any treatment regime. Alternatively if the situation has reached a point where both veterinary advisers agree that there is a valid claim, it can be settled promptly. If a course of action cannot be agreed by the two veterinary surgeons then the individual policy will detail the procedure to be followed. Most policies Permanent Loss of Use Insurance Page 8 Tel: 0845 230 2323 Email: ask@kbis.co.uk or visit www.kbis.co.uk allow the case to go to an independent veterinary practitioner agreed by both parties to resolve any disputes.
How long should any treatment be carried out for?
This will normally be agreed by the two veterinary advisers but the condition should be given adequate time to respond to treatment which may be for the full 12 months of cover from the date of onset. However some injuries, such as ligament/tendon injuries, can take several months to assess the permanency of the condition. If the horse needs more time to recover than is available within the extension period, the owner should discuss this with the insurance provider and see whether the policy can be extended to give every chance of a full recovery.
What happens once a claim has been agreed?
Most policies give the owner the choice of keeping the horse in retirement or having the horse humanely destroyed. If the latter option is chosen then proof of destruction will be required from the owner. If the horse is kept in retirement all horses are freeze marked with an ‘L’ within a circle by UK insurers. It is worth checking what continued insurance cover is available if the horse is kept in retirement. Within Europe R is frequently used to denote a previous loss of use claim.
Public Liability:
This is one area, which is an essential for any horse owner. Public liability provides the horse owner with cover for their legal liability to a third party. For example your horse escapes from a field as a result of you leaving the gate open and causes a road accident. The policy would pay for your defence costs and your liability up to the limit of the cover. It is important to realise that this only kicks in if the owner is liable in the eyes of the law. This can be an immensely complex area but in essence you would have to be deemed to be a) legally responsible for the horse at the time of the incident and b) caused the problem as a result of your negligence: cover is normally for £1 or 2 million.
Personal Accident:
You can also buy a very basic Personal Accident policy as part of your equine policy. This only pays out on death, permanent disablement or dental treatment. The usual limits are £10,000 or £20,000 and it is not a ‘catch all’ policy. For full blown Personal Accident cover you will need to buy a separate policy.
Tack & Trailer:
This can usually be purchased along with your horse policy. Do carefully check any excess amounts or security requirements. You must ensure that the security requirements are met or any claim may be invalid.
Basic Pinciples Relating to Equine Insurance:
The Owner:
Is responsible for the welfare of the horse and must also ensure that the Terms and Conditions of the insurance policy are adhered to.
The Insurer:
Must ensure that the policy clearly details the extent and limitations of the cover. They must also fairly interpret the policy terms and conditions.
The Veterinary Surgeon:
Has a responsibility to the horse, regardless of whether or not it is insured.
Policy period:
Equine policies are normally 12-month contracts offering insurance for the specified risks detailed in the policy schedule. At the end of the policy period the insurance provider may offer a new 12 month contract which will need to take into account any changes in the horse’s condition or value and may exclude any condition that occurred during the previous policy period. Underwriters are not obliged to offer renewal, similarly the insured horse owner is not obliged to accept renewal terms offered and can choose to find an alternative provider.
Disclosure:
An insurance policy is based on “Utmost good faith” that obliges both the insured and the insurer to disclose all material facts at inception or during the policy. It is important that the Insured (with information supplied by their veterinary adviser if necessary) makes full and complete disclosure of all material facts relating to the risk if they wish to ensure, that in the event of a loss covered by the policy, the claim is paid. Complete disclosure entails giving all known information about any condition the insured horse has previously suffered so that the Underwriters can make an appropriately informed decision whether to accept the risk or not.
Policy extension:
If a claim is made under a policy for a specific incident or condition the cover will normally extend for 12 months from the date of onset of the problem. There after having fulfilled the policy terms, there is no further obligation to provide on going cover (also see permanent loss of use guidelines). You should check your Terms & Conditions to check your specific policy time-scale as this can differ between insurers.
Pre-existing conditions and exclusions:
By defiinition pre-existing conditions are not covered by the policy. Underwriters may choose not to exclude a specific problem if they consider the risk insignificant but are under no obligation to accept cover on pre-existing conditions and can choose their own terms under which they are willing to provide insurance when the risk is abnormal. Often specific conditions known by all parties are detailed as exclusions on the policy schedule. However just because a pre-existing condition is not specifically excluded it does not mean that it is therefore included. It is important to realise that if the owner chooses to buy a horse with pre-existing problems they will have to accept the risk for these issues themselves and not expect the insurer to provide cover. The wording of the exclusion will normally be based on the advice received on the Veterinary Certificate or on a claim form and every attempt is made to ensure that this is fair and reasonable. The insured’s veterinary surgeon can offer an opinion on the significance of any condition and on an exclusion on the policy, but it is the insurer who will decide whether or not to exclude a specific risk or not.
If your horse suffers a condition during the period of insurance you should notify your Insurer regardless of whether you make a claim. The Underwriters may exclude this condition from your next policy (as it would become a pre-existing condition). It is a popular misconception that exclusions will only be placed on your insurance following a claim, in reality an underwriter can exclude a condition at renewal which occurred during your policy period if it represents an increased risk.
If you notified the condition when it first occurred you will normally find that you are covered on your expired policy under the Veterinary Fee extension (that normally runs for 12 months from the onset). If you fail to notify your insurer not only are you withholding a material fact that may result in your insurer being able to avoid your claim citing non-disclosure as a reason, but you may also fail to qualify for the 12 month extension on vets fees cover. As you can probably appreciate this could be a very costly mistake, therefore it is always best that you notify your insurer of any condition the horse suffers to avoid any nasty surprises!
A Veterinary Fee Incident/Occurrence is defined (by Kbis) as:
An onset of a symptom or set of symptoms, a condition or problem i.e. Lameness/Poor Performance, which is the proximate cause*. The ongoing investigation of this is considered to be one claimable incident regardless of the number of medical conditions diagnosed and the maximum benefit afforded shall be as specified in the insurance schedule. If subsequent investigations are carried out (possibly some weeks or months later) for the same conditions and as a result of the same proximate cause, these investigations shall be considered to be part of the same claimable incident even if the diagnosis changes.
*Proximate Cause - A proximate cause is the first event in a chain of events that gives rise to a claim.
Vetting:
Pre Purchase Vetting:
If you are buying a new horse we would always suggest that your best way of protecting your investment is to have the horse vetted. After the vetting it is worth contacting your chosen insurance provider to see if the comments on the veterinary certificate will result in any exclusions or limitations on the cover before you pay for the horse. This avoids later problems over exclusions, which may be placed on any conditions that are noted on the veterinary certificate. In any event if the horse has been vetted you must send a copy of the veterinary certificate to your insurance provider, as this constitutes a material fact that must be disclosed. Only one certificate can be produced and any facts or issues raised at purchase must be advised to the insurer. Most companies require a current full five-stage vets certificate for loss of use insurance that includes sickness and disease, with accompanying x-rays for horses of higher values (normally over £10,000).
Preinsurance vetting:
Before offering terms and where a horse has been owned for some time, insurers may ask for a health examination to be carried out. This will (either) be for:
- “All Risks of Mortality Insurance”, in which case the BVA form for “Examination of Horses for Mortality Insurance” should be used, or
- For insurance including “Permanent Incapacity and Veterinary Fees Insurance” in which a modified BVA/RCVS form based on a full 5 stage examination is used, specifically for insurance purposes.
All signs of disease or injury should be recorded on the certificate, including old scars and exostosis. In addition, these certificates include a section detailing previous medical history that should be filled in accurately. If in doubt append a detailed medical history/computer printout to the form. No opinion as to suitability for a purpose is put on these certificates and it is left to the insurer to decide on the insurance risk.
The decision to insure the horse is down to the owner, however the decision to offer a quotation and also the specific cover levels remains with the insurer. If the Insurer perceives the risk to be high they may decline to offer a quotation or renewal.
Some Commonly Used Jargon:
Inception date - the start date of the policy.
Extension periods - apply to expired policies when cover is extended beyond the expiry date of the policy normally for 12 months from the date of the onset of a condition.
Exclusions – noted conditions or risks that are not covered under the policy.
Pre-existing conditions - conditions that were manifest before the inception date and are therefore not covered by the insurance.
Underwriter or the insurer - a Lloyd’s syndicate, insurance company or mutual insurer who accepts the risk that the insurance policy covers in return for payment of the premium. The insurer sets the rates and determines the terms and conditions of the policy. The buck stops with the Underwriter or insurer for decisions relating to provision of cover.
Insurance Agent – An intermediary who has a contract to sell and administer policies on behalf of the Underwriter.
Insurance Broker – An intermediary who acts on behalf of the client.
The Financial Services Authority (FSA) – regulates the general insurance industry and authorises individual companies allowing them to sell insurance products. You can check on the registration of a company by visiting the FSA’s website www.fsa.gov.uk/register/ or by contacting the FSA on 0845 606 1234
Financial Ombudsman Service – Organisation that handles complaints by policyholders against insurance providers.
Material Fact – Any information that may infl uence the judgement of a prudent underwriter in his assessment of risk.
Utmost Good Faith – A positive duty to disclose, accurately and fully, all facts material to the risk being proposed, whether requested or not.
Co-insurance – An arrangement by which the insurer and the insured share, in a specified ratio, payment for losses covered by the policy after the excess has been paid. Sometimes referred to as co-payment.
Accidental Visible External and Violent Injury Only – Cover where the assured can only claim on the policy for open surface injuries as a result of an accident.
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