What is horse insurance and how does it work?
Within this article, we will try to demystify insurance terms and hopefully help you to decide on the appropriate type and level of insurance for yourself and your horse.
What is Insurance?
The point of a horse insurance policy is to indemnify you in the event of a financial loss. Put more simply, this means that it is intended to compensate you for your loss by putting you back in the same financial position you would have been in before the loss occurred. For example, your horse presents with symptoms suggesting it may have gastric ulcers, you call your vet, have your horse scoped and the ulcers confirmed. You are then given gastroguard to treat your horse. As long as your horse has not previously presented with ulcers before the policy began and you have selected an adequate level of vets fee cover you would be paid out for the cost of the vets fees less your chosen excess. Therefore, putting you back in the same financial position you were in before the symptoms of ulcers occurred – except paying the excess.
It must also be noted here that the purpose of insurance is to cover you for the unexpected or unforeseen circumstances, any problems pre-existing the start date of the insurance policy will not be covered and an exclusion will be put in place. This is because insuring your horse after a problem has occurred, such as lameness is like insuring your car after you have had an accident and expecting your insurer to pay out the costs of that accident. If insurers were to cover pre-existing conditions the potential ‘risk’ to Underwriters would be so great that it would make premiums unrealistically high and not a viable option for horse owners.
Insurance premiums go into a ‘pool’ which is used to pay claims. The ‘pool’ must be maintained to allow claims to continue to be paid. Underwriters set the premiums at what they believe to be an appropriate price to keep the ‘pool’ at the correct level to continue to pay claims. The majority of the claims we pay are for vets fees, these are the most expensive part of the policy as they cost the Underwriters the most amount of money in claims. The premiums that Underwriters set for vets fee insurance is directly related to the cost of veterinary fee claims. In the current environment (with new diagnostic equipment and technology) the cost of veterinary treatment is going up quickly and at a rate well above inflation. This means that insurance premiums for vets fee insurance have to increase at the same level to cover the cost of veterinary fee claims.
What Should I cover?
There are many different cover options that you can include on your policy, so it is worth understanding them as some may be more important for you and your horse than others.
This covers you for the death of your horse, through accident, sickness or disease. It must be noted that if your horse does not die of natural causes and requires euthanasia, the BEVA guidelines must be met for it to be a valid mortality claim (i.e. you receive payment from your insurers for your horse’s mortality). Put simply, you must have no other option but euthanasia, if you choose to euthanise your horse rather than treat the problem then your horse will not meet the guidelines and your claim will not be paid. More information about Mortality Insurance can be read here. A post-mortem must be carried out to determine the cause of death, the cost of this is the policyholder’s responsibility.
You can buy mortality only policies as well as limit the cover to accidental external injuries only. Other options of cover can also be included and most policies with veterinary fee cover will require you to insure for mortality cover as well.
Deciding on the value to insure your horse for can be difficult, you can read our article about how to determine your horse’s market value and its relation to the sum insured for more information.
Veterinary Fee Cover
Veterinary fee insurance is the most popular cover and usually the reason why people take out horse insurance, it is also the cover that varies the most between insurers so it is important to check the options available carefully.
Choosing the level of veterinary fee cover you want to take out is a very personal decision and will be affected by your view on risk, previous experience of veterinary treatment and the amount of money you wish to spend on your insurance policy.
At KBIS we offer one of the widest range of vet fee cover options, varying in excess, incident limit and additional cover benefits, such as complimentary treatment and hospitalisation. This allows our customers to pick and choose as much as possible.
The first decision is your incident limit, this is the total amount you are able to claim up to per incident, you will find that these generally range from £3,000 to £6,000. A higher incident limit will increase your premium but when opting for a lower level, in the event of a serious injury or illness requiring expensive diagnostics or ongoing treatment, you will need to be prepared to cover some of the costs yourself after your limit has been exceeded.
Next, consider the excess that you are comfortable with. The excess is the initial amount of each claim you will pay, for example, the first £175, £275, £350 or £500 of diagnostics and treatment. By opting for a higher excess your insurance premium will be reduced but in the event of a claim, you will need to pay out that higher excess. Co-insurance should also be a consideration for people looking to reduce their premium, this is where the client would pay a certain percentage of the vets fees after the excess has been paid, this is commonly set at 75% co-insurance, meaning that the client pays 25% of the vets fees after the excess and the insurance company pay 75%.
You may then want to look at any extras such as complementary treatment and hospitalisation costs. Complementary treatment covers such costs as remedial farriery and physiotherapy as long as they have been recommended by a vet, routine physio or dental check-ups would not be included. Hospitalisation costs cover the cost you incur if your horse has to stay at the vets. Both of these options will carry separate incident limits, usually applicable to the policy period and not per incident, but will be counted towards your overall veterinary fee incident limit.
Other factors to consider are whether you want full vets fee cover or cover for just accidental external injuries only, which are any injury where the skin has been broken. Full vets fees would include cover for things like lameness, kissing spines or dermatitis. Once horses reach a certain age or are retired some owners wish to reduce their cover to accidental external injuries only because the risk of a serious lameness occurring when the horse is just turned out in the field is less and often if this did occur the horse would be euthanised rather than treated. Other owners choose to reduce their cover to accidental external injuries only if their horse has had numerous problems resulting in a lot of exclusions.
By changing their cover in this way they do not feel like they are paying for cover that they cannot access due to exclusions. At KBIS we also offer additional benefits for instance if you are concerned about colic surgery then we provide cover for up to £7,500 worth of colic surgery, however, some owners may not want to put their horse through surgery or if the horse has previously had a serious bought of colic you would no longer be covered for this so general vets fees up to £6,000 or £3,000 may be more appropriate.
Aside from your personal preference your horse’s age will have an effect on the veterinary fee cover options that you are offered. Generally, as your horse gets older the cover options available become more limited. Each insurer will vary but at KBIS we can cover horses up to the age of 30 years old for accidental external injury and up to the age of 25 years old for full veterinary fee cover. Vet fee cover is an important consideration so it is worth spending time researching the cover available and selecting that which is most suited to your needs. Full veterinary fee options can be seen here.
Permanent Loss of Use Insurance
Loss of use insurance is designed to cover you in the event that your horse is no longer able to do the activity they have been insured for, for example, eventing at affiliated level. When taking out loss of use insurance your insurer will require an up to date 5 stage vetting where the horse has been looked at with the specific activity or use in mind, i.e. they are vetted for the purpose of being evented at affiliated level. Depending on the horse’s value specific x-rays may also be required.
The important thing to understand with permanent loss of use cover is that it is designed to cover against the insured horse being permanently unable to compete in the discipline and at the level it was competing at before the claimable incident. It does not cover against lack of ability or potential ability nor will it cover against behavioural problems, loss of value or temporary incapacity. When considering a loss of use claim underwriters will need to be satisfied that all reasonable methods of treatment have been considered and that treatments given have been allowed adequate time to have effect. Often this may include the full 12/15 months of cover under your vet fees, especially if the vet has recommended a period of time at rest. For this reason loss of use claims can be a lengthy process and so it is important to be prepared for this.
It is also important to note that you will only receive the full sum insured/percentage of cover taken out if you choose to have the horse humanely destroyed. If the horse is kept in retirement then you will receive a residual value. This value will vary according to each individual circumstance, but will normally be subject to a minimum of 10% of the sum insured. Due to the level of cover provided permanent loss of use insurance will increase your premium but if you have invested a significant amount in your horse and it is competing regularly in a demanding sport it may be a worthwhile investment to make.
Public Liability Insurance
Public Liability insurance protects you against claims made by third parties for property damage or bodily injury, caused by your horse. For example if you were out hacking and your horse kicked a car. Public Liability Insurance is not an expensive addition to include on to a horse policy but is essential cover to have as claims can amass to over £1,000,000 which is a rather scary thought. The policies work by paying out up to the limit of indemnity in the event that you are found legally liable or by paying for costs occurred when defending you in court, should underwriters feel you are not legally liable for the particular claim.
Personal Accident Insurance
Personal Accident Insurance can be added on to your horse insurance policy and covers yourself as well as anyone else riding or handling your horse with you permission (except for professional riders who will probably have their own policy in place). It offers cover for death and permanent total disablement up to £20,000 as well as cover for dental work that is not provided on the NHS up to £2,000. Some people may wish to have a higher level of personal accident cover which includes temporary total disablement, providing a weekly benefit if the policy holder cannot work due to accident or illness. If this is the case then standalone policies can be purchased, you can read more about these policies here. We hope this article has helped demystify some of the common confusions around horse insurance, if you have any queries about this article or anything relating to insurance please contact us at email@example.com.
KBIS are one of the largest independent horse insurance providers, offering all types of insurance for the equestrian. Our products include horsebox and trailer insurance, breakdown insurance, personal accident cover, liability insurance and horse insurance – including a wide variety of veterinary fee options. You can get a horse insurance quote online or call 0345 230 2323.