Horse Insurance 101: Commercial Equine Liability


If you board, breed, race, train, give riding lessons or conduct any kind of business-related equine activity, I highly recommend that you consider a Commercial Equine Liability policy. 

Homeowner’s and standard Farm & Ranch insurance policies completely exclude your equine business pursuits. 

Commercial liability insurance pays the damages for liability imposed upon you or your business by a liability claim or court judgment.  It also pays the cost of defending you when a lawsuit is brought against you.

This policy kicks in when an accident occurs and someone is hurt, regardless of whether you own the horse involved.

However, the basic Commercial Equine Liability policy does not cover claims for damage to property in your care, custody or control.  If someone claims, for example, that you injured their horse in the course of training it, you would need a Care, Custody & Control policy to cover that damage claim.

The Equine Activity Laws may help you provide a defense in the event of an equine incident, but they will not prevent you from being sued.  Without adequate liability coverage you will have to pay damages and defense costs yourself.  And the Equine Liability Laws only cover “inherent risks” in equine activities.  Some plaintiffs are able to successfully argue that their situation did not involve an “inherent risk”.  In other words, you could lose the case.  It bears repeating that defense costs are generally not recoverable by defendants in Texas lawsuits.

Commercial Equine Liability policies are designed to help protect you if you are sued by a third party who is injured or whose property is damaged.  A third party is generally someone who is not a family member or employee. 

If you have employees, you should consider carrying workman's compensation insurance as they are not covered under the general liability policy.  You should also make sure that any independent contractors that work with you show proof of their own liability insurance and ask that you be named as an Additional Insured on their policy.  This is especially true if you have an independent instructor or trainer working at your facility.

In addition to this policy, I recommend that all equine businesses 1) post the applicable Equine Activity Law in your state in conspicuous areas in your barn and on your property; and 2) have each third party who uses your facility sign a liability waiver that contains a covenant not to sue and specifically waives liability for ordinary negligence.   

 

Photo credit:  Katarina 2353 (Flikr)

Horse Insurance 101: Care, Custody & Control

Care, Custody & Control insurance is meant to cover people who board or train horses or are otherwise responsible for other people’s horses while breeding, showing, or racing them. The policy pays sums you are legally obligated to pay to others for death, injury or theft of horses in your care, custody, or control.

Example: a boarder’s horse dies of colic while it is at your barn, and the owner sues you for negligence.

Almost all general or commercial liability policies exclude coverage for injury or death to any horse in your care, custody or control.

This coverage does not apply to horses you own or lease, which typically are covered by a mortality policy.  Also, a Care, Custody & Control policy also does not cover you if a third-party’s horse in your care injures someone or damages their property. The Care, Custody & Control policy only protects you against claims of damage or loss of the third-party’s horse itself.

The policy typically pays for damages to horses and defense costs for suits brought against you. Premiums are usually based upon the average number of horses in your care or the total number of horses in any one barn, whichever is greater.

The basic policy also covers you if a horse is injured during incidental transit (hauling) of horses. “Incidental transit” is usually defined as 6 trips of 150 miles or less per year. The mileage restriction can usually be eliminated for an additional premium.

This coverage is especially recommended for trainers due to the multiple ways a horse can be injured in the course of a training program.

In addition to a Care, Custody & Control policy, I also recommended that trainers and boarding facilities get a written agreement with clients that includes 1) a “risk of loss” clause where the client assumes all risk of loss or injury to the horse; and 2) a veterinary power of attorney whereby the client agrees that the trainer or boarding facility has the discretion to provide veterinary care if the owner cannot be contacted.

Photo credit:  Markus Shaltrin