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

What if Potential Buyer Does Not Return Horse After Trial Period?

An attorney called me last week to ask what her client, a trainer, should do about a prospective buyer who had picked up a horse from the trainer to "try out" but failed to bring the horse back after the trial period.  The trainer had been hired by the horse's owner to find a buyer for the horse.  After months of trying to make contact with the prospective buyer, the trainer finally made contact to learn that the horse had allegedly died of colic while in the prospective buyer's care.  There were no written agreements between the owner and trainer or owner/trainer and prospective buyer.

The first thing I asked was whether they called the police or sheriff when the horse was not returned.  In potential theft situations, it is always advisable to call law enforcement and get a copy of their report.  I also suggested a bit of investigative work to determine if the horse was, in fact, dead.  They had called the vet the prospective buyer usually uses, but the vet had no record of seeing the horse.  I suggested that they send a letter to the prospective buyer asking for proof that the animal was euthanized and asking him to pay the asking price for the horse.  The next step was to file suit if he did not pay (I suggested that she make the trainer and owner joint plaintiffs).

Under Texas law, the trainer and owner in this situation have a colorable claim for conversion and theft under the Texas Theft Liability Act (the "TTLA") against the potential buyer.  People with ownership or possessory rights have standing on both claims. And assuming the trainer spent money to take care of the horse while in her care and was going to get a commission on the sale, the damages element is also satisfied as to the trainer.  Attorneys’ fees and costs are recoverable by the prevailing party under the TTLA.

Is the trainer liable to the owner in this situation?  The trainer would only be liable to the owner under the “principal-agent” theory if the trainer acted without actual authority when she gave the horse to the prospective buyer to try out.

What's the lesson here?  The trainer and owner would have been in a better position if they had obtained a written agreement with the prospective buyer containing a "risk of loss" provision, whereby the prospective buyer would agree to pay the owner if the horse died or was injured in the prospective buyer's care.  The trainer could have also required the prospective buyers to make payment in escrow for the horse, and agreed to return the money if and when the horse was returned.