© Kenneth C. Sandoe, Attorney-at-Law

published in The Draft Horse Journal, Autumn, 2000

Part 2 of a 2 part Series: Liability Insurance: Are You Covered?

“The great majority of mankind are satisfied with appearances, as though they were realities and often more influenced by the things that seem than those that are.” - Niccolo Machiavelli

You just purchased insurance and feel safe about your liability exposure. After all, you are protected...right? Machiavelli was right. Although it appears you have insurance (you have paid a premium and have a policy in your possession), in reality, depending on the facts, you may not be covered. This article will review the various types of liability coverage and the exclusions which apply.

Equine liability insurance generally takes on four different types. A homeowner’s policy, a farm policy, a commercial policy and a care, custody and control policy. The coverage involved and the policy language can be confusing and difficult to understand. Although coverage language is getting better, it is far from clear and simple.

Equine liability insurance, in theory, is simply the purchase of a contract of insurance to protect the horse owner from financial loss if the horses cause personal injury or property damage to another. Let us review the various policies that are available.

A homeowner’s policy generally covers horse accidents which are non-business related. For example, if you take a number of guests on a trail ride or wagon ride and an accident occurs, this should be covered under your typical homeowner’s policy. However, if you are giving lessons, buying or selling horses, or engaged in rides for hire or profit, you will not be covered. Homeowner policies exclude from coverage any type of business activity. If you engage in any type of business activity (receive compensation for your services),

then you will need to purchase special insurance known as commercial equine liability coverage.

Since many horse owners live on farms and do not have standard homeowner policies, the question arises, are horse related activities covered under the typical farm liability policy? The answer is, read you policy very carefully. The following examples are taken from insurance contracts that I have personally reviewed and are typical of many policies today. The first example is language taken from a standard farm, personal liability policy.

“Exclusions –This personal liability coverage does not apply to:

Bodily injury or property damage which results from the use of animals, other than horses (emphasis added) in or in the practice or preparation for any pre-arranged racing, speed, pulling or pushing, or stunt activities or contests. However, this exclusion applies only to occurrences that take place at the location designated for the contest or activity.”

Under the standard farm policy, where use of the animals is basically for a hobby and not for business pursuits, the policy will cover accidents at home and away at the contest.

However, if you are engaged in business pursuits with the horses, i.e. for hire and profit, the typical farm policy may not cover your activities without the appropriate commercial endorsement added to the policy. For example, the following language was taken from another farm liability policy:

“We do not pay for bodily injury or property damage that arises out of the ownership, use or maintenance of:

An animal in, or in the practice or preparation for, any pre-arranged racing, speeding, pulling or pushing, or stunt activities or contests. However, this exclusion applies only to occurrences that take place at the location designated for the contest or activity.”

This policy covers the insured at home, but not away. The insured would be wise to purchase a special endorsement for his protection or be certain specific event insurance is in place for the contest. (However, specific event insurance only covers participants and not spectators and, thus, does not provide the level of coverage that a proper endorsement would.)

Finally, I have seen the following language appear at the end of various policies:

“It is agreed the farm liability coverage section on medical payments to others, as provided by this policy does not apply to bodily injury or property damage resulting from or caused directly or indirectly by any activity related to horses on or away from the insured premises. Excluded activities include, but are not limited to, horse racing, horse boarding for others, horse breeding, horse breaking and training, horse sales, riding instructions, trail rides, hunt or riding clubs, horse shows, horses rented to the public.

However, this exclusion does not apply to the private, personal ownership and use of horses by the name insured and resident family members, permissive use of the insured’s horses by invited guests, and any horse activities specifically designated on the incident business pursuits endorsement or the horse boarding coverage endorsement.”

Again, the key issue is whether or not the horse activity is essentially a personal activity or a business activity. If the horse activity is considered to be a business activity, the general policy will not apply and an appropriate endorsement or commercial policy will be needed for coverage. If you have a farm policy, be sure to review it with your insurance agent. DO NOT assume you are covered. If in doubt, you should purchase a commercial endorsement and cover your horse-related activities, and be sure those activities are specifically set forth, in writing, in the endorsement or a letter from your insurance agent.

If you are an equine professional engaged in such activities as instructing, buying and selling horses, training horses, giving rides, etc., you will need commercial equine liability insurance. This coverage will provide protection for your commercial operation in the event of a personal injury or property damage and will also provide a legal defense to any lawsuits.

Following hand-in-hand with most commercial liability policies are endorsements for equine professional liability, which covers negligent acts, errors and omissions of the professional, as well as equine personal liability which covers owners and managers of the business, as well as those who operate on a leased or rented premises.

If you board, train or breed horses, you must purchase care, custody and control insurance. The standard policy only covers horses owned by you–not others. Care, custody and control insurance provides coverage for horses you do not own but have care, custody and control over. In the event of injury or death of another’s horse, the care, custody and control policy will provide coverage for medical care or replacement cost of the horse up to the policy limits purchased. Defense costs in regard to any lawsuit are also covered under this standard policy. Many care, custody and control policies also cover trailering of another’s horse, and the policy should be carefully reviewed to make sure this coverage is provided.

In conclusion, it is very important to review your liability insurance policy. First determine if your horse related activities are personal or a hobby in contrast to an actual business pursuit. If your activities are essentially personal or hobby in nature, you will probably be covered by the standard homeowner’s policy or farm policy. However, there are many exclusions which may apply including a horse-related exclusion and, thus, your policy must be reviewed in depth, and if any doubt, you should check with your agent and be certain that all questions are answered, in writing, and appropriate coverage or endorsement purchased.

If you are an equine professional, the standard homeowner’s policy or farm policy will probably not cover your activity, and you will need to purchase special equine commercial liability insurance. In addition, if you are in the possession of horses of other individuals, you will need to purchase additional coverage, known as care, custody and control, to insure those horses in your possession which you do not own.

If you have questions or are in doubt on any insurance coverage matter, you should contact your attorney for further advice.

Enough legal talk–it’s time to hitch horses.

Ken is a practicing attorney in Myerstown, Pennsylvania, where a good bit of his practice involves negligence cases. Ken and his wife, Karen, own Sunny Hill Farm Belgians, and they have been exhibiting their six horse hitch for the past few years at most major shows in the east.