Insurance and the Horseman

by Robert O. Dawson
Professor of Law
University of Texas
School of Law
Secretary/Treasurer AAHS

Why Have Liability Insurance for Horses?
If you own, take care of, or just regularly ride horses, you should consider liability insurance coverage for your activities. Why? Because horses carry risks of injury beyond those normally created by life in modern society. This extra risk creates a potential for lawsuits against you brought by persons injured by horses when the injury can be attributed to your fault. If you ride a bicycle or roller blade, those activities probably do not create any significant additional risk of injury to others. But horses are not bicycles or skates--they are more beautiful, noble, exciting, and dangerous. You will want to protect your hard-earned assets from being taken from you to compensate another for an injury inflicted by your horse activities.

In addition to the financial argument for having liability insurance for your horse activities, consider this moral argument. If by your negligence you injure another person through your horse activities, you should feel morally obligated to do everything possible to restore the victim to the circumstance he or she was in before the accident. Of course, it may not be possible to achieve that result completely and money alone often will not do it, but money will often go a long way toward restoration to the previous condition. Even if you have no assets to be seized to compensate the injured person (indeed--morally-- especially if you have no such assets) you should consider liability insurance to assist in restoring the injured person to the previous circumstance.

Personal vs. Business Coverage
If you have a homeowner’s insurance policy or even a tenant’s policy, you have liability coverage for non-business activities. This would cover to policy limits an injury inflicted by your negligent horse activities, provided your horse activities were personal and not for business. So, if you just own a couple of horses that are used exclusively for personal pleasure (and you do not attempt to deduct horse expenses from taxes as a business expense), you are covered. Then, the only question is whether you have enough coverage.

However, if your horses are being used for business purposes, then you would not be covered by the typical homeowner’s policy. Thus, if you rent horses for trail rides, or give riding lessons on the horses, or take out trail riders on your horses, or race horses in meets, or show horses and deduct show expenses from taxes, or stand a stallion for a fee, or have brood mares and sell the foals, you are probably in the horse business and your potential liability is not covered by your homeowner’s policy. Even if the business is small, you are still not covered by your homeowner’s policy. Even if the insurance agent is your brother-in-law, you are still not covered because it is the insurance company claims representative who initially decides whether an event is covered. That person will often be someone other than the agent who sold you the policy.

If you live on a working farm or ranch, you may have a farm/ranch policy instead of the standard homeowner’s policy. That will cover commercial activities on the farm or ranch and may cover your horse activities. If you have extensive horse activities, then you probably need coverage directed specifically at those activities.

If you care for other people’s horses by providing stalls, corrals or pasture for them or train the horses of others, the standard liability policy may not cover your negligent injury to those horses. You may need to obtain specific coverage for the care, custody and control of those horses. That might require obtaining a separate policy.

Reading the Policy
There is no doubt that under the law you have the obligation to understand what coverage is and is not being included by an insurance policy. Policies were formerly written in legal language that was difficult for the reader to understand. Now, many are written in plainer English or at least contain plain English summaries of the legal language.

The truth, however, is that most people who go to the trouble to purchase an insurance policy do not read it--they just put it in the shoe box where they keep such documents and then forget about it. Only if an accident occurs and a claim is made do they then discover what coverage they have purchased. That is unfortunate but preaching against the practice will not change it.

If you can’t bring yourself to read the policy before or at the time of purchase, at least you can ask the right questions of the agent who is selling you the policy. Horse owners secretly know that their love of equines creates special insurance needs. Many deal with this reality by steadfastly ignoring it. “If I don’t mention the problem, maybe it will go away.” There is also a fear that raising the horse activity coverage question when talking with the agent may lead the agent to refuse to sell you the policy or may greatly increase the cost of the policy.

Ignoring the issue is a terrible mistake. If the policy doesn’t cover your particular horse activities, the insurance company is pretty unlikely not to realize that when a claim is made under the policy. Then it is too late to insure the risk because it has already occurred. You should have thought out your horse coverage questions, written them down, and then asked the agent about them before purchasing the policy. If the agent says that your horse activity is covered, ask him to point out the language in the policy that provides that coverage. If he can’t, go elsewhere for insurance coverage. That way you don’t have to read the entire policy--which very few do--but can focus in on the specific issue of concern to you--your horse addiction. You are ordinarily bound by the language of the policy not the oral representations of the agent, but asking the questions will at least prevent the agent from selling you the wrong policy out of ignorance of its coverage.




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