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    Clearing the Muddy Waters of Insurance

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    August 30, 2018
    The standard homeowner’s policy, which most of us know, is undoubtedly the broadest insurance contract ever written. So, the natural inclination is to assume everything is covered. Not true, especially for the equine professional!
    The coverage can vary widely within a policy if you are in the horse “business”, or just a “hobbyist”. To analyze coverage, first you must come to grips whether or not you are in “business”. The standard ISO homeowner’s policy determines that “business” is an activity in which you have generated $2,000 or more in the preceding year. And, it would be hard to refute if you file a Schedule F on your taxes.
    Coverage B of the HO policy is normally an automatic 10% or 20% extension of the dwelling and it may be described as “other structures”, “other private structures” or “appurtenant structures”. Read this section very carefully. Some carriers define Coverage B as simply as a garage or carport. Others may define it as structures used in conjunction with the use or maintenance of the dwelling. But, in virtually all instances, it does not include structures used in “business”. So, what this can mean to you as a professional is that your barn, arena, etc. is not covered here. If you are strictly a hobbyist, then it could, providing the limit is adequate for all qualifying structures.
    Coverage C of the HO policy, Household Personal Property, offers a limited amount of coverage for “business” property. The standard ISO form covers $2,500 on your premises, and $500 off premises. That’s not much when considering the cost of saddles and other horse equipment. The “hobbyist” would have no limitation other than the stated policy limit, and subject to the stated deductible. In all cases, Coverage C excludes coverage for animals.
    Coverage E of the HO policy, Personal Liability, excludes coverage for motorized vehicles (ATVs, RTVs, golf carts, etc.) used off premises for “business” use.  However, for everyone they will be excluded from liability coverage if registered, or required to be registered, for use on public roads or public property. Have you ever taken one of these vehicles to a show? And did you realize you weren’t covered automatically?
    Another exclusion to be found in Coverage E is for the rendering or failure to render “professional services”. Keep in mind that as an equine professional, every time you give advice, you are providing a “professional service”.
    Coverage E also extends coverage to vacant land, but that extension does not apply to farm land. The policy does not define the term “farm land” so the courts would probably revert back to the Webster dictionary for a definition. In a round about way, farmland would include the production of livestock and other equine activities. So, there is potentially no coverage should someone get hurt on your acreage. This is one reason why carriers put a cap on the maximum number of acres that can be included under a HO policy.
    And, I have left the biggest “gray area” for last. What about my horses? Does personal liability extend coverage if they should hurt someone, or damage property? Courts have imposed the doctrine of absolute liability when owning an animal (dogs, cats, horses or whatever). This means you are responsible for the damage or injury they cause, even if it was outside your control or even provoked. Companies will vary widely on this issue; some will include liability coverage, more will exclude, and some may cover only while on your premises (a lot of good that would be at a show or trail ride). There is no gray area if your horses are used in your “business” (ie: breeding stock, lesson horses, etc.). They are simply not covered. But if you are the “hobbyist”, read your policy carefully, then touch bases with your HO agent. I would even go so far as writing the agent an email. That way, you have their response in writing.
    The bottom-line is this; don’t try to cram a round peg in a square hole. There are policies specifically tailored for the equine professional, and those in the horse “business”. We even have liability policies for the personal horses not covered under a HO policy.
    Ranch package policies are designed to include your home (or renter exposures), farm structures, equipment, supplies, and the liability exposes encountered by horse ownership and the horse business. Don’t jeopardize everything you own and everything you have saved. Contact an independent agent who specializes in the equine industry, and get it done right!
    Rich Maggard
    (541) 504-8686

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