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    The Great Mystery: What is the Insurable Value of my Horse

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    October 08, 2018
    Every day, we get calls from confused clients who want to insure their horses, but don’t know what their horse is worth. Insurance companies may view a horse’s value differently than we might as owners. Hopefully, here are some tips that might help you and the insurance carrier agree.
    First and foremost, it is important to realize that insurance companies want to protect your investment. They don’t insure values based on sentimental value, future potential, or what it might take to replace your horse. Having said this, one can see how “gift” horses or “bargain” purchases may pose a problem. If someone gives you a horse, you have no investment, even though the horse may have substantial worth. Many companies will not insure a “gift” horse, so each situation must be reviewed individually. Also, we frequently get calls from clients bragging that they just purchased a $10,000 horse, and only had to pay $2,500 for it. Although the client may wish to insure it for $10,000, the reality is they just bought a $2,500 horse. Insuring it for more than their investment would create a “moral hazard’ (an incentive to profit by the horse’s demise).
    So, where does one begin? If you purchased the horse, the amount you paid is the starting point. Then, most carriers will allow the cost of the initial transportation cost if performed by a commercial transporter. For example, a horse purchased on the east coast is shipped home to the west coast for $2,000. That $2,000 can be added to the purchase price. Carriers do not consider your expenses if you haul the horse yourself. Travel expenses for the buyer or agent, medical exams, etc. are also not included.
    If the horse is “home-bred”, the starting point is usually 2-3 times the stud fee of the sire. So, if you bred to a stallion with a $1,500 stud fee, the foal when born is normally insured for $4,500. Vet bills and other reproductive costs are not included. One factor that could heavily influence the foal’s value would be the actual sales price of maternal siblings.
    As you spend money on your horse, the value can be adjusted at any time throughout the policy period (we recommend a quarterly review). If your horse is in training, carriers will consider an increase of 30-50% of the combined training and board bill. As an example, if you spend $900 a month with your trainer for board and training, each quarter the horse’s value increases by $810-$1,350 (depending on the company). This does not include vet bills, lessons, farrier work or other maintenance items. If you are an equine professional, carriers will consider the value of your time, just as if you paid someone else.
    The last step would be an evaluation of your horse’s performance record. As you exhibit your horse, it’s accomplishments add value to the animal. The underwriters have a good idea of a horse’s value based on similar horses achieving a similar level of success. When your horse has done well in it’s discipline, we generally work backwards by asking the client what they would like to establish as an insurable value. Then we gather information that would help support that request to the carrier.
    As you can see, establishing an insurable value that can be agreed upon by you and the insurance company can be more of an art, than a science. This is just another reason why your selection of an agent that is an experienced equine specialist is so critical.
    Rich Maggard
    (541) 504-8686

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