More Peace of Mind: Part 1

Property insurance protects you from unforeseen events – as long as you’ve bought the right policy.

This is the first of a two-part series.

If you’ve financed your home, chances are your bank mandated that you purchase property insurance. While this insurance protects you from unfortunate events such as fire, theft and accidents – such as someone injuring themselves on the premises and then filing a lawsuit against you – it doesn’t necessarily extend to incidents involving your horses.

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Many small-farm owners – those with a house, a barn and a couple of their own horses on the property – simply purchase homeowner’s insurance, which, usually covers the residence only.

“Check to make sure that the homeowner’s liability extends to cover the ownership of horses,” says Butch Human, owner of Star H Equine Insurance in Advance, North Carolina. “In most cases, the insurance companies that write homeowner’s insurance do not extend their liability coverage to cover the ownership of horses.”

If you were told that the contract does cover your horses, be sure to ask how much: Unless it’s a farm/ranch owner’s policy, chances are that the payout will be minimal.

“It might cover up to $2,000 on a horse accident, which is absolutely nothing. Homeowner’s insurance is made for your home,” says Kristina Hedrick Wilson, owner of Equine Insurance Etc. in Fort Worth, Texas. “The minute you have a horse, you have different liability requirements.”

If this is the case – and you are otherwise satisfied with your homeowner’s policy – you can simply buy a separate contract for personal horse owner’s liability, designed to protect you in the event that your horse injures someone. However, this coverage only protects you if the horses under it are for your personal use.

Specific for Horses

Farm/ranch owner’s insurance, on the other hand, offers coverage to those in the horse business, and Butch emphasizes that the minute a property owner receives money for his or her services – no matter the amount or the size of the farm – that facility is considered a commercial operation.

“If you board one horse, train one horse, give one riding lesson or put on a clinic, and you are receiving remuneration, you are technically and legally in the horse business at that point,” he says.

Describing farm/ranch owner’s insurance as a “souped-up homeowner’s policy,” Butch explains that it covers your home and its contents just like a homeowner’s policy does, but it also extends coverage to your barn, indoor riding arena, hay barn, equipment building, loafing sheds and any other structures, plus your equipment. He also advises that tack be included under this insurance.

Kristina points out that if you write your horses off on your taxes, the insurance company also considers your facility an official business.

“It doesn’t have to be a huge operation,” she says, citing a visit from an individual interested in purchasing one of your horses as an example. “If they come in your home and they slip and fall, typically, your homeowner’s insurance would cover it. However, the majority of homeowner’s insurance policies say, ‘This does not include business pursuits.’ Since you write off those horses on your income taxes and the people came over to see your horses, the homeowner’s insurance won’t cover the claim.”

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Read the last of this series next week. Stay tuned.

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