Small home barns with boarders-how do you do your insurance?

[Jersey_Fresh]

We just purchased a property with land that we plan to build a barn on this summer (hence several threads in this forum ). My friends girlfriend is really unhappy with her current boarding barn and asked if I would consider taking a boarder. Her horse is an older, kind retiree that she doesn’t ride much.

We are not opposed to take a couple boarders if they are vetted thoroughly or something like the situation above. However, since the barn is on the same property my house is on, if we take boarders it will affect our homeowner’s policy. My agent said this will jump our insurance to $4000-6000 a year because it will have to be a commercial policy.

Is this correct? How do you all handle insurance? I was under the impression we could get a EGL/ECC policy for the barn and any operations, but if thats not the case and we have to pay $6000/yr, it wont be worth it for is to take on any additional horses.

[SuckerForHorses]

One would assume your agent knows what he is talking about. Maybe shop around some other companies and see what their response and pricing would be?

My agent said this will jump our insurance to $4000-6000 a year because it will have to be a commercial policy.

[Jersey_Fresh]

[QUOTE=SuckerForHorses;8527088]
One would assume your agent knows what he is talking about. Maybe shop around some other companies and see what their response and pricing would be?[/QUOTE]

Yes she but she might be assuming we will have workers or large numbers of horses. She is basing that off a previous quote for another horse operation which very well might be a large commercial farm based on our area.

[TrailRides4Fun]

Years ago, I boarded on a friend’s house/horse property.
Ended up moving bc it drove her home owners up more than my board would
even begin to cover.

[bdj]

Don’t know if this is the case for you, OP, but if you’ve got a mortgage, be mindful of what that will and will not allow you to do. When I bought my place, my mortgage agent told me that my loan wouldn’t allow me to use my place as a business - which means no boarding other people’s critters. That may not be the case for you, OP, but it’s worth investigating if you’re not certain.

(And for me, it was very convenient to have that as an easy out when people said “Oh, you have a barn and pastures, I’d love to move my horse to your place!”)

[IFG]

Farm Family has (or at least had) a policy specifically for small boarding operations. My hoe owners policy was happy to let me board if I carried the extra policy. ^ or so years ago, it ran about $225 a year. I ended up not having boarders, so cancelled the policy.

[clanter]

Our barns were not on our home owners as we leased the land and barns to the farm which was a corporation in itself. The farm carried its own policy.

[tangledweb]

We have a farm insurance policy that as well as covering the things that homeowners insurance covers, also covers barns, tractors etc. Each boarded horse adds about $100 per year to the cost.

[S1969]

[QUOTE=IFG;8529013]
Farm Family has (or at least had) a policy specifically for small boarding operations. My hoe owners policy was happy to let me board if I carried the extra policy. ^ or so years ago, it ran about $225 a year. I ended up not having boarders, so cancelled the policy.[/QUOTE]

This. Although I seem to recall it being more like $2000 additional…at the time I bought it, it was a range of 1-10 boarders or something; so it was expensive for one, but probably quite reasonable for 10.

Many traditional homeowners policies will not cover any part of your boarding operation, and might drop you if they find out. A traditional homeowner’s policy may also not cover events like a horse getting out of your pasture and causing an accident on the road - because the policy may only cover your property, not “off property.” According to our agent - the biggest concern is that a boarder will get hurt while on your property.

I’d definitely look at a company like Farm Family - that specifically has options for a variety of farms/farm businesses.

I have an umbrella policy now because I don’t have boarders. It will cover a horse getting out of the pasture, for example, but would probably be insufficient for a boarding situation.

[Palm_Beach]

Good comments. You can always shop around. Most HO policies will not cover any home business beyond a small token limit - check your current pollicy - and animals/farm stuff may not be covered. You can do what you want with your house, but if you suffer a loss, the insurance may deny your claim.

[msj]

I kept my Homeowners and Umbrella policy (1 million)with the same company, Amica, but also took out an Equine Liability policy and a Care, Custody, and Control policy with EMO. I only took in one boarder and the board bill of $350 covered the increased policies from EMO and the hay, grain and bedding of the boarders horse.

Now that was easily 15+ years ago so I don’t know what the costs today would be other than about 4 yrs ago I did take out an Equine Liability policy for a neighbor to bring her horse over come winter to use my indoor. That policy was $500/yr.

Also, I did talk initially to Amica and asked if they felt doing the Equine Liability and CCC policy would be sufficient coverage in addition to the Umbrella policy I still kept with Amica. They felt it would be fine.

[hosspuller]

As for commercial insurance… I have an “incidental farming” rider on my policy. It costs an additional $50 per year.

Your state and insurance company may differ.

[S1969]

[QUOTE=hosspuller;8529860]
As for commercial insurance… I have an “incidental farming” rider on my policy. It costs an additional $50 per year.

Your state and insurance company may differ.[/QUOTE]

What does that cover? Just trying to understand what “incidental farming” means as I’ve never heard that term.

I can’t imagine it covers boarding for only an extra $50/year, but maybe something like hay/hay storage?

ETA: Never mind - here is the definition:
HO 24 72, or “Incidental Farming; Personal Liability,” (See here) is intended to extend coverage for specifically defined farming operations conducted at the residence premises, and/or conducted away from the premises at other specifically described locations. Medical payments to others do not apply to the other described locations, but if a community garden is located on your property this endorsement is likely appropriate to cover you for general liability. This endorsement is designed for hobby farmers; companies are unlikely to extend coverage to a small farm where a minor amount of land is leased from others for feed or cash cropping.

[MMavin]

My agent (whose wife is a riding instructor) said I could keep a horse “at cost” and it would not change my policy. This means I don’t charge board-rather it’s the cost of hay and feed. This works for me as I need the pasture mate and his owner house sits as part of our arrangement.

[BeeHoney]

Insurance companies offer different varieties of policies/coverage. For example, some companies will include (possibly for a reasonable extra cost) liability coverage for the boarding of a small number of horses. Once you get a commercial liability policy, it has been my experience that the costs are significant, but I would recommend shopping around with some different companies.

However, there are a few other aspects/risks to consider and some reasons why the portion of your boarding cost that relates to liability and risk expenses needs to be higher than the cost of your insurance.

Commercial liability is only part of your risk. Your boarder(s) can hold you responsible for harm to their horses and a policy that covers that is called a “Care, Custody and Control” policy. My policy is capped at the actual value of the horse. So if I were to negligently injure a $500 retiree and it were to require $2000 in vet bills, the policy wouldn’t pay out more than $500 to the owner. So, on one hand, if you are boarding retirees, CC&C may not be a good value. BUT, keep in mind that if you truly do accidentally do something negligent that hurts a horse (you leave gate open in a hurry=horse with major injury/big vet bill, feed room door left open=founder/big vet bill) you may still be in a position where you personally feel obligated to cover the cost of the vet bill out of pocket.

Also, with the consideration of having boarders (and possibly their family members and guests) coming onto your property and also potentially having contact with your horses, you probably should consider also buying an umbrella policy. If you already have an umbrella policy, you may want to increase it.

Don’t forget that there may be smaller things that come up that either will be under your deductible or that you will choose not to file a claim for because you don’t want your rates to go up. For example, once during some bad weather my DH backed his truck into a client’s car that was parked where it shouldn’t have been. It was just a “ding” and we didn’t report it to the insurance but rather paid out of pocket. It was about $900 to repair. It was his fault, but it would never have happened if we didn’t have boarders. Stuff like this happens.

Another potentially wise move to protect yourself from liability might be the creation of an LLC. This can be done over the internet, but there are some recurring costs to maintaining an LLC (the costs vary by state).

Lastly, as an aside to the liability issue, you will need to develop a contract and a release that protect you from liability. It’s best to use an attorney who is familiar with the laws in your state.

[seabreeze]

I have a farm owner’s policy that covers house, barn, etc., through VA Farm Bureau. With that policy, I have a boarder option for a few hundred dollars per year (you can purchase per horse up to x number before you have to do a commercial policy…has been years since I purchased it and don’t remember what “x” number is…I just have one on it). Perfect for me and sounds like it would be perfect for your situation, too.

[S1969]

[QUOTE=MMavin;8530372]
My agent (whose wife is a riding instructor) said I could keep a horse “at cost” and it would not change my policy. This means I don’t charge board-rather it’s the cost of hay and feed. This works for me as I need the pasture mate and his owner house sits as part of our arrangement.[/QUOTE]

It might be sufficient, but it might not. You’re essentially claiming that horse as your own (not a boarder) which may or may not work depending on the claim. I’ve done this as well, but I would not consider it really sufficient coverage in comparison with a policy specifically designed for boarding horses - which takes into account the animals and the people that are on your property.

When we looked into this situation (small farm + 1 or 2 boarders), it occurred to me that most horse farms are probably grossly underinsured in the case of a significant claim. My biggest fear was gates left unlocked by a boarder that would cause a fatal car accident. I wanted to protect myself for that kind of claim - because if you were underinsured, you would have trouble paying - but on top of that, your insurance policy would also probably drop you and you may become uninsurable in the future…then what?

[Palm_Beach]

S1969 has some good points. If a large claim was brought and your policy paid out the limits and you were on the hook for the remainder, it would have to paid out personally.

http://www.alllaw.com/articles/nolo/personal-injury/compensation-beyond-insurance-policy-limits.html

[Jersey_Fresh]

[QUOTE=seabreeze;8530677]
I have a farm owner’s policy that covers house, barn, etc., through VA Farm Bureau. With that policy, I have a boarder option for a few hundred dollars per year (you can purchase per horse up to x number before you have to do a commercial policy…has been years since I purchased it and don’t remember what “x” number is…I just have one on it). Perfect for me and sounds like it would be perfect for your situation, too.[/QUOTE]

Do you mind me asking roughly how much the premium is a year? My FI called the KY Farm Bureau as well and we are waiting on quotes. They were super helpful.

[Jersey_Fresh]

[QUOTE=BeeHoney;8530566]
Insurance companies offer different varieties of policies/coverage. For example, some companies will include (possibly for a reasonable extra cost) liability coverage for the boarding of a small number of horses. Once you get a commercial liability policy, it has been my experience that the costs are significant, but I would recommend shopping around with some different companies.

However, there are a few other aspects/risks to consider and some reasons why the portion of your boarding cost that relates to liability and risk expenses needs to be higher than the cost of your insurance.

Commercial liability is only part of your risk. Your boarder(s) can hold you responsible for harm to their horses and a policy that covers that is called a “Care, Custody and Control” policy. My policy is capped at the actual value of the horse. So if I were to negligently injure a $500 retiree and it were to require $2000 in vet bills, the policy wouldn’t pay out more than $500 to the owner. So, on one hand, if you are boarding retirees, CC&C may not be a good value. BUT, keep in mind that if you truly do accidentally do something negligent that hurts a horse (you leave gate open in a hurry=horse with major injury/big vet bill, feed room door left open=founder/big vet bill) you may still be in a position where you personally feel obligated to cover the cost of the vet bill out of pocket.

Also, with the consideration of having boarders (and possibly their family members and guests) coming onto your property and also potentially having contact with your horses, you probably should consider also buying an umbrella policy. If you already have an umbrella policy, you may want to increase it.

Don’t forget that there may be smaller things that come up that either will be under your deductible or that you will choose not to file a claim for because you don’t want your rates to go up. For example, once during some bad weather my DH backed his truck into a client’s car that was parked where it shouldn’t have been. It was just a “ding” and we didn’t report it to the insurance but rather paid out of pocket. It was about $900 to repair. It was his fault, but it would never have happened if we didn’t have boarders. Stuff like this happens.

Another potentially wise move to protect yourself from liability might be the creation of an LLC. This can be done over the internet, but there are some recurring costs to maintaining an LLC (the costs vary by state).

Lastly, as an aside to the liability issue, you will need to develop a contract and a release that protect you from liability. It’s best to use an attorney who is familiar with the laws in your state.[/QUOTE]

Great points. We for sure would set up an LLC if we do this and we’ve already contacted a contracts attorney with experience with writing boarding contracts and releases. We are going to meet with her in early March once we know what insurance rates would be.

We both do not want to do this unless we know all of our bases are covered.