Stated value equine mortality insurance?

[Quelah]

Is anyone familiar with this? My experience has been in the past (two different horses two different insurance companies) that when you have to make a mortality claim on a horse, who you have for example insured for 10K, you must, when making the claim, prove the value. Be that with a copy of the purchase check, the show records if there was an increase in value, all of that. Not so fun after you’ve lost a horse to look over all your show records (yes, yes, he was that great of a horse) and send them off to the insurance company.

A friend of mine has what she calls “stated value” insurance on her horses, which according to her means that the value was agreed on at the time the policy was purchased and that if the horse dies all she has to do is provide proof of death (letter from vet) and that’s it, they cut the check.

This came up because she has an old and long retired show mare who is still insured at the value she had when she was taking names and kicking ass in the show ring. I said, when we were talking about insurance, “You know there’s no way they’re going to pay that kind of money when Methuselah dies, she hasn’t been in the show ring in 10 years!” Oh yes they will! she said.

Is this so? Cause it sure would be nice to not have to justify the value after the horse has died. Obvious answer of course is to call that company, which I’ll do, but they’ve already closed for the day and y’all are still open for commentary

[drawstraws]

Agreed Value policies state that as long as the horse is worth the insured value at some time during the policy term (normally proven at the time the policy is taken out) then that will be the amount paid in the event of a claim. However, it is still the insured’s responsibility to prove that the horse was worth that amount. In your friend’s case, just because she said that the horse was worth “x” amount when she purchased the policy, if she did not prove it at that time, she will most likely still need to do so in the event of a mortality claim. If this information is already in the company’s file because it was provided when the policy was purchased, there’s not much else you have to do for a claim other than to submit the vet information, but if it’s not there, it’s still on you to prove the horse’s value.

[Guilherme]

An “agreed value policy” means you and the company agree that a horse (or any other chattel) is worth a certain, fixed dollar amount and, in the event of covered loss, that amount will be paid.

Think of it this way: in a normal policy you purchase an amount of coverage and, in the event of a loss, must PROVE the value of the chattel. The proof is done AFTER the loss has occurred.

In a “declared value” policy you PROVE the value any subsequent loss at at the time you buy the policy.

Put another way, it’s proof “before the fact” vice proof “after the fact.”

I’ve never bought one of these policies but I understand they can be quite expensive. The reason is that they carry a large “moral risk.” One place these policies are common is fire and extended coverage. This is also the land of “friendly lightning.” People, in numbers, burn their own property regularly for the insurance. There have been some very prominent “horse killings” for insurance money.

If you’re interested in one of these call an agent and ask about them. Get a quote for both types of policy. Let us know what happens!

G.

[atr]

Confused. I am just increasing the value of my horse as I renew my policy. They have asked me for justification in terms of show results, training, etc., (I was amused that one of their files was for “winnings.”) Once they’ve decided whether my valuation is worthy and I’ve paid the increased policy, then surely they pay out against that policy?

[drawstraws]

atr - yes, if you’ve already provided the information for that policy and the company accepted it, they have agreed with you that the horse is worth the value you are requesting and you should be fine in the event of a claim and that information will already be in the file if needed for a claim. For a policy that is a renewal, the insured doesn’t always resubmit information each year and the company is just kind of taking their word for it that the horse is still worth the same value as before and the insured would most likely have to provide documentation to support it at the time of a claim.

[atr]

Ok, just beats me why one would spend the premiums for the next million years on an over valued horse…

[Guilherme]

[QUOTE=atr;8537287]
Confused. I am just increasing the value of my horse as I renew my policy. They have asked me for justification in terms of show results, training, etc., (I was amused that one of their files was for “winnings.”) Once they’ve decided whether my valuation is worthy and I’ve paid the increased policy, then surely they pay out against that policy?[/QUOTE]

In a “market value” policy the amount you buy is the MAXIMUM the policy will pay, not any sort of guarantee on the amount they will actually pay. The condition of the horse can change or the market can change. That can change the payout.

The “defined value policy” pays the stated sum if there’s a covered loss. Period. End of discussion.

This being the case, over valuing a horse in a “market value” policy is a foolish financial move because you’ll only get the “fair market value” of the horse, up to the limit on the Declarations page.

Note that horses are property. Morbidity and mortality insurance is protects the owner’s financial interest, not the life of the horse.

G.

[atr]

That makes sense. I guess I need to go read my policy and see if it is market value or defined value.

[Daventry]

[QUOTE=atr;8537441]
Ok, just beats me why one would spend the premiums for the next million years on an over valued horse…[/QUOTE]

Unfortunately, this happens frequently.

I am a Certified Senior Equine Appraiser and get hired by U.S. and Canadian insurance companies frequently to do appraisals for death claim reimbursement. It is shocking how little most Horse Owners know about their insurance policies.

Horse Owners don’t seem to be aware that there are two different types of equine insurance policies - “agreed value” and “actual cash value” (fair market value)? With agreed value, if your horse is insured for $10,000 and the horse dies, the insurance will pay out $10,000 as long as there is proof of value, which is normally done at the time the insurance is purchased and then a Justification of Value form is filled out each year at renewal. With actual cash value, you may be paying premiums on $10,000 for 5 years, but if your horse dies, the insurance company will only pay out what your horse is worth at the time of death (fair market value). If the economy tanks, for example, or your horse hasn’t shown or hasn’t been ridden for several years and the fair market value is only $4,000 as a result, that is unfortunately all you will get.

Most horse owners are under the impression that if they insured their horse for $20,000 and they have paid their premiums every year that they will get $20,000 if they die. Unfortunately, no always true! Unfortunately, I find some insurance brokers don’t always explain the type of policy you are purchasing.

There honestly is nothing wrong with purchasing an actual cash value insurance policy. That’s what I have in place for two of my horses. That being said, I’ve been very careful to only insure them for what they are worth (haven’t inflated the value) and I have kept excellent records for each horse, including current videos, photos, show results, etc.

Regardless of the insurance company you choose, please, please, please make sure to keep good records on your insured horses - including pictures, video and show records…and remember to continue to update them! I’ve done several very tough equine appraisal cases in which the owner didn’t have a single photo or video of their insured horses that passed away, no show record, nothing…which makes it extremely tough to prove their value! And, if you feel like the insurance company is giving you the run around, and you truly believe your horse is worth more, get your own independent equine appraisal done and present it to the insurance company or ask the insurance company to get a second opinion appraisal done. I do a lot of these…and it does work, but only if the first appraisal was poorly done and the value of the horse was truly incorrect!

I’ve written an article in regards to the ins and outs of equine insurance and explains things like Major Medical and “Loss of Use”: www.equineappraisers.com/howwelldoyouknowyourpolicy.html

[kcmel]

I just had to negotiate an increase in valuation for my young horse through Broadstone, XL is the underwriter. I asked specifically if once the value was agreed to then that would be the actual value paid out for mortality and they said yes.

I will say that they were not generous in increasing the valuation of a fancy young prospect, but he does not have much of a record on paper yet. (Saying your two trainers are fighting over who gets the ride on him at Rolex apparently does not carry much weight :lol:).

[khall]

This is something that I struggle with because I do not show very much, but I do regularly train and ride with an instructor several times a year. I actually undervalue my mortality especially on my main riding horse for that reason.