So, you own a horse that is boarded at someone else’s farm. Question is, who’s paying for the insurance? In this blog, we go into the details of this question and more.
Quick Disclosure: **In the article below, we will refer to the owner of the horse as the “horse owner” and the owner of the farm looking after the horse as the “barn owner.”
Not everyone who owns a horse owns a farm. Many horse owners will start a contract with a farmer who has extra space in their barn to board and look after their horses. The owner of the horse and the owner of the barn will reach an agreement concerning feed, veterinary services, and other considerations for the horse over a specific period of time.
One of the items that should be discussed is insurance. In some rare, but potentially devastating situations, insurance can be critical. Two such cases are outlined below to help illustrate how coverage works in each situation. For these examples, imagine we have ten horses in the barn with a value of $10,000 per horse. The total value of the horses is $100,000.
Imagine this –
Case #1: There is a tornado that destroys the barn which collapses onto and kills the horses. In this instance, the insurance company for the horse owner pays the loss to the horse owner of $100,000, and the claim is finalized under their Farm Livestock Coverage. After the claim is finalized, the matter is closed because there is no potential liability to the barn owner for a tornado. The barn owner does not need to pay anything under the Non-Owned Livestock Liability Coverage because there is no legal liability in this situation.
Case #2: There is a fire that destroys the barn and kills the horses. In this instance, the insurance company for the horse owner pays the loss to the horse owner of $100,000, and the claim is finalized under their Farm Livestock Coverage. Next, the fire marshal and insurance company complete their investigation into the fire, and they determine that the cause of the fire was an improperly installed heating unit in the shower room. The heating unit was installed and wired in by the barn owner. In this case, the insurance company for the horse owner, having paid their $100,000 loss to the horse owner, will commence a lawsuit against the barn owner for causing the death of the horses. This is known as subrogation. The barn owner advises his insurance company of the lawsuit. The insurance company for the barn owner defends him against the lawsuit under the Non-Owned Livestock Liability Coverage and, if needed, pays the lawsuit to the insurance company for the horse owner.
The cause of loss in the above examples may change, but the function of the two types of insurance does not. Even if the contract between the horse owner and the barn owner discusses coverage for the horses, the barn owner can still be held legally liable for losses to the horses.
What insurance does the horse owner need?
For the horse owner, the insurance they need is Farm Livestock Coverage.
What is Farm Livestock Coverage?
Farm livestock coverage protects beef cattle, dairy cattle, hogs, sheep, goats, and yes, horses, against a broad range of perils, such as fire, lightning, collapse of buildings, riot, theft, and more.
Excalibur Insurance would work with the horse owner to review the details of the farm, including location, how long the horses will be boarded there, the total number of horses, and their value. A full review of all of the perils, allows Excalibur Insurance to ensure that the proper coverage is in place. There are coverages available for the various standard perils that can cause the death of the horses. In addition to these standard coverages, there are optional coverages for entrapment, consequential loss, and heat prostration. Consequential loss is caused by an interruption in the heating or ventilation systems, while heat prostration is caused by heat exhaustion due to extremes in atmospheric temperature.
What about the barn owner?
For the barn owner, the insurance they need is Non-Owned Livestock Liability.
What is Non-Owned Livestock Liability?
Non-Owned Livestock Liability is an endorsement added to the barn owner’s Farm Insurance policy. Non-Owned Livestock Liability coverage means that the insurance company agrees to pay damages, should the barn owner become legally obligated to do so. The barn owner may be obligated to pay if they are found legally liable for physical injury or death caused to horses that they are boarding.
The bottom line for contract barn situations
Farm Livestock Coverage and Non-Owned Livestock Liability Coverage make up an integral part of the insurance program for contract barn situations. The reality is that both the horse owner and the barn owner need their own insurance coverage for these horse operations.
Please give one of our Excalibur Farm Insurance specialists a call and we can review your needs and discuss this coverage.