Ask BFL about Equine Insurance
I recently completed an application for liability insurance for my commercial equine activities, which included a list of mandatory conditions for me to follow. I had to sign this page confirming I would follow these conditions. Most of the conditions are common sense, but some of them could be hard for me to follow. How does this affect my coverage?
There are different kinds of Conditions found within every insurance policy. For example, property insurance policies include Statutory Conditions that outline certain responsibilities of the Insured and the Insurer, such as how a policy may be cancelled, or what constitutes a misrepresentation or material change in risk. These conditions are necessary to give parameters within which the policy operates; they protect both the Insurer and the Insured by clarifying important elements of the insurance contract.
Other Conditions can be in the form of a Warranty, meaning there is a promise by the Insured that certain conditions will be met throughout the policy term. If a warranty is found to be untrue or not met, the Insurer may cancel the policy and/or refuse to cover claims.
Unfortunately, we have seen a recent trend with equine liability insurance policies where a warranty on the policy demands that the Insured follow certain protocols, otherwise a claim will be denied. It is perfectly acceptable for an insurance company or broker to provide its clients with risk management guidelines or "best practices" to follow. It is another matter to require you, the Insured, to sign a statement saying that if you do not follow these "best practices", your policy may not respond to a claim against you. After all, what is the purpose of liability insurance if not to protect us when we make a mistake? Let’s use a riding school as an example of where an unreasonable warranty could prove disastrous.
The school hires only certified instructors and coaches. The horses are all suited to their purpose, sound and in good health. The facility is well-maintained. The students are all of appropriate age and experience for the exercises they are doing. Everything seems perfect – how could this scenario spell disaster?
During the routine safety inspection at the beginning of the group lesson for four riders, the instructor discovers on rider # 3 a stirrup leather with rotted stitching. Crisis averted! She replaces the stirrup leather with a new one and sends the class out on the rail. But the distraction caused her to forget to check rider #4, and it just happens that her girth has not been adjusted properly.
Twenty minutes later, the student with the improperly fitted girth is cantering a circle and the saddle slips. The horse spooks, and the student falls off, breaking her collarbone.
It is obvious that improperly fitted equipment caused the accident, demonstrating negligence on the part of the riding school/instructor because the tack check did not include this student’s girth. The liability policy should respond when a mistake like this is made; however, if there is a condition or warranty under the policy that all equipment will be inspected prior to every use, it is quite possible that the policy will not respond and put the riding school in potentially deep trouble.
Of course it is imperative that we use sound risk management practices (including tack checks at the beginning of every ride) in a consistent and effective manner to help prevent accidents from occurring, but your insurance company has to understand that even the most diligent Insured can make a mistake. If you are required as part of your application process to sign off on a list of conditions that you can’t guarantee will be met 100% of the time, then you should discuss this with your broker, or explore other options.