Inventor and politician, Benjamin Franklin, once said, “In this world nothing is certain but death and taxes.” If Franklin was uttering those words today, he might be inclined to add insurance to his record of certainties.

And nowhere should that be truer than for anyone offering lessons, boarding and other equestrian services. Adding 1,500-pound unpredictable animals to any scenario increases the risk of potential lawsuits, especially when the (increasingly litigious) general public is involved.

Owners/operators of equestrian businesses need to consider what type of liability insurance will best protect them if personal injury or property damage results from activities borne out of their horse business.

For many, the topic of insurance causes severe brain cramps. To make the matter easier to digest, Horse Sport asked Doug Henry, whose company, Henry Equestrian Insurance Brokers Ltd. (Aurora, Ontario), has offered insurance solutions to Canadian horse people for more than 25 years, to help us find our way through the complicated, sometimes intimidating world of commercial stable liability insurance.

Where to Start?

Liability insurance is a contract intended to protect the stable owner from financial loss if he or she is found liable (legally accountable) for injury or damage to another person or property.

Homeowner’s liability policies can, depending on the insurance company, cover a certain number of horses on the property.

These policies, however, generally contain an exclusion stating that if you make money from your horses, you are not covered for these activities. This could be as simple as offering your neighbour’s daughter weekly lessons on your old nag or taking in a single border.

Many stable owners own farms and have farmer’s comprehensive liability insurance. Unlike homeowner’s liability insurance, farm policies can protect against liability arising from business activities.

“In some cases, farmer’s comprehensive liability can be extended to cover the commercial operations of a horse facility,” said Henry. “We have a lot of risks on the books for which farmer’s comprehensive liability is extended to cover the entire commercial operation. In other words, if [the business] is a riding school, then it would be covered. If the horses are being used for instruction, it would be covered.”

Henry continued, however, to say that farm liability may not necessarily offer the type of specific coverages required for a commercial stable.

Insuring companies might not want to assume the risk if, for example: the operation grows too large for the insuring company to handle; clinics, horse shows, or camps are offered on the premises; the value of the horses at a boarding stable is too high; or you are showing off-property.

Although farm liability insurance premiums may prove less expensive, stable owners should seriously consider a separate equine general commercial liability insurance – policies written expressly to consider the unique risks associated with equine businesses.

Getting What’s Right for You

Several Canadian brokers deal in equine-specific insurance. They know the industry and its inner workings and can provide tailor-made policies for each business’s needs. Conversely, they can knowledgably inform underwriters as to the particulars of the equine industry or the quirky nature of horses.

Brokers are able to offer packages that blend the business end of things with property insurance (protecting against damages to farm buildings such as house, barn, arena, as well as tack and farm equipment), personal liability as well as other coverages including care, custody and control. This is a policy that protects you if horses you don’t own, but that are under your care (i.e. boarders or horses in for training or showing) are injured or died due to negligence on your part or that of your employees.

Henry advises that insurance seekers shouldn’t be swayed by policies that will save you a few hundred dollars on the premium.

Don’t “play insurance broker,” he said. “That’s like me playing veterinarian. I’m not educated for that. I may know a lot about the care of horses, but when it comes right down to it I’m not a vet.”

Examining the documentation might reveal you aren’t covered for the same risks as another policy that might be more expensive.

“There’s going to be a big difference in coverages if there’s a big difference in premiums,” Henry warned. “The bottom line is, if you have a good insurance broker, who knows the ins and outs of horse insurance, then you should be in good shape.”

Risk Management

When making an application for insurance, be honest in declaring the activities your business undertakes. If, for example, you fail to state you offer trail rides to the public and have a claim arising from an injury due to a client’s fall while participating in this activity, your insurance will not cover you.

Also consider your stable’s risk management policies. Henry said he sees many claims resulting from individuals who claim to be professionals making what he calls “stupid” mistakes, perhaps due to a lack of solid horsemanship skills or mere laziness.

“These are people who should know,” he said. “Either they’re too busy or they assume insurance will look after everything.”

He advised that stable operators take it upon themselves to run a safe, efficient stable in order to minimize risk. Brokers and equine insurance companies can offer suggestions to help you create and maintain a safe facility right from the best building materials to use, hay and equipment storage plans, through to safety programs for staff, clients and visitors.

When you receive your policy, resist the temptation to squirrel it away into a drawer or file, ignoring it.

“The word ‘insurance’ scares everybody off,” said Henry. “It’s complicated and they don’t want to be bothered, they just want to know they’re covered.”

Definitely read your policy and ensure you understand the terms that are set out. Ask questions, if necessary. Review it when the annual renewal time comes around. Then, should a claim arise, you won’t face the unpleasant realization that your policy will not kick in.

“It may be boring, but when your whole financial being is at stake, you would think people would take care in what they’re doing,” said Henry.

Stable owners should take Henry’s advice: find and most importantly, understand an insurance policy that best protects their commercial interests.

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Insurance Terminology

Part of what makes insurance daunting is the language – rather like it is for a neophyte equestrian learning horse lingo. Following are definitions of a few terms that might help clear the insurance fog:

Agent

The licensed representative of an insurance company, who sells insurance policies.

Broker

An individual or company that sells insurance policies from a number of companies.

Insured

The person buying the insurance.

Insurer/Carrier

The company providing the insurance policy that will write the cheque in a claim.

Premium

What you pay to the insurance company to receive coverage.

Policy

The written contract between insurer and insured.

Deductible

The amount of a claim the insured agrees to pay toward losses before a payment is made by the insurer.

Exclusions

The parts of an insurance policy that describes a loss or risk that will not be covered.

Underwriter

The individual at an insurance company that evaluates and decides whether an application for a policy should be approved.

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Employee Insurance

Many stables opt to classify their employees as “independent contractors” instead of “staff” to avoid the hassles of paperwork and the necessity of paying into the Canada Pension Plan, Employment Insurance program, and, perhaps most significantly, considering the risks associated with working around horses,

Workers’ Compensation

Workers’ Compensation is a no-fault workplace insurance program, providing compensation benefits (i.e. medical and rehabilitation services and wage-loss benefits) to workers who sustain a workplace injury. It also protects employers from the threat of workplace lawsuits. The program is governed by laws set out by each province.

Employers contribute to an “accident fund” from which the benefits are derived. Doug Henry explained this cost to employers (which depends on the industry to which the business belongs and the size of payroll) can turn off some stable owners as can the work involved in getting coverage for their workers.

Henry said, however, employees and contractors are not covered under most commercial general liability policies. And, he warned, “You do not want an employee suing you. You know if they are on Workers’ Compensation and they are injured, the bottom line is they can’t sue.”

Occasionally, stables do take on legitimate self-employed independent contractors such as coaches and trainers, allowing them to conduct business on the premises. These individuals must show proof that they have their own liability insurance and stable owner/operators should ask to be named as an additional insured on the contractor’s policy.

For more information on Workers’ Compensation go to awcbc.org and to the Canada Revenue Agency, cra.gc.ca, for details on the difference between self-employed contractors and employees.

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Farm vs. Commercial Facility Insurance

With Don Vale of Colley, Borland & Vale Insurance Brokers Ltd.  

Farm insurance is just like home insurance, except it is usually printed on a different form where the coverages are slightly different. With farm insurance, you also have outbuildings that, under a homeowner’s policy, cannot be insured – such as barns, arenas, etc.

We do reconstruction appraisals on farm dwellings and outbuildings that tell us the cost of replacement, and we recommend those values to our clients. If they don’t want to take our values, we can reduce them, but the coverage is then not as broad, and they have to realize that if they don’t insure to value they are subject to penalties. Farm outbuildings also have re-building clauses. For example, a farmer has $100,000 worth of coverage on a barn – whether that is enough to rebuild or not does not matter. The farmer can make that decision, but if he doesn’t rebuild he only gets half the insured amount.

There is really no difference between regular farm insurance and commercial farm insurance for a commercial stable. We may recommend different deductibles based on values, but the perils insured are the same. The difference is in the liability coverage between a regular farm and a commercial stable. A commercial operation that has many activities has a much larger risk of liability than a farm where they are growing crops for example, so the liability premiums for the commercial operator are much greater and a lot more criteria must be met.

As brokers, we are supposed to be trained enough to ensure that the client doesn’t make mistakes in judgment when selecting a policy. Sometimes though, clients fail to tell the broker exactly what they are going to be involved in or after the policy is issued they add more operations to their facility and don’t tell the broker, which leaves them open to lawsuits that may not be covered.

A farm owner should make sure an agent or broker comes to the farm and does a comprehensive review of the property, proper appraisals, discusses discount, deductibles, coverages, waivers, contracts with clients, etc. Every new policy is tailored to the clients’ needs and there is a reasonable amount of flexibility, but many of the things are the same.