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The Best Coverage for Your Equine Business

Your Homeowner’s Policy May Not Be the Solution

The UPHA on-demand webinar series LET’S TALK ABOUT THAT includes a presentation by Julie Fershtman of Foster Swift Collins & Smith, PC (www.fosterswift.com). Sponsored by Equidae Insurance, “Horse Sense in a Litigious World” imparts a legal perspective on the equine industry for horse and farm owners.

Within this blog, we share Ms. Fershtman’s remarks on equine business coverages. Subsequent blogs will cover more of Ms. Fershtman’s presentation, so check back monthly to gain a wider legal understanding of the equine industry.

The best way to avoid disputes with your insurance company, of course, is to make sure you have the coverage you need before a claim occurs. If you are an equine industry professional -- even if you're giving just three lessons a week -- business insurance is important. That means you should have commercial general liability coverage or equine professional liability coverage in place. If you have an unrelated day job and you're doing horse activities such as training or teaching on the side, you might be able to add an incidental business endorsement to your existing policy. Or course, you should discuss this with your insurance agent.

If all you have is homeowner’s insurance, but you have a horse business on the side, exclusions exist within your homeowner’s policy that prevent coverage for your business. Those exclusions will result in declined coverage from your insurance company, forcing you to deal with claims on your own and requiring that you hire an attorney at your own expense.

Here are a few exclusions in homeowners’ policies and examples of which you should be aware if you do not purchase business insurance for your equine business activities:

1. Business Pursuit Exclusion: If you're teaching a lesson outside of your day job and the student falls off, gets hurt, and makes a claim against you, your homeowner’s insurance company could be justified in denying coverage for that injured student. Insurers might believe that the lesson cost you collected made this activity a “business pursuit.” Be aware of this, and if you're convinced you don't need business insurance, get confirmation from your insurance agent and maybe even your homeowner's insurance company. Make sure.
    
2. Employee Exclusion: Business owners may have interns, apprentices, and/or workers that they personally consider “independent contractors,” without knowing if that is, in fact, legally correct. Homeowner’s insurance policies typically have “employee exclusions.” That means if people working on your behalf get injured, your homeowners insurance company could be justified in denying coverage based on this exclusion.
   
   What do you do if that situation occurs? If you are convinced that your workers are truly “independent contractors” – who may not qualify under the terms of your policy as “employees” and for whom you wouldn't need Workers' Compensation insurance -- discuss your situation with a lawyer. A lawyer can discuss the coverage issue with you, and a lawyer can also advise whether your workers are more likely classified as “employees.” Unfortunately, your state law could very well consider those workers you’ve classified as “contractors” to actually be “employees.” To be safe, consider purchasing Workers' Compensation coverage. The cost of Workers’ Compensation coverage is less than a financial hit you might experience from an employee lawsuit against you.
    
3. Care, Custody, and Control Exclusion: Boarding and training stables usually have an exclusion in their commercial general liability policies for personal property belonging to others in their care, custody, and control. Some refer to this as the “CCC exclusion.” However, many insurance companies offer a special endorsement called “Care, Custody, and Control insurance” that is designed to cover that gap. Keep in mind that these endorsements offer less coverage than the overall policy amount. For example, you may have $1 million in liability insurance coverage, but the CCC endorsement you buy may have a sub-limit which only covers up to $25,000 on the value of the horse if you're deemed negligent. Still, this coverage should provide you with a legal defense, which is valuable. Be sure to discuss this with your insurance agent.
    

You may also want to consider purchasing an umbrella liability insurance policy to expand your coverage limit. You may think, "Hey, I belong to a particular Association, and I get free umbrella insurance, so I don't need to buy this liability insurance." Take caution, because umbrella insurance policies typically require you to have an underlying policy of insurance in place. This type of coverage is called “umbrella insurance” because it goes on top of your other liability insurance policy and protects you in the event of a serious liability that exceeds the amount of your other liability insurance. When in doubt, look into it. If you think your existing umbrella insurance covers you for everything, ask your insurance agent good questions and confirm the coverage you need.

For non-professionals, do you need additional insurance if you take your horse to a show? I worked on a lawsuit in Kentucky where a World Champion Saddlebred was frightened by something near the show ring. The horse jumped out of the arena and into the show announcer's booth, causing two people inside the announcer’s booth to become injured. They sued, among others, the horse owners. A personal horse owner’s liability insurance policy is designed to protect the owner from liabilities that could occur wherever his or her horse goes, whether on or off the boarding stable property.

In any case, the best option before a dispute occurs is to discuss your insurance coverage with your agent. Make sure your coverage is adequate for your needs and account for any exclusions. A well-prepared policy holder is one who will rarely have a dispute with their insurance carrier.

Julie Fershtman (www.equinelaw.net) is one of the nation’s leading counselors and litigators in Equine Law. Her practice crosses all equine breeds and disciplines, and serves stables, insurers, industry professionals, associations, and businesses across the United States. Her expertise includes contract law as well as business, fraud, and insurance litigation.

Ms. Fershtman’s professional distinctions are numerous and include being listed in The Best Lawyers in America, 2013-2021. She has written more than 400 articles on Equine Law and is published in numerous magazines nationwide. Ms. Fershtman is also the author of four books, including Equine Law and Horse Sense published by the American Bar Association in 2019. This book has received four national book awards and is available for purchase through Amazon.

The one-hour webinar “Horse Sense in a Litigious World. Let’s Talk About That” featuring Julie Fershtman and sponsored by Equidae Insurance, is now available on-demand to UPHA members through their website: https://www.uphaonline.com/. We encourage UPHA members to visit this website and access a library of Equidae-sponsored webinars with topics ranging from retirement planning to taxes to structuring a business to insurance hot topics. For non-UPHA members, stay tuned to this page as we bring some of these topics to you.

The views, information, or opinions expressed in this blog are solely those of Julie Fershtman, and do not necessarily represent those of Equidae Insurance.

For more information about equine or farm insurance, or if you have a topic you’d like to see covered in our blog, please contact us directly at: Equidae Insurance, Inc. 608 Virginia Street East, Suite 302 Charleston, WV 25301 p. (304) 346-1198 f. (304) 345-3535

Stacey Halloran, Agent
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