How does loss of use insurance work?

  • Trying to get your head around different types of horse insurance can be a confusing business. And with loss of use insurance questions are often raised about when a company will or won’t pay out.

    “Loss of use insurance covers the horse if he becomes permanently incapable of performing the tasks for which he is insured as a result of accident or disease,” says Guy Prest from equestrian insurance company KBIS.

    “The definition of specific use will vary, depending on the individual policy and company.”

    There are two distinct types of cover sold:
    ➤ External injury only loss of use is due to accidental external and violent injury only (involving an external wound).
    ➤ Full loss of use provides cover in the event your horse is permanently unable to perform his insured function due to an accident, injury, illness or disease, as long as these were not pre-existing conditions.

    Claim protocol

    “One thing to be aware of when you take out permanent loss of use (LOU) cover is you need to think whether it would be of benefit to you,” comments Kate Hopkins, marketing consultant for Petplan Equine. “It is particularly important to think what your situation would be if your horse became ill or sustained a career ending injury which would make him permanently unable to compete at the level you originally purchased him for and had to be retired early or compete at a lower level.

    “With most insurance policies,” continues Kate, “if LOU cover is to be included, your provider may need to see an up-to-date five-stage vetting. At Petplan Equine, a five-stage vetting is required if your horses value is over £2,500.

    “It is always advised, especially when making a LOU claim that you speak to your insurer as soon as possible. Having a channel of communication between you, your vet and the insurance company means they can guide you through the process and the options available to you.”

    What happens next?
    “The insurer will require a report detailing the case history (including dates), diagnosis and prognosis including treatments available or that have been already tried,” says Guy at KBIS.

    The insurer then arranges for the case to be reviewed by their veterinary adviser.

    “From this, the insurer will be able to decide if they wish to have a second opinion or request a treatment regime,” Guy adds.

    “Alternatively, if both veterinary advisers agree that it is a claim, it can be promptly settled. Otherwise, the case may go to arbitration by a leading veterinary practitioner agreed by both parties.”

    If your horse is still capable of light work, what he is allowed to do in terms of a competing totally depends on the individual insurer. However, all loss of use horses are freeze marked with an “L”.

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    Exceptions to cover
    “Loss of use insurance does not cover for loss of value, lack of ability, behavioural problems or temporary incapacity,” explains Guy.

    “We also specifically state what the horse is being insured for. If you insure a horse as a hack and it breaks down while eventing at two-star level, that’s a breach of contract.”

    You also can’t insure a horse for a level you would like him eventually to reach — it will only be covered for the activities and level he is competing at the time of insuring.

    Some horses are insured for a number of activities.

    “Check whether your horse would have to be incapable of all his uses or just one, as this could affect your ability to claim,” says a spokesperson from NFU Mutual.

    “Our cover will pay if a horse is incapable of one of his uses, so if you have a mare who events but could be used for breeding, this would still be a valid claim if she couldn’t event.”

    Take a look at our advice for choosing the right policy

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