What is loss of use insurance for horses and how does it 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.

    What is loss of use insurance for horses?

    “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 for an 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

    “Most importantly with loss of use insurance, you should consider whether it’s right for you – it’s an additional cost to a basic premium,” says Francis Martin, CEO of The Insurance Emporium. “In addition, not all insurance providers offer full loss of use if your horse has an accident or injury or condition that results in permanent loss of use – some only cover external injuries and accidents only, so you should always check the small print. Finally, if your horse doesn’t have to be put down and you choose to retire it then it may only pay a percentage of its market value.”

    How do you make a loss of use claim?

    “One thing to consider before you take out permanent loss of use (LOU) cover is whether it would be of benefit to you,” explains 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 that 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 will 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.”

    Most insurance companies will allow customers to raise a LOU claim any time within the 12 months that follow the first clinical signs of the illness or the date the injury happened. If you think you may have a claim then it is recommended that you speak to your insurer as soon as possible, so they can help guide you through the process.

    What happens next?

    Loss of use claims can take a considerable amount of time to settle, particularly if they involve an injury such as tendon or ligament damage, which needs to be given time to heal before the horse’s ability to return to work at its previous level can be assessed.

    “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”.

    When will loss of use insurance not pay out?

    “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 and will not be covered.”

    You also can’t insure a horse for a level you would like him eventually to reach — he 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 different 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.”

    In most cases LOU will not pay out if a horse or pony used for showing suffers an injury that results in blemishes or scars. Also horses will not be covered for fertility issues unless the horse has been insured specifically for breeding (as a broodmare or breeding stallion) and it is proven that they are unable to breed as a result of an injury or illness.

    Take a look at our advice for choosing the right policy

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