Equine insurance experts answer your questions about insuring Thoroughbreds for the breeding and auction realms. Email us at [email protected] if you have a question for an insurer.
QUESTION: What is “Fall Of Hammer” Coverage?
BRYCE BURTON: Fall Of Hammer is a term used to describe Full Mortality Insurance being automatically placed on a horse purchased at public auction. As soon as the horse goes through the ring, coverage can instantly be placed for the amount of the purchase price. It's important to note that a policy must already be in place for fall of the hammer to be activated. This is made possible because there are no veterinary requirements for horses purchased at auction, as the catalog page is sufficient. This policy feature allows the insured the opportunity to focus on purchasing and iron out the policy details at a later date.
QUESTION: How far in advance do I have to get Fall Of Hammer booked with you?
BRYCE BURTON: If your Mortality coverage is placed with a company that provides Fall Of Hammer coverage, this goes into effect for future purchases as soon as a policy is put in place. However, it would be in the policyholder's best interest to reach out to their agent prior to the sale to notify them that they will he actively buying. This way the agent can keep an eye on the results to make sure that the company is aware of the specifics. Also, the policyholder should have their agent confirm with the Underwriters that FOH is in place prior to buying. The details can always be ironed out at sale's end, but it can't hurt to keep your agent in the loop.
QUESTION: Can the insured value of my horse be affected by a hammer price if it's a buy back?
BRYCE BURTON: Yes it can. If a horse that is insured under a Full Mortality policy does not meet the reserve set at auction, and the RNA value is below the agreed sum insured value on the policy, the policy wording states that the sum insured value must be decreased to that RNA value.
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