Equine insurance experts answer your questions about insuring Thoroughbreds for the breeding and auction realms.
QUESTION: How do you determine the insured value of a horse on a Full Mortality policy?
BRYCE BURTON: The simplest scenario for both the policyholder and insurance carrier is when a horse is purchased at public auction, because the horse's sum insured value is set at that purchase price from the start. There will be no veterinary requirements in order to place coverage on the horse. A private purchase falls within the same category, as the private purchase price will determine the sum insured value of the horse. However, depending on the value, a veterinary certificate will most likely be required and the underwriters may ask for a bill of sale in order to confirm.
Determining the insured value of a racehorse isn't as cut and dried as insuring a new purchase out of the sale. There are multiple factors that come into play. The underwriters will approve a value based on the value of the races the horse has been running in, the amount of money earned on the track, pedigree, value as a broodmare after retirement for fillies, etc. With that being said, there is an “Agreed Value” endorsement included within Full Mortality policies. This endorsement states that the company agrees to pay you the full sum insured amount which was agreed to at the beginning of the policy period, unless A) The racer is entered into a claiming race where the claiming price is less than the agreed upon sum insured value; or B) an insured horse is entered into public auction and is an RNA at a lower amount than the agreed upon sum insured value. This is put in place to ensure that the market is continuously setting the insured value and that the insured horse is covered for an appropriate amount.
For foals and yearlings, the general rule of thumb is that the underwriters will agree a value up to two times the stud fee paid. As an example, the underwriters would have no problem agreeing a value up to $250,000 on a 2019 foal by Uncle Mo, as his 2018 stud fee was $125,000. The insurance carriers will always consider higher values on a case-by-case basis upon request depending on the foals pedigree and other information that may lead to a higher valuation.
Bryce Burton is a property and liability specialist for Muirfield Insurance. He is from Frankfort, Ky., where he grew up an avid race fan. His Thoroughbred racing fandom combined with a collegiate internship in the insurance industry, culminated in a start in the equine insurance field. Bryce has been with Muirfield Insurance since 2014, following his graduation from Transylvania University in Lexington
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