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: Are there different types of Full Mortality, or All Risk Mortality, Policies? If so, what are they?
BRYCE BURTON: As we've discussed in previous issues, Full Mortality Coverage, also known as All Risk Mortality, is the most common coverage placed on Thoroughbreds. As the name suggests, it provides coverage on the animal for death due to any accident, illness, or condition. The policies can be written on either a Straight Rate basis or a Deductible basis.
With a Straight Rate Full Mortality Policy, there is no deductible applicable in the event of a loss. As soon as a claim is filed, the insurance company will pay the insured the full agreed-upon Sum Insured Value. As you'd expect, the rates are generally higher across the board than what you'd see within a Deductible Policy, resulting in higher premiums. Flat racers are generally on the higher end of that rating scale and breeding stock are at the lower end. The other Full Mortality option that is available to Thoroughbred owners is a Deductible Full Mortality Policy. In order for the underwriters to quote this option, they typically like to see a schedule of around 20 or more horses with a total sum insured value of around $1 million or more. No one horse can be insured in excess of 20 percent of the total sum insured on the policy. An annual aggregate deductible is calculated at inception of the policy, which must be exhausted within the policy period before a claim will be paid by the insurance company. When this type of policy is quoted, the applicant may be given a few deductible options, whether it be a higher premium rate and lower deductible rate, or vice versa. The owner has the option to choose the deductible amount that makes the most sense to his or her specific operation.
If an owner has more than 20 horses, it's ultimately up to the policyholder, depending on their schedule of horses, to determine what they'd like to accomplish by putting the policy in place. For example, an owner with a handful of higher-valued horses, or a more top-heavy schedule, may elect to solely insure those horses on a Straight-Rate basis. Others who may have a schedule of 20-30 horses where the values are more evenly dispersed may elect to go with the Deductible option, so they're not “throwing darts” at which horses to insure.
We always recommend for applicants to quote a Straight Rate option as well as a few Deductible options in order to determine the correct fit for their specific schedule.
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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