A fire started in a horse training facility that killed 23 horses and destroyed the property. It was reported the fire broke out in the early morning hours. The owner said six employees entered the burning barn trying to save as many of the horses as possible. Owner, Eric Reed, called his staff “heroes“. The newspaper reported there were 13 horses that survived the ordeal.

“Reed said most of the horses that died were yearlings and some were racehorses. He told the Herald-Leader that one of the horses killed in the fire was a 3-year-old filly who recently won $100,000 in a stakes race. Another horse was scheduled to race Monday in Ohio.” You can see the emotional upset in the recorded interview by a local television station.

Fires involving horse training facilities bring various types of insurance claims. A number of  possible claims come to mind seeing the interview of the tragic loss. The various losses that might produce insurance claims are the insured property of the respective owners and also potential liability claims if negligence was involved in the fire or rescue efforts.

In cases where the horses were being boarded as part of the training, the horse owners may have purchased horse mortality coverage to protect their financial interest. Horse mortality insurance comes in several forms that include most risks of loss. Theft coverage is part of some insurance policies. The value of the horse may preset at the time of application for the insurance, but the insurance company probably has a maximum limit of coverage. There may also be exclusions for race horses, certain breeds, or other concerns. Of course some insurers write insurance policies for race horse, hunter jumpers, and the more expensive animals. It an almost certainty the insurance policies will provide for the right of subrogation.

The horse owners’ insurance company may have to pay the loss, but understandably the insurer will want to recoup the amount paid out for the claim. The typical horse training farm will carry general liability insurance. “Liability insurance is available for a variety of equine related activities – ranging from a full scale commercial horse boarding, training and riding instruction operation to the back yard horse owner’s personal pleasure use.” If the insurance company paying the horse owner sues to recover, it will likely trigger the liability policy’s duty to defend. Depending on the facts and policy language, it may result in insurance coverage for indemnification of the loss.

A lot of horse trainers purchase coverage called Care Custody and Control insurance. “This insurance provides coverage for your legal liability for injury or even the death of a non-owned horse that you have in your care custody and control. (This does not include your horses or ones you may be leasing.) If you are in the business of boarding or training horses for others, it is highly recommended that this protection be added by endorsement to your Commercial Liability policy. Coverage may be included for transportation of horses which is incidental to your business.” It is a separate endorsement of coverage under a lot of insurance programs.

canstockphoto10129388The horses are not the stopping point of the insurance claims in a fire to a training or boarding farm. The business suffers the damage or loss of the barns, waters, feeders, supplies, tack, and equipment. The damage can be extensive. Barns are expensive to rebuild and equine equipment and tack are not cheap. It can be difficult to find replacement cost coverage from insurers for equine operations. Insurance written for actual cash value or ACV results in the training or boarding company having “skin in the game” and will result in uncovered losses.

Transportation equipment and vehicles are part of nearly every horse business. The commercial demands of the horse industry require moving horses around the country for races, shows, and events. The trucks, trailers, and semis may be insured by different insurers and mean claims for those losses are adjusted by others.

The losses in this fire were estimated by the owner, Mr. Reed, to exceed $2 Million. Large claims routinely create claims under Umbrella policies. Since the underlying  insurance policies will have a maximum coverage limit, the Umbrella coverage may come into play. If for example, the policy has a $1 Million per occurrence limit, the Umbrella policy may be needed to pay for damages.

It is also not uncommon for the primary insurance company to cede or reinsure part of its own risk. In large losses, the damage may involve reinsurers who will end up paying for portions of the loss encountered by the insurance company that provide the principal coverage to the horse training or boarding farm.

From the initial reports, none of the staff or caretakers of the horses were injured by the fire. In situations where an employee is burned or injured, it may create workers’ compensation claims for the business. Smoke inhalation can turn into a trip to the hospital or even a doctor late in the week. These medical expenses have to be paid by someone. In some jurisdictions, agriculture is exempted from workers’ compensation. If the employee has health insurance, the medical expenses may by paid by private health coverage.

The horse trainer will have a loss of income associated with fire. The people paying to have the horse trained or boarded will no longer be making their monthly training payments. The business will have a reduced amount of income. If business interruption insurance protection was bought, it may offer reimbursement to make up for the lost income. The facility may have borrowed money or have a line of credit for the operation. The bank or lender will expect to be paid regardless of the fire.

The types of coverage, facts and particular circumstances can call for knowledgable legal counsel to address. Coverage questions abound in the horse industry and insurance coverage available. Insurance is sometimes complicated and extensive fire claims are no exception. Retaining an attorney promptly makes sense when the size and extent of a loss are clearly going to result in issues for some time to come.

The reason business purchase insurance is to protect against devastating, unexpected damages from fires, storms, casualty losses, thefts, etc. Fortunately, some of the misfortune can be taken care of.