Gow-Gates Insurance Brokers Answer Member FAQ's

Understanding Loss of Use Insurance

As an Horse Owner you may have come across people talking about Loss of Use Insurance.

So what exactly is Loss of Use?

Loss of Use, or Economic Slaughter and Permanent Loss of Use as it is also known, is an extension to your basic mortality policy put in place to protect you should your horse suffer an injury or illness which permanently renders it incapable of fulfilling it’s proven role.  The key words here are “permanently” and “proven”.

Many people are under the misconception that you can insure a horse’s “potential” role, but this is not the case.  You cannot insure a 2 year old unbroken Warmblood as a potential Grand Prix Dressage horse, and you cannot insure against it being behaviourally unsuitable for your chosen role.  

This type of cover has been widely criticised in the past because, whilst the premiums are considered higher than other coverages and the health requirements are considered extreme, people have had difficulty in proving their horse’s use and value in the event of a claim.

At Gow-Gates, we have specialised brokers who are experienced in this line of insurance.  Our experience has shown that the key is to provide all the evidence required to prove your horse’s use and value PRIOR to inception of the policy.  This way, in the event to of a claim, the process is made far easier as the work has already been done.

We encourage our clients to look at the commercial and economical viability of taking out this insurance, and we usually recommend that you only consider this insurance if you are the owner of a valuable Performance horse.

Importance of Veterinary Documents

Insurers will require a 5 Stage Veterinary Certificate and a Full Set of X-Ray’s before they accept any risk for Loss Of Use.  There is also a maximum age for new business, being around 12 years of age.  A 5 Stage VC is different from a normal VC suitable for Mortality Insurance Purposes because it examines the horse during strenuous work and during/after it’s recovery.  X-Ray’s are required to eliminate any conditions which are already pre-existing.  After examination of these health documents you may or may not have a number of exclusions on your policy but this way at least you, and Insurers, are clear on what is covered and what is not.  It is also in the best interests of your horse as it allows you to note any degenerative changes noted in the report and allows you to manage them accordingly, so that you may prolong the working life of your horse.

Importance of prompt injury / illness notification

Some conditions which appear insignificant when first noticed can deteriorate and lead to a Loss of Use Claim.  As per the above, whereby you supply as much information as possible at inception of the policy, you should adopt the same approach when keeping your insurer notified of all conditions.  This way they can be kept fully informed throughout all stages of the horse’s treatment, and hopeful recovery, and it will help the claims process if the horse doesn’t recover.

Justification of Value

Due to the fact that most policies are based on Fair Market Value, which means insurers will only pay out the specified percentage of the value of the horse at that time of loss, you must be aware of your horse’s true market value.  For further information on Justifying your horse’s value please refer to the below link.http://www.gowgates.com.au/uploads/contentFiles/files/JUSTIFYING%20THE%20VALUE%20OF%20YOUR%20HORSE%20FOR%20INSURANCE%20PURPOSES.pdf

If you would like a quote for Loss of Use please contact Gow-Gates Equestrian Team directly and we will take you through the process step by step.  We always provide honest, transparent advice and will provide you with all the facts before you decide whether you wish to invest in this insurance. [email protected] or 1800 811 371.

Gow-Gates Insurance Brokers (Australasia) Pty Ltd, A.B.N 29 069 562 787, AFSL 245433.

Disclaimer: The information in the above article is intended as a guide only and should not be relied upon without the seeking independent professional advice.