Equine Law Blog
When finances are tight, people sometimes consider canceling or reducing their liability insurance coverage. Watch out – this could be mistake.
What is Liability Insurance?
Liability insurance as to equine activities is designed to protect people from certain unintentional situations where someone is injured either on your property, from an act that occurs around your horse (such as a bite or kick), when your horse gets loose, or from acts that occur when someone rides your horse.
Policies exist that protect people who stable horses on their own property, horse owners who board their horses off premises, and equine industry professionals such as riding instructors and boarding stables. Examples of liability insurance policies include: homeowner’s insurance, commercial general liability insurance, farmowner’s insurance, equine professional liability insurance, individual horse owner’s liability insurance, and several others.
If someone brings a claim against you, and if your liability insurance policy covers that claim, the insurer will defend the matter at its expense and/or pay settlements or judgments (up to limits set forth in the policy). The company’s rights and obligations vary and are explained within the policy.
Risks of Reducing or Eliminating Coverage
Those who cancel or reduce their liability insurance do so at great risk. For example:
- Legal Expenses. If a claim or suit is brought against you, but you have no insurance, can you pay the legal fee for your defense? Defense costs could potentially be tens of thousands of dollars, and there is never a guarantee that you will win.
- Liability. What if your state law makes you automatically liable for an equine-related incident? In Michigan, for example, Michigan’s Animal Running at Large Act imposes strict liability on horse owners or keepers for certain property damage caused by a horse “running at large.” If your horse becomes loose and damages a large truck, are you ready to pay the repair costs? Your liability insurance might take care of this, sparing you the expense.
Industry Myths
Over the years, people have raised several reasons to justify canceling or reducing their insurance. As explained below, these reasons are largely based on myths.
- “My state’s equine liability act makes insurance unnecessary.” As of June 2011, 46 states (all but California, Maryland, Nevada, and New York) have some form of an equine activity liability act. A careful review of the laws will reveal that none was designed to permanently end all liability. People can, and do, file lawsuits. And even if an equine statute justifies dismissal of a case, who will pay for your legal defense? Liability insurance remains important.
- “I have a liability release so I need no insurance.” It is true that most states have enforced waivers or releases of liability when properly drafted, presented, and signed. However, a well-drafted release is never a substitute for insurance. People who sign these documents sometimes sue. And even if the state has enforced releases in the past, there is never a guarantee that your document will succeed. Also, releases can be powerless against certain types of legal claims.
- “Nobody will sue me if I’m not insured.” Some lawyers will not sue uninsured people. Some will. When an uninsured person loses his case, and an enforceable judgment issued, the winning party might seek to collect the judgment by seizing and selling off the losing party’s property.
ShareholderJulie Fershtman is considered to be one of the nation's leading attorneys in the field of equine law. She has successfully tried equine cases before juries in four states. A frequent author and speaker on legal issues, she has written ...
