What Does Your Commercial Equine Insurance Give You?

Denial of Coverage

An insurance company can deny your business coverage either by declining an initial application or by denying an individual claim and/or canceling your policy.

Every insurance company has publicly established guidelines it follows in deciding what it will and will not insure, called underwriting guidelines. They are based on the amount of risk an insurance company is able to take financially.

An insurance company might deny coverage because the business activities that an applicant has requested coverage for fall outside those guidelines. It can also happen as a result of a miscommunication between the applicant and the insurance company; that’s important to understand if you’re looking for new insurance or have been denied coverage in the past.

“I can’t tell you how many times underwriters have turned down accounts,” DeTurk said, “because the question is asked on the application, ‘Do you offer trail rides?’ And the applicant answers ‘yes.’

“What the applicant means is ‘Yes, I take my lesson students out on the trail as a normal part of my instructional program,’ not, ‘I offer rented saddle horses to the public.’” Both operations are referred to as trail rides, but one might be within an insurance company’s underwriting guidelines and the other might not be.

DeTurk points out the advantage of using an equine insurance specialist. “You need someone who knows both the equine professional’s business and the business of the insurance company, who can say to the underwriters, ‘This is part of their normal lesson program; we should offer the coverage,’” DeTurk advised. “You need someone who can interpret your equine business for the insurance company and act on your behalf.”

In addition, an insurance company cannot arbitrarily cancel your policy. According to DeTurk, “Laws are clear in protecting the insured. An insurance company can only cancel policies or deny coverage for specific reasons, such as non-payment of premium, or if there’s been some substantial misrepresentation of fact that increases hazard.

“For example,” she continued, “say an insurance company does not cover hacking, also known as rental of saddle animals to the general public. The company asks specifically on its application, ‘Do you provide trail rides to the general public?’

“If the answer is ‘no’ on the application, but the operation is doing it anyway, and there’s a claim, the insurance company has the right to deny coverage and cancel the policy.” This is because of both the misrepresentation and the increase in hazardous operation.