What Does Your Commercial Equine Insurance Give You?

Sudden Increase of Premium

There are a number of reasons a premium can suddenly increase; one reason might be related to the type of insurance company you have. There are two basic types of insurance companies, ‘admitted carriers’ and ‘excess and surplus lines carriers.’

“Admitted insurers (carriers) have to file their rates with each state and the state has approved those rates,” DeTurk explained. “So, an admitted insurer cannot arbitrarily decide to jack rates up without a change in filing.

“In addition, if an admitted carrier becomes insolvent, the state’s Guarantee Fund refunds any premiums due policy holders. It also pays any claims for policy holders that occur during the period of time from the insolvency to the individual’s purchase of new insurance.”

In contrast, excess and surplus lines insurers don’t have to file their rates with the states. (They are also called non-admitted carriers.) “Non-admitted carriers can basically do whatever they want with their rates because they are not admitted,” DeTurk said. “They don’t have to go by filed rates.

“If they go insolvent, there’s no Guarantee Fund to back them up. That’s not to say all non-admitted carriers are financially weak. For example, Lloyds of London is well respected and strong financially; the chance of Lloyds going out of business is not very likely. But they can jump their rates around.”

So, why use them? “You might go to an excess and surplus lines carrier as a carrier of last resort,” DeTurk explained, “because the admitted carriers won’t cover you or your type of operation.”

It goes back to a company’s established underwriting guidelines, based on the financial risk an insurance company is able to take. Typically, excess and surplus lines carriers are more willing to insure higher risk operations.

“There’s nothing volatile about operations like boarding, breeding, training or lessons,” DeTurk said. “On the other hand, rodeos, polo, vaulting, trail riding – those are the kinds of operations that might need to seek excess and surplus lines coverage.”

Your state’s insurance governing body can tell you whether or not your company is an admitted carrier. If it’s not, you might want to look around for another company.

Another common reason rates jump is due to a change in your business. “If, all of a sudden, you have 10 more boarders,” DeTurk said, “the premium is going to go up.”

Again, there can be advantages to having an insurance agent experienced in the equine industry to help prevent any miscommunication between the insured and a company’s underwriters that might affect your premium rates.