With frequent dips in the market, many owners (and buyers) are looking to loan out horses and ponies rather than exchanging money for the ownership of the horse. This is a viable solution for both parties and is often a good compromise to resolve various financial or emotional situations. But what about insurance – who is responsible, the loaner or the loanee?
In fact there is no right answer here. Either party can take over the responsibility of arranging insurance and the details of such an agreement should be specified in a contract between the two parties. Loan Agreements are common practice and there are various tools available online to help with producing a suitable document. Many insurers will also ask for a copy of the Loan Agreement for their records so it is worthwhile taking the time to have this in place to avoid any disputes further down the line.
If the owner already has an insurance policy in place then it is perfectly acceptable for them to continue with the cover so that they remain in control of the policy and are fully aware of what sections of cover have been included. The owner must also inform the insurers that their horse is now out on loan and advise of the loanee’s name and address at least. If the owner would prefer that the loanee becomes responsible for ensuring adequate cover is in place then it must be made clear what sections of the policy must be included and if the owner has any specifications for minimum cover levels e.g. if the horse has to be insured for a certain value or public liability cover must be included for a minimum of £2 Million. If any covers are omitted from the policy then it should be discussed who would be responsible for any costs incurred where there is a lack of cover for this.
In the event of a death claim any settlement for the value of the horse would be paid to the owner, however any claim for veterinary fees can be assessed as normal with payment being made to the loanee, assuming they were responsible for the expenses incurred. It is important to keep your insurers fully aware of any change in circumstances to ensure the horse is appropriately covered for any change in activity level with the loanee.
As always, good communication is paramount between insurer, owner and loanee and the key to avoiding any unexpected lack in cover further down the line.
Laura has worked in the insurance industry since 2006 after achieving a BSc (Hons) in Equine Science from The University of the West of England. She studied at Hartpury College in Gloucester and has extensive equine knowledge from personal experiences as well as further professional training. She has two horses to compete – ‘Molly’ who is an Intermediate/ CCI** level eventer and ‘Lex’ who showjumps at 1.35m level – and can regularly be seen competing around the UK.