American Equine Full Loss of Use Coverage (Plan A)

Full Loss of Use Coverage (Plan A) is an optional endorsement that adds coverage when an insured horse becomes totally and permanently unable to perform its declared use due to an accident, injury, illness or disease-type “incident,” but the horse does not require humane destruction.

What’s Covered

Coverage applies when all of the following are true:

• The horse develops a condition that results from an accident, injury, illness or disease (incident).
• The date of incident falls during the coverage period.
• You notify the insurer during the coverage period.
• A licensed veterinarian appointed by the insurer determines—during the coverage period—that the horse is totally and permanently unfit for its declared use, as a direct and proximate result of the condition.

How Claims Are Paid

• The endorsement pays the maximum indemnity percentage of the lesser of:
  • the horse’s value on the date of incident, or
  • the limit of insurance shown on the Schedule (including any later endorsements).
• After a claim payment, the insurer has the right to take title and possession of the horse (and requires you to sign over registration/papers).
• The insurer may offer to let you keep the horse by setting a residual fair market value and deducting that amount from the claim payment. If you disagree with the residual value, both sides attempt to resolve it, but the insurer can still choose to pay and take title at any time.
• You can withdraw the claim at any time and keep the horse.

Not Covered

• Any horse used for breeding
• Any loss of use that arises directly or indirectly from cosmetic conditions of any nature

Important Conditions

• If you and the insurer disagree on whether the horse has a permanent and total loss of use, the matter goes to a mutually agreed qualified licensed veterinarian at the earlier of:
  • 3 months from the date of incident, or
  • the end of the policy period.
    That veterinarian can decide right away or set an observation period, but must make a final decision before the policy period ends. Both parties treat that decision as final and binding.
• If a claim is paid under this endorsement or under the horse’s mortality coverage, all other coverages for that horse end, and the premium for that horse is fully earned.
• If the underlying mortality coverage ends (expiration, cancellation, or deletion), this loss of use coverage ends automatically unless the mortality coverage is reinstated or restored.

Practical Summary

Think of this as coverage for a horse that’s still alive, but can no longer do the job you insured it for—permanently. The key make-or-break items are: (1) the condition must stem from an incident during the policy term, (2) you must report it during the term, and (3) the insurer’s appointed veterinarian must confirm total and permanent loss of use during the term. If the claim pays, expect either a transfer of the horse and papers to the insurer or a reduced payment if you keep the horse with a residual value deduction.