By TE Cunningham
Most of us are familiar with life insurance and why it is beneficial for those left behind. In large corporations, many CEOs and other C-level executives are insured to protect the business in case of loss of life.
But what if your company’s value is in livestock? Well then, you purchase something called animal mortality insurance, which financially protects an entity that has animals as a critical function of its core business.
Farmers, ranchers, zoos – heck even circuses - count animals as a critical piece of the business operation, and if something happens to the animals, it can severely impact business profitability.
“I see many different livestock owners use this policy as a protection for their animals,” says TrustPoint Insurance Agent Sarah Rice. “Due to the rural area I am in, the most common coverages I have written are for roping horses and equestrian show horses. I do have some clients that are involved in quarter horse breeding and insure their studs.”
This specialized insurance works similarly to other insurance, in that it tends to be based on specific events or instances – storms, traffic accidents, contaminated water, hypothermia, accidental shooting and more.
The coverage is two-fold: protecting the company or individual from the cost of replacing the animal, and compensating the anticipated profits that the animal can no longer generate. Think of a racehorse that has won the Triple Crown – what is the lost revenue from stud fees – some studs make as much as 10-12 million dollars per year.
Also, think of the time of training that goes into some animals, for example, police and service dogs. That cost is covered as well.
For the farmer, the value of the animals is vast: chickens on a poultry farm, heads of cattle, pigs and more. The mortality insurance will cover not only the accidental death of these animals in a farmer’s policy but also the natural passing in addition to that of death by injury, disease or the case of theft. Without this type of insurance, a livestock breeder could be ruined with one fatal disease outbreak or a catastrophic event like a tornado.
The cost of these premiums depends on many factors, including the animal’s age and value; animals are appraised as part of the insurance process.
"Fortunately, we have not had many times when the mortality policy has had to come into effect with our insureds at TrustPoint,” says Rice. “However, the most common coverage used would be the emergency colic coverage. If you are an equine owner, you will understand colic comes quickly, and if you are not prepared to handle the situation, it could be fatal. This coverage covers costs for immediate care- tubing and/or surgery."