Theft on the Equine Mortality Policy

Most equine insurance policies include coverage for theft of the horse. Of course there are conditions to this coverage just like the mortality coverage. From the carrier standpoint, they intend to cover theft if you go out to the barn in the morning and your horse is missing from their stall or the pasture. Or if you are at a show and the horse is gone. Of course it requires filing a police report and some other conditions (usually some evidence of foul play - mysterious disappearance is usually excluded).

But a recent situation got me to asking more questions....what if you sell a horse on contract and are listed as the Loss Payee but the buyer of the horse takes the horse away from where you thought it was going to be kept, stops making payments, and you cannot get ahold of them through any means? I think all of us in the equine world would agree that means the buyer has stolen that horse from the seller. But is it insurable as theft under the insurance policy? And does it matter if the horse is insured in the name of the buyer with the seller as the loss payee or in the name of the buyer with the seller listed as an interested party?

The short answer to both questions is "no". The policies I've read have an exclusion for Voluntary Parting. Voluntary Parting is usually defined slightly different by various carriers (mostly because of more or less language in the definition), but all come down to the idea that you entrusted possession of the horse to someone else either voluntarily or through fraud, trickery, or false pretense and therefore you have voluntarily parted with the horse.

But wait, shouldn't it be theft if someone signed a contract and failed to follow through and is hiding the horse? It sure feels like it, but it does not meet the insurable definition of theft. In this case, the matter becomes a civil one as failure to follow a contract and the remedy is typically repossession of the horse or going through court to get a judgment and then likely trying to garnish wages, etc.

So how can you protect yourself? Our suggestion would be to have a solid sales contract with specific conditions and the venue that will resolve any breach (and best to have one drafted by an equine attorney that can help you if you need to try to enforce the contract).