You find the perfect lease horse for your daughter. You sign the contract, pay the fee, and bring Bella home.
Two weeks later, Bella colics and needs $15,000 in surgery.
You call the owner, assuming she has insurance. She screams into the phone, “The contract says you are responsible for all veterinary care!”
Now you’re staring at a choice: pay $15,000 for surgery on a horse you don’t own—or let her die and get sued for the horse’s $50,000 value.
Key Takeaways
- The Contract Rules: Insurance follows the contract. If the lease says “Lessee assumes all risk,” you must buy the insurance.
- Mortality stays with Owner: Usually, the owner keeps the Mortality policy (since they get the check if the horse dies), but the lessee often pays the premium.
- Medical goes to Lessee: The lessee (who pays the vet bills) should carry the Major Medical endorsement so the reimbursement check comes to them, not the owner.
- Named Insured vs. Loss Payee: The policy must be set up correctly with the Owner as “Named Insured” and Lessee as “Additional Insured,” or vice versa, depending on carrier rules.
The “Why” (The Trap): The “Care” Gap
The trap is assuming the owner’s policy covers your bills.
The Clause:
“We will pay the Named Insured for expenses incurred…”
If the Owner is the Named Insured, but you (Lessee) paid the vet bill, the insurance company sends the check to the Owner. Good luck getting that money back if you aren’t on good terms. You need to be listed on the policy to have rights to the claim.
The Investigation: Setting Up the Policy
I called three agents to ask how to structure a “Full Lease” insurance policy.
Hallmarq / Great American
- The Structure: They recommended the Lessee takes out the policy.
- The Setup: Lessee is the “Named Insured” (paying premiums/receiving medical checks). Owner is listed as “Loss Payee” for Mortality.
- Why: This ensures if the horse dies, the owner gets the value. If the horse gets sick, the lessee gets the vet money.
Markel
- The Structure: They often prefer the Owner maintains the policy.
- The Setup: Owner stays Named Insured. Lessee reimburses Owner for the premium.
- The Risk: Lessee has no direct control. If the Owner forgets to pay the bill and the policy lapses, the Lessee is exposed.
Comparison Table: Lease Responsibilities
| Scenario | Who Pays Premium? | Who Gets Mortality Check? | Who Gets Medical Check? |
| Owner-Maintained Policy | Lessee (Reimburses) | Owner | Owner (Must reimburse Lessee) |
| Lessee-Maintained Policy | Lessee (Direct) | Owner (Loss Payee) | Lessee |
| No Insurance | Lessee (Out of pocket) | Lessee owes Owner Value | Lessee pays Vet |
[IMAGE: Graphic showing money flow: Lessee -> Insurer -> Owner (Death) / Lessee (Medical)]
Step-by-Step Action Plan
- Read the Lease Contract: Does it specify who must insure? Does it state an “Agreed Value” for the horse?
- Call the Agent Together: Get the Owner and the Agent on a conference call. “I am leasing this horse. We need to set up ‘Loss Payee’ status.”
- Get a Certificate of Insurance: If the Owner holds the policy, demand a certificate proving it is active and you are listed.
- Major Medical is Yours: If you are the one signing vet checks, ensure the Medical endorsement is tied to your bank account.
FAQ
Can I insure a horse I half-lease?
Usually, no. You don’t have enough “insurable interest” or control. The owner insures; you might pay a portion of the cost.
What if the horse dies due to my negligence?
The insurance pays the owner (Mortality). The insurance company might then subrogate (sue) you to get their money back if you were grossly negligent. You need Liability insurance to protect against that.