Subrogation & Recovery Law Blog : Insurance Subrogation Lawyer & Attorney : Cozen O'Connor Law Firm : Property Damage & Insurance Commentary

Measure of Damages

A critical part of any subrogation analysis is the determination of what damages are legally recoverable from a potentially liable third party. Unique to equine claims, the owner of the horse will often choose to insure the horse for less than its fair market value to avoid higher premiums. For this reason, the insured value rarely, if ever, equates to what is legally recoverable. In most jurisdictions, the fair market value of the horse is the proper measure of damages. To prove fair market value at trial, there must be a well supported opinion given by a qualified expert in the field. Although a third party may be liable for injuring the horse and rendering it incapable of performing its intended purpose, the horse may still have a significant residual value as a breeding horse or performing a new purpose. That residual value will likely be subtracted from the overall damages recoverable through litigation. In today’s climate of frequent expert challenges, choosing the right expert who can properly evaluate these issues is essential.

In addition to seeking the fair market value of the horse, an owner often asks whether he or she may seek pain and suffering or emotional distress damages for their loss. In the vast majority of jurisdictions, these types of damages are not recoverable because there is no physical manifestation of an injury to the policy holder. The owner will be limited to economic damages, which may include a claim for business interruption, loss of future breeding rights or loss of future value. 

First Dollar Out

With many horses being underinsured, first dollar out questions often arise in equine subrogation claims. It is important to be aware of the policy language and any first dollar out rules in your jurisdiction. In addition, there is no penalty for underinsuring a horse.   A proration agreement is one way to effectively handle what could be a sticky situation with the insured after litigation begins.  Such an agreement also provides a platform for the carrier and the policy holder to discuss the actual recoverable damages before litigation ensues. Having these discussions up front helps to manage the sometimes unreasonable expectations of the policy holder who is devastated by the loss of their equine companion. 

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 Just like property damage claims, it is vital to hire the right experts and conduct a thorough and timely investigation. But unlike a typical property damage claim, with equine mortality claims it is often impractical and difficult to maintain the deceased horse for days or weeks to allow for all interested parties to retain experts and examine the horse. Many times, the board of health will not allow the horse to be retained. Nonetheless, immediate notice should be given in writing to any potentially responsible third parties. DNA samples should be collected and preserved to prove that the deceased horse is in fact the insured horse. If it is believed that a third party caused the death, it is also recommended that a full post mortem examination be conducted at either a university or a diagnostic laboratory in order to conclusively establish the cause of death. Photographic documentation and the appropriate records from an equine veterinarian are also helpful in combating any claims of spoliation.

In an equine injury situation, a veterinary expert will be necessary to causally connect the potential defendant’s conduct to the injury. Similar to a personal injury case, the right medical experts and records are needed to support such a claim. Notice to responsible third parties should be given immediately, and the injury should be properly documented with photographs, x-rays, blood tests, or the like. Taking things a step further, the subrogation professional may wish to consult with the veterinarian before a report is finalized to make sure the report is thorough, admissible at trial, and easily understood by an opposing adjuster, judge or jury.

Consideration should also be given to whether the treating veterinarian is qualified to serve as a litigation consultant and testify at trial. Many veterinarians, like medical doctors, may be hesitant to testify against others in their industry. When there is a potential malpractice claim against a veterinarian, this issue should be addressed up front with the treating veterinarian. If a new expert is needed, it is best to give him or her an opportunity to examine the horse in question as close as possible to the time of the injury. Often times the insurance company will hire a separate veterinarian to avoid any conflict of interest for the insured’s veterinarian, which gives the subrogation professional a choice of experts.

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The recent tragedy in Florida involving the sudden and untimely death of twenty-one polo ponies raises issues about equine subrogation possibilities. In that matter, a supplement is suspected in the death of polo horses. Because a horse cannot be “preserved” for inspection as with typical property losses, particular attention must be paid up front to protect any subrogation claim. This thread will routinely provide helpful tips for the adjuster and subrogation professional with regard to equine claims.

Theories of Equine Law Recovery

There are many potential third parties to look to for a recovery in an equine loss. If the horse is injured or killed, the question is what caused the injury or death. Assuming the stable owner is not the owner of the horse, the stable owner may be a potential target. If the barn or the grounds presented a dangerous condition that caused the injury or death, a premises liability case may exist. Before going too far down this road, the boarding agreement must be obtained and examined for any waivers of liability or waivers of subrogation. The stable will often carry a care, custody and control policy, or “CCC policy,” that covers any horses that are injured while in the care of the stable. Be sure to check policy limits, however, because some policies only pay a limited amount per horse and may have a low aggregated limit.

Another potential target is the treating veterinarian. If the treating veterinarian fails to properly treat or diagnose a condition that leads to the deterioration of that condition and permanent lameness or injury, a subrogation claim may be viable. Likewise, trainers may also be potential targets for failing to recognize a problem or failing to timely seek veterinary assistance. If the trainer does not address an injury, or disregards a veterinarian’s advice, the horse could suffer additional injury or permanent lameness if pushed to exercise and work. This is properly the subject of expert testimony—thus it is critical to have an consulting veterinarian or trainer to advise whether treating veterinarian and/or the trainer failed to meet the standard of care which was the proximate cause of the injury. 

Product manufacturers, including drug companies, are another potential target. There can be any number of ways a defective product could kill or injure a horse - from a defective heater causing a barn fire, to a horse-trailer tire blowing out and causing an accident. In a fire situation, local codes should be reviewed to determine whether any fire suppression system should have been installed and maintained by the stable manager. Thinking creatively about possible theories of recovery in the early stages is invaluable to know what parties to place on notice and what evidence and documentation should be retained.

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