Craig Harrison asked Great American to cover his two-year-old thoroughbred filly as a racehorse. Unfortunately, after a short period of training, the horse was injured. Harrison asked Great American to reclassify the horse as a pleasure horse while she recovered. Great American agreed and reduced the premium accordingly. Harrison neglected to contact Great American when she had completed her rehabilitation and returned to racehorse training. She sustained another injury and as a result of that second injury was euthanized. Harrison filed a claim.

Great American denied the claim because at the time of the loss, the horse was used as a racehorse and not a pleasure horse. Harrison argued that the horse had never raced and so was a pleasure horse.

Click here to see if the courts agreed that the horse was properly classified at the time of the loss.

The starting point for all underwriting and rating is proper classification. If the classification is wrong, everything is wrong. Any new decision is flawed because a restaurant is not the same as a florist and a window washer is not the same as a janitor. A household with a teenage driver is not the same as one with only senior citizens. Likewise, a horseracing track is not the same as a farm and a race horse is not the same as a pleasure horse.

Click here for two articles. The first explains the reason every agent should review classification decisions and the other provides guidance on properly classifying a habitational risk.

The underwriter decides which classification is most appropriate based on the application and your explanation of the risk. However, you can always make a recommendation. Each narrative in the Producer's Commercial Lines Risk Evaluation System provides suggested General Liability and Workers Compensation codes that you could use as a starting point.

Click here to view the Horse Farm (Racehorses) narrative.

Some agents may intentionally select an incorrect classification in order to place business with one of its standard carriers. While the decision may result in a temporary market, it is not a long-term solution because audit and losses could bring the deception to light, and that will harm the agent's relationship with both the client and the carrier. A better alternative would be to find a market that is interested in your client's operations and has the expertise to underwrite and price the risk plus handle any claims that may occur.

The Insurance Marketplace provides a listing, by state, of over 700 categories of risks and the MGAs, brokers and companies that are interested in writing them.

Click here to review the list of brokers and managing general agencies that are interested in writing horse farms.