Property coverage is a little easier to figure. The goal is to repair or replace the covered property. If is something you cannot do without (for instance your home and its contents), and you could not afford to replace it out of your liquid assets if it were destroyed tomorrow, it should be insured for replacement value. It is important to reevaluate your insured assets annually and any time you addd to them substantially, check the market so you know what it would cost to replace them, and make sure the coverage limits would truly replace what you have to lose. For less critical assets, determining whether and for how much to insure depends on your judgement of how much you need the asset at issue, how likely it is to be destroyed, whether you could afford to replace it, and your appetite for risk. Horses are a good case in point. While many of us think we cannot live without them, in fact we would survive without them, though many of us choose not to. Horses are fairly hazard prone and very vulnerable to things like serious colic, so the need to replace a favorite is not unlikely. The nature of the horse's activity and the environment in which he lives will factor into the likelihood of the need for replacement. The equivalent of the horse you spent years training can cost a good deal of money. If you need or want to be able to replace such a horse with an animal of equivalent quality and training, insuring for the horse's full value is probably a good decision, and you would also want to look at loss of use coverage. If you would rather start over with another young horse, but could still use help with the purchase price, then you might save on premiums by insuring your horse at a lower declared value. If you decide to do this, BE SURE that you document the current horse's actual value and the reason for insuring at a lower value. This will help protect your ability to collect actual damages should someone else cause the demise of your horse. If you are sure you could never replace the marvelous animal that currently graces your life, you may still want to insure him for mortality because of the major medical coverage that can only be purchased if the horse is insured for mortality. This saves a potentially devastating decision if your horse could be saved by surgery or expensive treatment, but you are without the cash reserves to pay for it when the horse needs it. If, on the other hand, you could replace your favorite, he's not doing anything particularly dangerous, you always have enough reserves to pay for necessary veterinary treatment, and you could earn a good return on your money by investing it well in another place, you are might decide to "self insure." That is, you choose to bear the risk that something will happen to your assets, and that you will be able to replace what is necessary for you to pick up and go on without the help of an insurance company. Every time you put off buying insurance coverage this is what you are doing. In some cases it is a valid decision, but make sure that it is an intentional, informed and conscious one. Self insuring by default is often not a very good idea.

Elizabeth Clarke provides risk management and dispute resolution services for horse related businesses. She can be reached via e-mail at allowme@idt.net