Many veterinary practices hospitalize patients, and some offer grooming and boarding services. From a liability standpoint, the question becomes, “What happens if an animal in my business’s possession becomes injured, dies, is stolen or escapes?” The short answer is your practice might be liable for the animal’s defined value — and more — based on your state’s legal statutes.
Here are two examples:
- A kennel attendant was walking a dog when it ran off. Thankfully, someone found the animal unharmed a couple of miles away two days later. The hospital paid a reward for the animal’s safe return and incurred advertising and search-related expenses.
- An aggressive dog was leashed to a treatment table and ready to be sedated before a minor procedure when the animal got away and attacked a geriatric toy poodle. The small dog was euthanized after unsuccessful intensive treatment at a nearby specialty practice. The medical expenses exceeded $15,000.
Let’s consider the legal and financial exposures for a minute, fully recognizing how the two events emotionally affected the pet owners and hospital teams. Specifically:
- “How do I pay for the animal-related expenses?”
- “Who pays for our legal defense if the client engages an attorney?”
- “Will my business insurance carrier assist me?”
Standard business insurance traditionally doesn’t cover the care, custody or control of animals belonging to others. That’s why veterinary practices should have an animal bailee policy.
A bailee is any person or business responsible for the care, custody or control of another person’s property. A bailment relationship exists when a person (the bailor) leaves the property with the bailee for a particular purpose, such as storage, safekeeping, or the performance of work or a service. The bailee taking possession of the property has a fiduciary responsibility to the bailor to maintain and return it at a previously agreed-upon time and in a particular condition.
In the examples above, the bailee is the veterinary hospital, and the bailor is the client. Failing to return a client’s animal due to the business’s negligence typically falls into the professional or animal bailee areas of liability. Assuming the issue is unrelated to the delivery of substandard medical services (professional liability), it’s an animal bailee matter. Bailee insurance provides financial and legal assistance to the policyholder when adverse events occur.
Unfortunately, many practice owners don’t carry animal bailee insurance or have limited coverage.
Here is what you should look for in an animal bailee policy and from the insurance company.
Adequate Coverage
I recommend coverage limits based on a potentially catastrophic event, such as a building fire that occurs when all the cages and runs are occupied and all the animals die. Animal bailee insurance is relatively inexpensive, so look elsewhere if you’re trying to save money.
Per-Animal Sublimit
Animal bailee policies often provide appropriate annual aggregate coverage but severely restrict the per-animal limit — for example, a $50,000 yearly cap but only $1,000 per animal. Limiting the per-animal amount reduces an insurer’s financial exposure substantially while creating the impression of adequate limits.
I suggest rejecting a per-animal sublimit. With one, the clinic in the second scenario was responsible for $14,000 of the $15,000 in medical expenses, plus the animal’s replacement cost and ancillary expenses.
Per-Occurrence Sublimit
Many animal bailee policies include a per-occurrence sublimit as low as $10,000, regardless of the number of animals involved. A $10,000 cap is woefully insufficient if a catastrophic event occurs and multiple animals are injured or killed.
In-Transit Coverage
Make sure your animal bailee coverage isn’t limited to animals on your insured premises. It also should extend to those transported in your owned, leased or hired vehicles.
The policy should read something like: “We will pay for loss or damage to covered animals while in your care, custody or control for veterinary services at any insured premises or while in transit in your owned, leased or hired vehicles.” Be careful, though, because in-transit coverage might contain a low per-animal or per-occurrence sublimit.
Ancillary Replacement Costs
Most people will replace a lost or deceased adult animal with a juvenile. However, the actual replacement cost can be significantly greater when someone purchases a puppy or kitten. First-year medical expenses might include veterinary exams, vaccines, deworming and sterilization. Also, consider behavioral training expenses.
Additional Expenses
The most common animal bailee claim follows an animal’s escape at the insured premises or in transit to or from the practice. Escapes might occur during walks, while the animal is entering or exiting a vehicle, and through open doors. Cats might bolt through open windows or into drop-down ceilings.
Therefore, purchase an animal bailee policy that covers the additional expenses incurred in trying to recover a patient. They include lost-pet advertising and paying a reward to the finder.
In the case of the dog that got away from the kennel attendant during a walk, the insurance policy paid $1,000 to the person who found and reported the missing animal. In addition, the practice paid more than $500 in printing and advertising costs. Look for a policy with minimums of $2,500 per occurrence and $5,000 annually.
Preservation Expenses
Insurance companies will pay to move animals in your custody or control to preserve their safety and well-being. An animal bailee policy should contain verbiage like this: “If it is necessary to move covered animals to preserve them from loss by a covered cause of loss (fire, etc.), we will pay the actual expense to move the covered animals to safety.” The policy should provide at least $15,000 to $25,000 in coverage per occurrence.
Policy Exclusions
An insurer typically will deny an animal bailee claim for these reasons:
- Not rendering appropriate professional services. Such actions fall under a professional liability claim.
- Dishonest acts by you, your employees or authorized representatives.
- Any disease, sickness or natural death.
- Animals held for sale.
- The seizure or destruction of animals by government order, such as a cat’s mandatory quarantine, a dog euthanized for rabies testing or an animal removed from its owner due to vicious behavior.
PAST-DUE ACCOUNTS
A nice feature of some animal bailee policies calls for settling unpaid veterinary bills. The policy might state, “In the event of loss to covered animals caused by or resulting from a covered cause of loss, we will also pay your accrued charges not collected from the customers as a result of the loss.”