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Until I moved to a wetter climate than I had been living, I was unaware of what rain rot is. Rain rot is a fungus that develops and grows on the exposed parts of horses that cannot get out of the rain to dry off. The fungus usually comes from the surrounding brush or trees.
I kept my horses stalled at night but during the day they went out to pasture. The pasture does have a few stands of trees that will shelter the horses from the elements but unfortunately one of them was always getting pushed out of the sheltered area. All it took was a few days exposed to the rain and my oldest horse developed rain rot.
The rain rot causes unsightly areas hair loss and patches of scabs. Treatment is daily washing with medicated shampoo and through drying. You can either buy over the counter anti-fungus and hair loss shampoo or you can make it yourself. I make mine from 1 part betadine and 3 parts shampoo.
After shampooing you have to get the horse dry. The daily shampooing has to be done until there are no more scabs and the fur is growing back. That also means that the horse will have to be blanketed if going out in any rain. If the sun is out then the blanket should be removed as exposure to sunlight kills the fungus.