Why is
an Equine Appraisal so Important?
- We all know that a vet
inspection is important before buying a horse, but many people make the
mistake of buying a horse without having any idea of the true value of
the animal. There are many factors other than the health
inspection that the vet will provide. By obtaining a Certified Equine
Appraisal, you are assured that you will not waste your time and money
by investing in the wrong horse or paying too much for the right one.
Why do I need an appraisal?
You ask yourself the question, what is my horse worth? Am I paying
market value for my horse? A certified appraiser will provide the
expertise and knowledge to assess the correct market value of your
horse. There are many reasons why certified appraisals are needed. It
may be legal or judiciary in nature; it may be insurability or asset
protection, or simply the true market value of your horse. Due to trends
in the horse industry and the economy, the value in an appraisal is time
sensitive.
What is an appraisal?
In order to determine the correct market value of a horse, an
appraiser collects information regarding the pedigree, training, show
results and confirmation. With the research attained, the information is
correlated and measured against comparable horses. The market value is
determined using unbiased, mathematical procedures very similar to that
of a home appraisal. An appraisal is sometimes mandatory in situations
of buying and selling a horse, for insurance purpose, taxes, estate
planning, and litigation. There is an unknown IRS fact, that when
donating or gifting a horse in excess of $5000, a certified appraisal is
needed.
What are factors in Appraisals?
Determining Factors: Factors not considered in
value of the horse:
(1) Age
(1) Assumption
(2) Health History (2)
Emotional Value
(3) Conformation (3) Direct or
indirect cost
(4) Disposition
(5) Pedigree
(6) Training
(7) Show Records
(8) Progeny
(9) Athletic ability in one or more events
Increase your insured value. Professional appraisals often make
the difference between insuring horses for what they are really worth, and
settling for an insurance company valuation, which is generally lower than
the horse’s real market value. Remember, horse owners are not necessarily
protected by an “agreed value” rider on their insurance policy.
Value is a
tricky issue. If the horse died and is insured, the policy may well
provide for “market value” or replacement value. The insurance company has
taken premiums based on some asserted value of the horse by the owner. It is
rare that an insurance company conducts an independent appraisal prior to
the issuance of a policy. However, it is not unusual for the company to
question value at the time a loss occurs, which may require the owner to
cover the claimed valued in order to collect the face value.
Example: Owner purchases a horse for
$45,000.00. The horse is insured for the value of the sale. The horse is a 2
year old stallion. A year later the horse is entered in several shows, it
does very well and is entered in the breed’s National show. The owner sells
a couple of breedings for the following year at $3,000.00 per breeding. The
owner asks the insurance company to increase the policy to $200,000. The
insurance company issues a new policy for mortality coverage with the face
value of $200,000. The horse dies. The policy has language providing that it
will pay replacement value not to exceed the amount of $200,000. Insurance
company contests the value at the time of death. (Ref: State of Texas
University of Law). This is just one example where an appraisal will become
an important factor in deciding the outcome.
For all prices and
fees please call J. R. Acord at: 618-384-2160 or e-mail J. R. Acord at:
bararanch2000@yahoo.com
