How is a horses value determined for insurance purposes?
Mortality insurance pays for the “cash value” of the horse at the time of death but not more that the “insured value.” The “cash value” and the “insured value” are two different things and are a distinction that must be understood. If a horse has an insured value of $50,000 (and the owner has been paying premiums based on that amount), this does not mean the owner will receive $50,000 if the horse dies. The owner will receive the “cash value” of the horse at the time of its death which could be significantly less than its insured value. Traditionally, it has been difficult to determine the actual cash value of an insured horse. The owner of the horse has generally determined the horse’s “value” and insured him accordingly, but the terms of most policies require that the insurer pay out the “actual cash value” of the horse at the time of his death. This requirement represents an attempt on the part of the insurance companies to guard against two scenarios: first, that in which the value
