Equipment Appraisal Blog | Understanding Machinery Appraisals

Did you know that over one-third of businesses that go through a disaster or property loss never open their doors again? This is primarily due to insufficient insurance or the inability to prove the value of equipment and other assets lost in the event. How do you protect your business against this kind of unexpected problem? An accredited equipment appraisal with a signed certification can go a long way towards ensuring you have adequate insurance to protect against a loss and to support equipment values during an insurance loss settlement.

Involved in an Insurance Loss Claim for Machinery & Equipment? Accredited Appraisals Will Assist in the Process.

Determining Insurance Coverage

When you are buying business insurance, you want to make sure all your assets, including machinery & equipment, are being covered for their current market or replacement cost value. Many people rely on tax return depreciation as a quick guide to appraising it, but the actual value may be much different than what standard accounting depreciation allows.

If the machinery & equipment is overvalued, you may be paying too much for premiums and will not recover the full amount you have estimated during a loss claim. If the assets are undervalued, the insurance company may have concerns that you did not pay for sufficient coverage and not be willing to pay you a fair value for casualty claims. An accredited machinery & equipment appraisal can go a long way to providing proof of value for your assets and assist in determining how much coverage you need.

Dealing with a Loss

When your business suffers an actual casualty loss, during this stressful time, you will want to reach a fair settlement as quickly as possible, to avoid business interruption. Can you prove what your equipment was actually worth? Having support documentation completed by an accredited machinery & equipment appraiser with signed certification helps to prove the real market value and can be utilized in an insurance settlement. The valuation is an objective, unbiased, defendable report that you can present to the insurance company during the claim process.

Even if you have not had a report completed before the loss, appraisers can retrospectively value the machinery & equipment as of the casualty loss date. An accredited equipment appraiser will sign a certification attesting to the value as of the prior loss date. They have the experience and expertise to research the market and make the appropriate adjustments to reflect market value as of the effective date. Make sure the firm employs accredited valuation experts who are members of the American Society of Appraisers (ASA). This ensures they follow the protocols of providing objective, supportable reports that will hold up in any settlement negotiation.

He said, She said: when it comes to a divorce, many of us know it can be very stressful. With all that is happening to determine your future, you probably are not considering the importance of an equipment appraisal. If there is a business associated with the split, however, you need to look at this option, as there may be significant value in the tangible assets of the jointly owned company. An independent valuation by an accredited or certified appraiser of the tangible assets for the business, whether it is a trucking company, construction contracting business, landscaping or any similar operation is vitally important. In addition, the report will be supportable in court and take away any biased information you may be receiving from the other side. Here is what else you need to know:

The appraiser will act as a neutral party, providing a fair value for your equipment. If your appraisal report is not prepared by an accredited or certified equipment appraiser, it will likely be contested or thrown out in court during proceedings. If you believe there is a likelihood that the litigation will evolve into court proceedings, you will also want the appraiser to have experience as an expert witness, testifying as to the credibility and accuracy of the valuation report.

The most common premise, or definition of value utilized for divorce proceedings is Fair Market Value, however you should check with your attorney to ensure this is appropriate in your case. There are liquidation values you may need to consider as well, that can be reviewed and discussed prior to the engagement. Both parties should agree to the appraisal, however, if this is not possible, the fact that you engaged an experienced appraiser on your own will carry a lot of weight in ultimately determining value.

Understanding all that is involved during a divorce, including the need for an accredited or certified equipment appraisal can ensure you are receiving the best settlement possible. You or your legal counsel can get in touch with one of our professionals at equipmentappraisal.com to discuss the details further and receive a free quote for our services.

With the inauguration of President Trump, we can expect to see changes in how business is done in our country. One area that may be impacted is appraisals for SBA loan purposes. Will you need to have equipment values to get a loan? Will having a machinery valuation from a certified equipment appraiser improve your chances of being approved? Let's take a look at some signs of what may lie ahead in Trump's administration.

What Trump's Policies Mean for Appraisals for SBA Loan Purposes

As a businessman, President Trump has regularly mentioned his plan to grow the economy and American way of life through the promotion and growth of domestic businesses of all sizes. Many people are hoping that this will translate into policy changes that benefit small business owners and entrepreneurs, especially with positive changes in the Small Business Administration. Unlike several of his more controversial appointments, the President's appointment of Linda McMahon to head the organization was approved by an overwhelming majority of 18-1 by the Senate Small Business and Entrepreneurship Committee.

But what does this mean? It could suggest that neither side finds any problem with McMahon, which could be good or bad. She could promote strong changes in the SBA, or she could simply keep it business as usual, making her a non-threat to the establishment in Congress. That being said, she has shown the ability to grow a small regional business into a multi-national corporation, so she may be able to shake out some of the existing bureaucracy in favor of effective updates to the administration.

If the changes favor more available SBA-backed loans, businesses that would otherwise not be approved may find themselves able to apply for these loans, though the conservative backing that brought President Trump into office may not approve of risky investments that bring back memories of the sub-prime mortgage market. If the approach remains the same, with a business-as-usual approach, borderline businesses may need additional documentation of asset worth to qualify for loans.

Beyond any potential changes the new administration may bring, having an equipment appraisal performed on your equipment provides a number of other benefits. It helps provide documentation of equipment values for insurance, financial, legal and tax agency circles, when performed by a certified equipment appraiser. Because the certification process teaches the proper methodologies to use in particular situations, which have been tested over time, the appraisal reports produced by such an appraiser stand up to strong scrutiny. This report could serve as documentation of value to help secure an SBA loan by proving the assets you can already bring to bear for your company. It also helps you back up insurance claims, fight bad property tax assessments or prove asset value from a charitable donation.

Regardless of what changes may be coming to the Small Business Administration with the new administration, equipment appraisals for SBA loan purposes are always a good idea. An equipment appraisal report gives you concrete proof of value for your machinery that will stand up in legal, insurance, tax and financial circles.