Insurance Companies
Chapter XX
Fire And Accident Insurance
We hear and know much about life insurance because, no doubt, it has to do
directly with the individual, and so has a personal appeal; but there are
other forms of insurance, forms that have to do with things material, that
play an important part in the world's business.
LIKE GAMBLING
The gambling spirit, like the desire for stimulants and the tobacco habit,
seems to be well nigh universal.
Men bet on the turn of dice, the cutting of cards, or the tossing of a coin,
and we very properly denounce it as gambling. We take money without giving
an equivalent, or we part with it and have nothing to show for the transfer.
There are insurance companies in England and in other parts of Europe where
they insure risks from life to fire, from ships to crops, and from the
turning of a card to the tossing of a coin.
The English company, known the world over as "Lloyd's," is ready to insure
an ocean liner, or to guarantee that the next child born into your family
will be a boy or a girl; it will even insure that there will or will not be
twins, and that, if twins, they will be boys or girls, or one of each.
Now, this looks like gambling, and you would be quite right in so classing
it, yet it is founded on the well considered law of chance, and the
premiums--call them bets--are calculated with a mathematical precision
surprising to one who has not studied the matter.
WHAT IS FIRE INSURANCE?
Fire insurance is a contract between the insured and the company taking the
risk, in which for a consideration called a "premium," the company agrees to
pay to the insured a stated sum, should the property, named in the policy,
be destroyed by fire.
If there should be a fire, during the life of the policy, and the damage is
not total, the company pays only enough to cover the loss.
Should the property be totally destroyed the company pays up to the amount
named in the policy.
No company cares to insure for the full amount of the property; that might
be an incentive to incendiarism.
In taking a fire risk, the companies base their estimates on tables as
carefully worked out and from experiences quite as well studied as those of
the actuaries of life companies.
Fire companies are purely business corporations, and their conduct is
subject to the inspection of the officials of the state from which they
receive their charters.
PREMIUMS
As life companies have rates dependent on the age of the insured, so fire
companies regulate their premiums by the location and other circumstances of
the buildings; in other words, they calculate the probabilities, and charge
accordingly.
There are buildings particularly subject to combustion on which American
companies will not take a risk. Among these may be classed kerosene and
turpentine stills, sulphur and powder mills, and the buildings in which
these products are stored.
Buildings not used for the purposes named, but in close proximity to them,
are often considered too dangerous to warrant the issuance of a policy.
In all cases, the company makes a careful survey of the property to be
insured, and on this report the amount of the premium is based.
Premiums on fire policies must be paid in bulk and in advance.
Policies should be renewed some days before the expiration of the old ones.
Fire premiums, taking into consideration the amount to be paid, are much
lower than life premiums. We know that a man must die, but a building may
never burn down, therefore the risk is less.
COLLECTING
A man may insure in a dozen life insurance companies, and each must pay the
amount of the policy on his death, but not so with fire companies.
A man owning a house worth, say ten thousand dollars, can insure it in ten
companies, each taking a risk of eight thousand dollars.
If this house burns down the man does not receive eighty thousand dollars.
The actual loss is calculated and the companies divide it up, each paying
its part.
Fire companies, while anxious to issue policies on every insurable house,
are more than willing that their business rivals should do the same, as in
the event of fire the burden of loss will not be borne by one.
After every fire the company's agent examines the damage and estimates what
is saved. On this the payment is based.
INSURABLE PROPERTY
A building is classed as real estate, but personal
property is just as
liable to be destroyed by fire.
Fire policies can be secured on goods, furniture, machinery, live stock and
other things, and the method is about the same as where buildings are
insured, but as a rule the premiums are higher, for such things are apt to
be ruined by smoke and water, when the building in which they are stored may
not be much injured.
MUTUAL COMPANIES
Men can associate for any legal purpose, and mutual protection against loss
by fire is one of these.
In many neighborhoods throughout the country, but particularly in the
eastern states, there are mutual insurance companies, usually composed of a
number of men who know each other and who agree to share the losses of a
member, in proportions agreed to in advance.
This form of insurance is cheap and effective, but the field of its
operations is necessarily limited.
STOCK COMPANIES
The stock companies start with a fixed capital, each member receiving stock
in proportion to the amount contributed.
The capital and the interest from it, after paying the necessary expenses,
is invested, and reinvested, till it often reaches a large sum.
At the end of every fiscal year, usually June 30th, the expenses and the
losses paid are deducted from the earnings and the net gain may be divided
as dividends.
Often there are not only no dividends, but a great conflagration, like that
of San Francisco, may wipe out all the earnings, all the reserve and even
the capital itself, leaving the company bankrupt and heavily in debt.
Great calamities cannot be foreseen. No actuary has yet appeared to forecast
the acts of Providence, but on the whole our fire insurance companies are
well managed and prosperous.
ACCIDENT INSURANCE
We have insurance against storms, against the breaking of plate glass and
even against loss from burglars, but the best known of the minor insurance
societies are those known as "accident companies."
Accident policies are of many kinds, and there is no reason why the
companies, under their charters, should not extend their risks indefinitely.
Accidents against property are insured much as is destruction from fire, but
the nature of the accident as "hail," "explosions," "tornadoes" and "insect
destruction" must be specified in the policy.
The most popular form of accident policy is that which is sold to travellers,
and which can usually be had at the office where one buys his ticket.
The method here is simple, and the purchase may be made in a minute. "I want
a policy for $1,000 for ten days," you say to the clerk. He tells you the
amount, you pay and get your ticket, and there you are.
Prudent men have a stamped and addressed envelope ready. Into this they push
the policy, and the wife gets it. No, it does not startle her. It is just
Harry's prudence and she is used to that. |
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