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.