Perrysburg journal. (Perrysburg, Wood Co., O. [Ohio]) 186?-1965, 1871-12-08
About Insurance.

IL the present unfortunate condition Of
insurance companies resulting from their
unprecedented losses by the great fire in
Chicago, by which very large number
throughout the country have become
hopelessly insolvent, it is of the utmost
importance to insurers that they take the
earliest opportunity to protect themselves
against further disastrous consequences.
1t must be understood at the outset that
policy of insurance is contract OF in
demnity, only, against loss, and not a
contract to pay absolutely the amount
written in the policy-and, in case of sew
eral policies upon the same risk, each poll
cy pays only that proportion OF
the loss which the amount written
in it bears to the total amount in
sured. Thus: A insures his barn and its
contents in four different companies by
four different policies for $TU,ojO, $500
in each. A fire occurs by which his barn
and its contents are destroyed, with the
exception of $4,000 worth of the proper
ty insured, which he is fortunate enough
to save. His loss, suppOsing the property
is insured for its full value, is $4,000.
This is divided equally between the four
companies, each paying $4,000. If two
of the companies prove insolvent, A will
secure 81, 900 from. the two solvent com.
panies, and such proportion of the bal
ance from the insolvent companies as
they may be able to pay-say 10 per
cent, or $400. His total insurance would
thus produce for him only 81 400, while
his loss is $4,000. And this result will be
the same if, before the fire which destroys
the property insured, two of these COM
panies become insOlvent by any means
whatever
1t becomes, therefore, of great impOr-
tance for the farmer to look well to his
policies and see that none of them are
written by companies no longer sound,
If such are found they should be handed
in to the nearest agent of the company,
and cancelled at once, without waiting to
effect new insurance to take their place,
since, as in the illustration we have given
above, although a cancellation of the
policies of the insolvent companies would
reduce the insurance to $1,000, the loss
would be divided between the solvent
companies and paid in full, one-half by
EACH a gain to the insurer Of 5000 on the
amount which could be obtained in case
the insolved companies remained unean-
celled. The insolvent companies are au-
thorized upon the cancellation of policies,
to pay to the holders the unearned pre-
miium, that is, q sum which bears the same
proportion 10 tne 1uH premium pdll tllaJ
the uneXpired term does to the full term.
This is fair to all parties since, if an out
standing policy in an insolvent company
| sustains a loss, the loss becomes claim
upon the funds of the company for its
amount a result which may be Obviated
by the small payment of the unearned
premium as above stated
In case the insolvent company refuses
to pny the unearned premium upon the
cancellation of its policies, the amount OF
! il is nevertheless claim against its assets
and entitled to its proportionate dividend
upon presentment and proof, as in case OF
/ less. Therefore TO avoid the possibility
of danger that the insolvent policy may
be called upon to contribute in case OF
| loss as has been shown at the head of this
article, and thus reduce good insurance
insurers should see to it that a new policy
taken in place of doubtful one contains
O clause as follows
" Any loss under this Policy shall bt
paid without reference to any existing
Policy Tor Policies) on same property ii
the - Insurance Company Tor Com
panies. )"-fhdii9e Farmer.
"
ENGLAND is excited on the subject o