Lancaster daily intelligencer. [volume] (Lancaster, Pa.) 1864-1928, 1885-06-10
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LANCASTER. JUNE 10, 1885.
Shall Insurance Insure9

& The Harrisburg Patriot thinks that the
House made mistake in passing the bill
requiring insurance companies to pay the
fun amount of the policy in case of a total
loss of the property insured. The Patriot |
thinks that the result of such law would |
bo to encourage arson, as persons would |
insure their property above its value and
fire 1t to recover the insurance money.
But like most questions, this one has two
sides to it, and we incline to the opinion
that the House has the right side of it.
It is true that arson will grow under a
law which encourages the insuring of prop
erty above its value. But is this such a
law 7 Will not its effect be to induce in
surance companies to determine the value
of the property they insure before insuring
itp At present they pay too little atten-
tion to this inquiry. The greater the
amount of insurance the greater the
amount of the premium they receive.
They are disposed to accept party's own
valuation of his property,t to great extent,
and to rely upon their adjusters' ability, in
case of loss, to reduce the value of the
property destroyed. The consequence is
that the property owner is melted to arson
because of the excessive insurance given
him; and though he finds, after
the fire, that his insurance is not
what he thought it was, and mat the
company has been too sharp for
him, the information copes too late to
save the~ ~cfffae; and the more expert and
e7.enced class Of ,b1cendiaries, who are
acquainted with the facilities possessed by
the company for reducing the amount OF
their insurance losses, are yet not deferred
thereby, because they have tricks of theil
own by which they beat the companies
the favorite one being to secretly reduce
their stock of goods before the burning
This device they can employ against th'
companies, whatever their care may be il
examining into the value of the propert,
insured; and the risk of it is taken ac
count of in the "moral hazard, which i
included in the insurance premium.
The objection we have to the presen
practice, by which insurance companie
charge premium for loss which the
refuse TO pay when it comes, is that it i
not honest and that it subjects honest in
sarers to great annoyance and loss. Al
insurance company, like an individual
should pay for what it gets. If it is pai
for an insurance of 81 600, and the thing in
sured is totally destroyed, it should not b
then allowed TO say that it was not wort
$1,000, unless it can show that the propert
had deprecated in value since it was in
sured. The question of value at the tim
of insurance should be settled at that time
and when the money is paid for it. TIL
company has then better opportunity t
determine the value of the property tha
after it is burned. 1t should be compelle,
by the law to settle the value then, and no
be permitted to dispute it when it is calle
upon to pay it, and after it has probabl
received for many years the sum Of none
which it deemed adequate to compensate
for the risk it assumed.
Insurance, no doubt, stimulates arson
There would be much less burning if ther
was no insurance. 1t is quite probabl
that true public policy would forbid an.
insurance of property. The result woul,
not only diminish incendiarism, but i
would cause the erection of indestructibl
buildings that would insure themselve
against destruction. But, while we hav
insurance companies, let them be held to
proper scrutiny Of their business and /;
prompt and full adjustment of their liabili
ties, and be forbid the sneaking from the
losses to which they SO greatly incline.