The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1885-10-05
THE VALUED POLICY LAW.

cases
authority.
THE VALUED POLICY LAW.
A Clear Statement of Its Objectionable Feat
ures-How 1t Works in New Hampshire.
The Augusta (Ga.) Chronicle prints the fol-
lowing letter from the Insurance Commissioner
of New Hampshire respecting that States re-
| cently-enacted valued policy law:
INSURANCE COMMISSIONERS OFFICE,
CONCORD, n. H, Sept. II, 1885
The Hon: Martin " Calvin. Member of Legislature.
State of Georges
Dear Sir-Yours of the 14th duly received.
AS you suggest, the people of this State ''are in
an exceedingly bad way Every licensed fire
insurance company has Cancelled its agencies,
called home supplies, and Withdrawn from the
State and am just informed that about seven
ty five other companies are pledged not to write
policy for citizen Of this State. A few com
panies canceling policies but this is not vet
general. For home companies we are limited
to one stock and a few small mutuals conse-
quenty manufacturers. traders, and business
parties generally, including the banks, who hold
heavy amounts of policies as collateral, are, or
soon will be, almost literally without insurance.
Strong men of wealth. the accumulation of
years of industrious toll are soon to be at the
mercy of the devouring element The situation
may be partially imagined, but not easily oe-
scribed
1t is in contemplation among business men to
to repeal the law, while average citizens, who
have only their shelters to insure, largely Cp-
pose the movement The future, therefore, is in
doubt. | inclose copies of the recent enactments.
You will notice that they compilation of
the most offensive legislation touching insurance
that exists in all the States, single State
cept this, having adopted the whole batch; still
the valued policy is the chief bone of contention.
Insurance capital is becoming very sensitive as
to the introduction of this principle. Their ex-
| n St1taS adj
confirm their worst fears in relation to it, and
they feel compelled to make a stand against it in
selfdefense, and for the protection of their
customers.
The valued policy has been put forth as a
remedy for overinsurance. which is unquestion-
ably great evil. This however, is not the first
instance where a proposed remedy has agra
waited the disease. A little reflection must con-
vince any one that such law invites and
facilitates the evil it is desirable to abate; it
provides that the sum named in the policy as
limit no matter how many manipulatons,
misstatements, concealments or subter-
fuges may have been devised to
obtain it, shall be paid, although it may
be twice the value of the property destroyed. I
know it is often fppantly said person should
have all the insurance he pays for, ignoring the
idea of indemnity. With the unrefecting this
phrase passes quite current but will it bear
moments Investigations Primarily \, nine
cases out of ten. the owner is the best Judge as
to the value of his property; II he pays for more
Y,
and for some purpose; there is no compusion,
however derect as to his duty the agent may
be. This 0ver-lnSurance, when obtained, at
once takes away his interest in the preservation
of his property it makes it worth more to burn
than to keep, and therefore invites him to apply
the torch To substitute the valued policy for
the indemnity contract is to substitute careless
nessj for care, incentive for precaution,
knavery for virtue, and to increase the moral
hazard without limit. Under this law dishonest
md rfu- To
gether, and sell undesirable property to insur
ance companies for double its value, and the
companies practically estopped from expos
ing the fraud and protecting themselves as well
as the public who eventually do all the paying,
for every fraud even enters into the premiums
we pay for insurance.
The valued policy proposes TO change the
simple indemnity contract against loss, which has
been the theory and practice of insurance ever
since its origin into speculative contract, and
is in direct opposition to the whole tenor of the
decisions of courts in this country and in Eng
| land, which have uniformly held that the pos
| sible recovery of more than the value of the
property destroyed or lost IS against public pol
icy, and II furious to public morals. This meas
ure in effe-. offers premium for fraud. 1t fur
nshes the honest portion of the community with
| increased burdens, and shields the rogues with
| their illgott en- booty. 1t makes contracts arbi-
| trary which have heretofore been opeLed to ad-
| justment by disinterested neighbors, APP
| peal to the courts, where insurance compani es
| especially rarely obtain mercy.
| In this State by the adoption of the amend
ment to Chapter 172 of the statutes, all the slip
ulations, covenants and agreements on the part
of the insured found in ordinary policy contracts
are swept away. SO that, with his valued policy,
| he stands complete master of the situation; if
embarrassment presses him. avarce allures
| him. or innate deviltry tempts him, he has the
| staff in his own hands. The poor boon of prov
| ing fraud before prejudiced and therefore hos
tile jury left the insurance companies, is simply
| bold indignity. l regard the principle of the
| law as fraught with danger to the public veal,
| debauchng the public morals, and as directly
| contravening the petition, LEAD US not into
| temptation"
| Cases of injustice do occur through overzealous
| agents and adjuSters, for which would be the
last to apologize, but these ara the exceptions,
and not the general rule. Thousands of losses
| may be and are literally adjusted and promptly
| paid without exciting comment while
single case of in justice creates tempest that
I'sweeps through the whole community with cleo
| trio speed. While l deprecate these isolated
| cases. do not think they Justify the enactment
| of this sweeping and revolutionary measure
which would upset all former court decisions,
| changing the indemnity contract. so long tho
| rule, into speculative wager. and opening a
wide door for fraudulent operations that will in
evitably increase the fire waste and greatly en-
| danger and Cypress honest people that rogues
may thrive.
| ] have thus hastily described the situation in
| this State you desired, and briefly given my
views of the measure under consideration l
| hope your honorable Legislature will arrive at
wise and just conclusions whether 1 am in the
right or In the wrong. Yours very truly,
OLIVER PILLsBURY,
Insurance Commissioner.