The Vermont watchman. [volume] (Montpelier, Vt.) 1883-1911, 1893-02-08

OF his loss, $3.50 more--an aggregate
premium of seventy ak per cent. Now
what is the iusured's estimate of the
"fairness " of this manner Of increasing
insurance rates2 And yet this Is co.
insurance r, duced to practice, applied
to the adjustment of case of loss un-
der the clause, the crucial point of its
application.
But eliminate from each case the
sum the companies will carve off from
the amount of the policy as the penalty
for the failure of the insured to insure
eighty per cent of the value of his prop
erty, what rate will the insured then
pay on the amount he receives in the
settlement of the loss of 81 900? For
vi 900 insurance he pays premium
of $40. He is damaged 81 900, and on
adju tment the companies pay him
$3.50, their share of the loss under the
reinsurance clause. He pays $40 for
$3.50 insurance. His premium is, there
fore, four per cent of the insurance he
gets. AS we showed in our first article
on this subject, the alternative the New
England Insurance Exchange presents
to the insured, If he fails to insure for
at least eighty per cent of the value of
his property, is ~ to become a CO.
insurer for the amount of the deficit;
or (2) to pay an addition of from ten
per cent to fifty per cent to the tariff
rate if eighty per cent is not guaran eed.
Under the rules of the Exchange, if no
guarantee is given, or if the guarantee
is less than fifty per cent of the value
of the property, fifty per cent is added
to the tariff rate. This is the highest
penalty prescribed for refusing to &C.
cept the co-insursnce clause. Now
apply this rule to case (d) in the ex.
ample. The tariff rate is S1.O0. The
insured must therefore pay $3.50 tor
each one hundred dollars of insurance,
or $500 for 81 900. If he has a loss
of 81 600, on adjustment he will be paid
the full amount. Under the co.insur-
ance clause the insured will pay $40
premium, and, if he loses 81, 900 he will
get the munificeut sum of $3.50. Ia
the former case his cost rate is one and
one-half per cent; in the latter four
per cent. Case (c), involving insur-
ance less than fifty per cent of the
value of the property, comes also under
this rule. Case (b), involving an in
surance of sixty per cent of the value of
the property, would pay rate of 81 90,
or $4,000 on $1,000, provided the in
sured would guarantee TO maintain this
amount of insurance. If he should be
damaged SO 600, on adjustment of his
loss the companies would pay him that
sum. Under the CO insurance clause
the rate in this case would be one per
cent, or $50; but in the event OF lJss
of So 900, the companies would pay
S2,2J0. In the former case the cost of
the insurance would be 81 20; in the lat.
ter 81 33s. Now, in the light of all the
above facts, what becomes of our cor
respondents claim that the co-insur-
ance plan of increasing rates is, even
from the most favorable point of view,
" the fairest way" for the insured?
Co-insurance may fill the Golfers of
the companies, but it will empty the
pockets of the victims of partial losses.
For the people the good old fashioned
insurance, with specific rate of pre-
MUM, is the best; and the increase in
the tariff rate the Exchange orders,
when risks are written with no insur
ance guarantee, or with guarantee
less than eighty per cent of the value
of the property, is much fairer and
more rational way Of raising rates than
this co-insurance subterfuge.