The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1893-01-10
THE 80 PER CENT. CLAUSE.
An Explanation of its Effect Upon the
Insured.

An Explanation of its Effect Upon the
Insured.
Mi. III. N. Pinkham, of the insurance
firm of Dow and Pinkham, is circulating
a pamphlet designed to show by exam
pies how the so per cent. co-insurance
clause works in practice. 1t is as fol-
lows
N. Y. Standard, so Per Cent Co-Insurance
Clause.
If at the time of fire the whole amount of in
surance of the property shall be less than
eighty per cent. of the actual cash value there
of, this company SHALL in case of loss or dam
age,be liable for only such portion OF such loss
or damage as the amount insured by this policy
shall bear to said eighty per cent. of the actual
cash value of such property.
The object of this little pamphlet is to
show the fairness of the use of the so
per cent Co-Insurance Clause by Fire
Insurance Companies and it's applica-
ton.
Heretofore the Fire Underwater has
as rule not been able to know what
proportion of insurance to value of pro-
perty would be found existing at time OF
loss.
One customer would have so per cent,
another so per cent, another 80 per cent,
and when loss was less than the 1nsur-
ance, recovered all. On the other hand,
with the same hazard, the rate charged
has been the same, yet the cost of JIM
surance to each has been very different.
The Insurance Companies were getting
the premiums whereby to pay losses,
but the discrimination against the one
carrying the largest amount of insurance
was great.
The 80 per cent. Clause equalizes this.
The Clause is imperative if the insurer
carries so per cent of insurance, and the
loss is adjusted exactly as without it; if
he is short at time of loss in this per
centage he contributes to the loss, the
percentage, whatever it may be, repre-
sented by the deficiency.
In Marine Insurance the principle has
always prevailed.
EXAMPLE I.
Partial Loss.
Where property insured for less than 30 per
Pro oe 4 insure value. 100000
with 80 per cent. Clause on policy.
amount that shouldibe insured would
be $50, 0U0.)
panies actually carried. ..s-. :-......6o,oooo
There is loss lnderth policy OIL. 10000
How will the Clause apply?
Under the provision OF the Clause, the
to the amount 81 e-s or .............. 10000
and the property owner is himself the
amount Of IS or.............. . 10000
he taking the responsibility Of partici.
patlng as all insurer to the amount of
the deficit and paying his share OF the
loss in that proportion.
When loss is adjusted. the Insurance
Companies stand SO OF the loss, Or. a,5oo
and The assured 2-S of the loss, Or. $500
because he was short 2-S III his lnsT-
ance,
EXAMPLE II.
PARTIAL LOSS.
Where property insured for 80 per cent. Of
property insured: value ...... 200
Amount of insurance carried. ........ 10000
There is a loss under policy Of. ..... 10000
The same result will happen if insurance at
time of loss is over 80 per cent OF value
EXAMPLE III.
TOTAL LOSS.
Where property insured for less than 80 per
Property insured: value 100000
Amount Of Insurance carried.-...---.. $4,000
Loss total or ..s..-s, lUO,0OO
Insurance Campanies' proportion. 10000
In case d total loss under this Policy the as
sured RECEIVERS all his insurance.
NO co-INsURANcE ON POLICIES.
Two Dry Goods Merchants
"A" has goods valued at ...$l00,0OO
Carries insurance ....-............ $4,000
At 80 cent rate pays $64O.
"B' has goods valued at. .....-.... 100000
Carries insurance. 10000
At 80 cent rate pays $500.
Each have have a loss OF $4,000 during term
of Policy.
"a cents per 800.
40 cents per 500.
To business man this is interesting es
pecially to "a" Co-Insurance equalizes this
This new principle of Co-insurance
$50 per cent now applies in all parts of
the United States. In Portland it does
not include dwellings or contents, ex-
cent few cases.