The Vermont watchman. [volume] (Montpelier, Vt.) 1883-1911, 1893-03-15

tlOn:
II a policy la written "with a sixty per
cent but less than seventy per cent guar
antee," say sixty per cent, and the Insured
has but fifty per cent of insurance, he is a
co-insurer to the extent of the deficiency, or
ten per cent. The rule is applied just the
same as when the eighty per cent guarantee
or co-insurance clause is attached. The
only difference is in the results. To Illus
trate: Rate one per cent, value OF property,
$1,000. With the eighty per cent clause or
guarantee attached, premium is $40. III
partial loss of less than eighty per cent
comes, say $500, with $500 insurance, the
insuring company pays five-eighths of loss
or $3.50, and the insured contributes the
balance, or $3.50. With the sixty per cent
clause or guarantee attached, premium is
S12. II a partial loss OF less than eighty
per cent comes, say $500, the insuring COM
pany pays fve-sixths of loss, or $685. and
the insured contributes the balance, or
S66.66s.
We incline TO the opinion that Mr..
Mcfarland is badly ratified by the right.
eous clamor against this reinsurance
scheme for filling the treasures of in
surance companies with premiums and
bundling partial losses off on to the in
suree. That he is off his customary
poise is evident from the paragraph
quoted. How does he make it appear
that, with $500 insurance at a tariff rate
of one per cent, the premium under the
eighty per cent clause is $40, or that, with
twenty per cent addition to the tariff
rate, it is S12 under the sixty per cent
guarantee? And why, with a "sixty
per cent guarantee" attached to policy,
does he seek to adjust a partial loss
from the base line of the eighty per
cent clause? Possibly these things &C.
count for his false issue with the
WATCHMAN at this point. "Mac's !"
illustration seems to be woful misfit.
In the first place, with $500 insurance
! and the tariff rate one per cent, the
premium would be $500 in the first
instance and Sc 90 in the second. But,
secondly, why does he talk of $500 insur-
ancep His applicant wants insurance
on property valued at 1000, and the
question is, Will he take it under the
eighty per cent clause or under the
sixty per cent guarantee? If the
former, and the tariff rate is one per
cent, he will take out policy for $500
and will pay $500 premium; if the lat
ter, he will take out policy for 5000,
at rate of $1.20, and will pay pre-
MUM of $3.50.
Now, what the WATCHMAN has
maintained throughout this discussion
and has repeatedly stated, and so
plainly that no one interested in the
subject-except possibly Mr.. McFar-
land-has failed to comprehend its
meaning, is that an applicant for insur-
ance who rejects the co.insurance
clause, but who guarantees to main
tain, for example, insurance to the ex-
tent of sixty per cent of the value of
the property insured, and pays the re-
quired addition of twenty per cent to
the tariff rate, is entitled to an adjust
ment of loss the same as under ali
old-fashioned straight-out policy; pro.
vided, of course, the applicant has kept
his contract in maintaining sixty per
cent insurance. So, in the article Mr..
Mcfarland criticises, writing of this
alternative increase of the tariff rate if
the eighty per cent co-insurance clause
is rejected, we said: "This, we under
stand, is straight addition to the
tariff rate and entities the insured in
case of loss to an adjustment under the
old method" 1t would have been
plainly supererogatory to add, "pro-
vided he had maintained the guaran-
teed sixty per cent insurance." That
was the contract, and his policy at the
outset covers the guarantee. This is
"the guarantee to which we referred "
and this its " force and effect" Mr..
Mcfarland asked the WATCHMAN to
explain, and we trust the explanation
is satisfactory. If we should para
phrase some of the pleasantries our
critic employed for our confusion, we
should say, We cannot refrain from
remarking in passing, that, unless Mr..
Mcfarland is little more careful with
his illustrations, he will expose his
ignorance regarding the theory and
practice of co-insurance. He has evil
IDENTITY made several SLIGHT mistakes,
and his general inconsistency is ex.
ceedingly painful to his friends.
The WATCHMAN's argument against
co-insurance is on the ground of its es-
sential injustice to the insured, and Mr..
Mcfarland should not go out of his
way to misunderstood or misrepresent
US in this respect. He would have the
public believe that co-insurance is the
fairest way, even for the insured them.