The Portland daily press., 1895-01-14
THAT co INSURANCE LAW.
The Legislature is Considering Its
Repeal.
somethine About Measure That is But
Little Understood-The state house
Roof-The Fatal Democratic Plank
(speciai to- the PRESS }

(SUecldi UQ6 E-hIlDC
Augusta, January 12.-What is co-1nsur-
ance anyway? That is question whlch
many members of the legislature ask wheh
informed that they must vote on inc
question of repeating the law WHICH lof lhe
fact two years has prevented the WTlllng VI
this kind of fire insurance in Maine we'll
there are various kinds of co-iasurance' the
name itself indicating in a general way
what it is. Under it, insured ana insurer
share the losses, the amounts paid being
based upon the proportion OF the lace oi ING
policy to the value of the property insured
or a certain percentage of that vaiue as
NAV have been agreed upon. In cases wneIe
nronertv is insured for its full value, there
is no co-insuranoe, as the term is here used'
the company being liable for the face OF the
policy.
Tn exnlaining co-insurance, underwriters
use an illustration similar to this: Jones
and Johnson own adjoining blocks, each
building being worth $4,000. But Jones Is q
WEALTHY man and OWES several buildings
while Johnson owns but the one. Jones'
therefore feels that he tan, by plae1uA
small amount of insurance OH each of MS
blocks, get protection against the small hres
which are likely to occur and run the rlsk
of the big blaze which may, but propaply
wont. entirely destroy one of his buildings.
So he insures each building for one-haIf OF
Its value, which. in the case OF that aoJoAn-
ing Johnson's, is $4,000 Johnson on the other
hand does not care to take any chances. all
his money being invested in the on struct-
ure, He accordingly insures it for It's fuli
value. Fire breaks out and eats It's way IN
to both blocks. In each it is extingu1shed
after doing five or six thousand dollars
damage. Jones collects the face value of
his nolicy. and the company has met a total
loss on it. Johnson, who has paid for SlO,-
0oO of insurance, gets the amount of the
damage actually done. johnson has paid
the company four times as much as Jones.
Now. say the underwriters. property IN
sured for only portion of its value Is IKE
ly to mean losses to the companies equal to
the full amounts of the policy, while
property insured for its actual value, Is
likely to represent only partial losses, as
the cases where fires entirely destroy
property are, comparatively speaking, very
rare, So it is urged that it is only falr
that there should be difference made In
the methods of full and partial Insurance.
and, to reach this result. the companies
have written oo-insurance policies SO that
if a man carries only small insurance, he
the loss. A sample of these is the following.
the full co-insurance clause which may oe
attached to the New York standard policy:
.sIf at the time of fire, the whole amount
of insurance on the property covered by
this policy shall be less than the actual cash
value thereof, this company shall, in case
of loss or damage, be liable for such portion
only of tie loss OF damage as the amount
insured by this policy shall bear to the
actual cash value of such property
From the above clause. it will be seen
that had Jones's block been insured under
a co-insurance policy, he would have re-
covered so per cent of the loss on his build
ing. the face of the policy being 30 per
cent of the value OF the building.
Another co-insura nee plan is that known
as the percentage clause, the following be-
ing also copy of the form prescribed by
the New York Standard policy Jaw:
IF at the time of fire the whole amount
of insurance on the property covered py
this policy shall be less than per cent OF
the actual cash value thereof. this COM
pany shall in case of loss or damage be
liable for only such portion of such loss or
damage as the amount isured by this policy
shall bear to the said - per cent of the
actual cash value of such property"
Assuming that the percentage agreed up
on under a clue as such as the above was gu
Der cent and Jones haG insured his building
for half its value. then in case OF loss ne
would have recovered from the company
five-eights Of the loss. 80 per cent of the
value of the property being five-eights OF W
per cent, the amount agreed in the policy.
The law which has prevented the writing OF
co-insurance in Maine as already stated n
the PRESS, required the value OF the
property to be stated in the policy or, in
other words. made co-insuranoe contracts
valued policies under which the companies
have declined to do business. Co-insurance,
it is needless to add, applies equally to
erchandize as to real estate. 1t is yet too
early to say what action the legislature Will
take. Those who favor the repeal of the
law are, however. confident of success. IL
was because the insurance companies pro-