St. Paul daily globe., 1896-04-29
ATTORNEY GENERAL CHILDS
KNOCKS OUT THE PRO RATA
LUMBER CLAUSE
ON INSURANCE POLICIES.
THE LAWS OF THE
e STATE.
30 PER CENT CoINsURANcE o. X.
From the States Legal Depart-
ment-DuIuth Victorious.

The pro rata insurance rider, which the
companies placing risks on lumber yards re-
Gently adopted, and which aroused the oppo-
sition Of the lumbermen at the head of the
lake especially, has been declared by the at
torney general as in conflict with the insur-
ance laws OF the state of Minnesota and its
use in this state WILL therefore, be forbidden.
Attorney General Childs rendered his opinion
yesterday to Insurance Commissioner Smith,
through whose Office the affair was laid be-
fore him:
- You call my attention to the following
forms of riders or clauses proposed to be
used by certain insurance companies, and
request my views as to whether they are
properly permissible. They are as follows:
Permission is hereby granted for other
insurance to an amount, including this policy,
aggregate not to exceed so per cent of the
actual cash value OF the property; provided,
however, that If at the time of the fire the
" total insurance on the property shall exceed
said so per cent, this policy shall thereby
become void only in the proportion of such
excess to such total insurance
when this clause is attached to and made
q part of a policy covering two more
items, this clause shall be construed ap-
plying separately to each item of the policy.
should the property hereby insured be or
become separated by a space spaces, of
fifty feet or more, it is hereby agreed that
this policy shall attach in on each division
separated by such space or spaces in such
proportion as the value in or each divis-
ion bears to the aggregate value Of the sub
3ects insured"
First-As to the first clause, the question
Is virtually disposed of by what said in
the opinion of this Office under date of Nov.
5, 1885, wherein it held that the use of
such clause is permissible. The reasons
which conduced to that decision obtain with
equal force to the of the clause in QueS-
tion, and you are advised accordingly.
Second The employment of the second
form or the pro rata clause" should not be
authorized. It offends against the very pur-
pose and spirit of the statute prohibiting
Insurance inasmuch as the statute clearly
seeks to protect the assured against an ex-
action on the part of the insurer, whereby
the former is made to pay for what he does
not actually receive; or, in other words, is
designed to secure to him the right OF being
compensated for the loss actually sustained,
with no other limitation than the amount Oh
the policy. 1t would, in my judgment, be In
violation of the statute to employ provision
whose observance will operate as restric-
tion in such respect upon him. That the
1Ise of the clause will be attended with such
restriction is at once obvious where regard
As had to it's practical operation. 1t implies
that the owner of lumber piled in detached
parcels can recover in case OF a hre occur
ring in one of such parcels or piles only sucn
amount as the value of such parcel or pie
hears to the total value in yard or on dock,
as the case may be. 1t must, therefore, 1oi,
low with the utmost certainty that ne VIII
receive a less amount than his loss AS
above suggested, he is entitled to contract
fnsuring him against the whole OF such d
loss.