New-York tribune., 1906-05-09
SAN FRANCISCO INSURANCE.

There may be fire insurance companies so
near the line OF insolvency that their officers are
burning 10 discover ways by which they can
avoid payment Of their losses in San Francisco.
If so, we are not surprised at attempts to take
advantage of the California statute which reads
Where peril is specially excepted in con-
tract OF insurance, a loss which would not have
occurred but for such peril is thereby excepted.
although the immediate cause of the loss be a
peril which was not excepted.
If this law has the meaning which some COM
panes give ii, all claims on policies containing
the earthquake clause excepting from the risk
damage done by earthquake would be void. As
the first cause of the fire was the earthquake
such an Interpretation would prevent recovery
on the great number of buildings which were not
at all damaged by the shock, but which fell
prey to flames started perhaps mile away.
Similarly, if a company had Il clause except
ing damage from the use of gasOlene in a house,
and a gasOlene tank blew up. setting fire to Il
house and starting a cOnfagratiOn which swept
a whole district it might not only refuse to pay
the house owner storing the gasOlene, but the
innocent owners of all the houses to which the
flames spread. We do not know what the CalifOr-
MIA lawmakers had i'm mind in wording this stat
ute. Perhaps they meant merely 10 guard against
claims for damages swollen by the violation
of policies Thus fire might start from a cause
insured against, but be made serious by the pres
ence of cOmbuStibleS not insured against. In
that case the loss really occurring from the eX
cepted peril could not be recovered, though the
immediate cause peril not excepted. How
ever that may be, only extreme need, total cal
lOusneSs to moral obligation and despair of be-
ing able TO continue business for which good
will is needed would induce underwriters to
dispute on such a techncality the genuine fire
losses of a stricken city to which the whole
world is eager to contribute
San Francisco has long been known as a tinder
box. Insurance rates have been high there, be-
cause every underwater has recognized the risk
and foreseen terrible losses when the inevitable
big fire came; but he has expected rich pickings
before the day of reckoning The day of reckon
ing has now come. Nobody expects the companies
to pay for walls thrown down by shock or other
direct damage of the earthquake. But no strong
and sef-respecting company, either in America
or Europe will refuse to meet the fire losses
against which it has been collecting premiums
at high rates for many years. Indeed, we do
not believe that many companies will consider
such a thing. The suggestion probably comes
from weak companies which, without adequate
resources and in search of quick gains, over
wrote themselves in San Francisco in a specU-
lative spirit.
Perhaps even they do not expect to carry out
this policy literally, but are merely threatening
it in the hope of forcing compromise of their
losses and avoiding bankruptcy. The circulation
Of the idea may dispose sufferers to make easy
terms without forcing any company to assume
the odium of actually standing for it. Ger
tainIy no company could afford to do this which
hoped to continue in business The reputation
of having WEIGHED in its dealings with a people
possessing peculiar claims to generous treatment,
and receiving it from the great body of high
minded insurance men, would be fatal. Far bet
ter the name of having impoverished itself to
meet the claims of honor. The goodwill and
trust earned by such course would be as valu-
able as surplus for building up future business.