The Cook County news-herald. [volume] (Grand Marais, Cook County, Minn.) 1909-current, 1917-02-28
THE REINSURANCE CLAUSE
IN FIRE INSURANCE POLICIES
Property Must be Insured for 100
Per Cent Of Value In Order to
" Collect Full Damages.

| VVsuoCS VS. Oa"N9oSs
| The property owner who carries a
fire insurance policy upon his prop
erty with the reinsurance clause at
tached agrees that in case of loss,
he shall receive only the proportion
that the amount of insurance carried
bears to the amount of insurance
that is stipulated in the co-insur-
ance clause, which in the State of
Minnesota may be SO, 60, 70, 80, 80,
or 100 per cent of the value of the
insured property.
Therefore, if the insured is to COL
lect the full amount of any loss he
must at all times keep his property
insured~for the full amount called
for by his co-insurance contract. If
he fails to maintain the required a.
mount of insurance, in case of loss
the company is only liable for that
portion of the loss which is repre-
sented by the proportion that the
actual insurance bears to the re-
quired amount. Thus, if the value
of the building is $4,000, then un-
der the 80 per cent co-insurance
clause the insured is required to
take policy for at least $4,000. If
this is done the company is liable
in full for any loss not exceeding
the face of the policy. However, if
the insured carries only $4,000 of in
surance or one-half of the required
amount and loss of $4,000 takes
place, the reinsurance clause pre-
vents the insured from collecting
his claim in full by providing that
this $4,000 loss is to be paid only in
the proportion that the insurance
actually carried $4,000 bears to
the 80 per cent insurance required
($16,000) which is one-half of $4,-
900, or $4,000. In such case, there
fore, the insured would be carrying
one-half of the insurance and the
company one-half, or in other words,
he is co-insurer Of one-haf of the
risk.
If $4,000 had been taken instead
Of $4,000, the loss would be paid in
the proportion that $4,000 bears to
$4,000 (the amount required by the
co-insurance clause), which is five
Fights of the $4,000 loss, or $4,000.
On the other hand, if 100 per
cent or full co-insurance clause had
been used and only $4,000 of insur-
ance taken, the property owner
would receive the proportion that
$4,000 bears to $4,000 (the full val
ue of the property, which is two
fifths or $1,000. In this last case,
therefore, the property owner would
have been a co-insurer to the extent
of three-ffths Of the loss.
If the owner of property worth
$4,000 had an 80 per cent co-insur-
ance clause attached to his policy,
he must then carry $4,000 insurance.
Should it be found at the time of
loss that he has only insurance in
force to the amount of $4,000 he is
short $4,000 of the amount he agreed
to carry, which is one-fourth, or Is
per cent, and he must then stand
this portion of the loss. In case
such loss should be $4,000, the insur-
ance company will pay the assured
three-fourths, or rs per cent of $5,-
900, which will be $3.50, and the as
sured or co-insurer, must stand the
other one-fourth, or $3.50. Or, if
the loss was only 5000, the insurance
company would pay three-fourths, or
$3.50, and the assured must stand
the other one-fourth, or $50.
If SO per cent co-insurance clause
is attached to a policy covering on
property worth $4,000 the assured
should carry $4,000 insurance. If it
is found at the time of loss that on
ly $4,000 is carried, he is short $751;
900, one-ffth, or 20 per cent of the
amount stipulated in the co-insur-
ance clause, which portion he, as CO.
insurer, must stand. If the loss d.
mounts to $4,000, the insurance
company will pay four-fifths, or 50
per cent of $4,000, making the u
mount due under the policy $4,000,
and the assured must stand the
other one-fifth, or $4,000. Should the
loss be only $500, the insurance COM.
pany will pay four ffths or S4OO, and
the assured must stand one-fifth, or