Year: 1871

In the present unfortunate condition OF
insurance companies resulting from their
unprecedented losses by the great fire in
Chicago, by which a very large number
throughout the country have become
hopelessly insolvent, it is of the utmost
importance to insurers that they take the
earliest opportunity to protect themselves
against further disastrous consequences
1t must be understood at the outset that
policy of insurance is contract of in
demnity, only, against loss, and not a
contract to pay absolutely the amount
written in the policy-and in case of sew
eral policies upon the same risk, each poll
cy pays only that proportion of
the loss which the amount written
in it bears to the total amount in
sured. Thus: A insures his barn and its
contents in four different companies by
four different policies for $40, 900, So, 800
in each. A fire occurs by which his barn
and its contents are destroyed, with the
exception of $4,000 worth of the proper
ty insured, which he is fortunate enough
to save. His loss, supposing the property
is insured for its full value, is $4,000.
This is divided equally between the four
companies, each paying 81, 600. If two
of the companies prove insolvent, A will
secure 81, 900 from the two solvent COM





ance from the insolvent companies as
they may be able to zpay-say 10 per
cent, or S400. His total insurance would
thus produce for him only $4, 400, while
his loss is SS,000 And this result will be
the same if, before the fire which destroys
the property insured, two of these COM
panies become insolvent by any means
whatever ... ,.


1t becomes, therefore, of great impor
tance for the farmer to look well to his
policies and see that none of them are
written by companies no longer sound.
If such are found, they should be handed
in to the nearest agent of the company,
and cancelled at once without waiting to
effect new insurance to take their place,
since, as in the illustration we have given
above, although cancellation of the
policies of the insolvent companies would
reduce the insurance to 5000, the loss
would be divided between the solvent
companies and paid in full, one-hah by
each, gain to the insurer of 5000 on the
amount which could be obtained in case
the insolved companies remained uncan-
celled. The insolvent companies are au-
thorized upon the cancellation of policies,
to pay to the holders the unearned pre-
MUM, that is, sum which bears the same
proportion to the full premium paid that
but lcIlu llOCS W tHC 1ull eSA
This is fair to all parties, since, if an out
standing policy in an insolvent company
sustains a loss, the loss becomes claim
upon the funds of the company for its
amount, result which may be obviated
by the small payment of the unearned
premium as above stated. -a--.


In case the insolvent company refuses
to pay the unearned premium upon the
cancellation of its policies, the amount of
it is nevertheless claim against its assets
and entitled to its proportionate dividend
upon presentment and proof, as in case of
less Therefore, to avoid the possibility
of danger that the insolvent policy may
be called upon to contribute in case of
loss as has been shown at the head of this
article, and thus reduce good insurance,
insurers should see to it that new policy
taken in place of doubtful one contains
clause as follows:


Any loss under this Policy shall be
paid without reference to any existing
Policy (or Policies) on same property in
the Insurance Company Tor Com
panies )"-Prdirie Farmer.