INSURANCE.

739. Insurance is a contract of indemnity for loss or damage within a specified time. Insurance is of two kinds, Property Insurance and Personal Insurance.

740. The Insurer, or Underwriter, is the party or company undertaking the risk.

741. The Insured is the party secured against loss or damage.

742. Insurance companies are chiefly of two kinds, Stock Insurance Companies and Mutual Companies.

743. A Stock Insurance Company is one owned by stockholders who alone share the profits and are liable for the losses.

744. A Mutual Insurance Company is one in which the insured share in the gains and losses.

745. The Policy is the written contract between the person whose property is insured and the insurance company.

746. A Valued Policy is one in which the value of the property insured is specified.

747. An Open Policy is one in which the value of the property to be insured is not definitely known when the policy is written. This form of policy is used by persons who insure goods which are to be conveyed from one place to another, and at different times.

748. The Premium is the sum paid for insurance, and is usually a certain rate per cent. of the amount insured.

The rates of premium depend upon the nature of the risk and the length of time for which the policy is issued.

749. The Term of Insurance is the period of time covered by the policy.

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PROPERTY INSURANCE.

750. Property Insurance is a contract which provides security against loss of property. It includes Fire Insurance, Marine Insurance, Live Stock Insurance, etc.

Among other forms of property insurance may be mentioned Plate Glass Insurance, Steam Boiler Insurance, Tornado Insurance, and Transit Insurance. 751. Fire Insurance gives indemnity for loss or damage by fire. 752. Marine Insurance provides indemnity for loss or damage to vessels or their cargoes through the perils of navigation.

753. Live Stock Insurance affords indemnity for loss of horses, cattle, etc., or damage to them, by lightning or other casualty.

754. Fire Insurance Losses are usually adjusted by the insurance company paying the full amount of the loss up to the limit of the policy, unless the policy contain the "percentage co-insurance clause" which provides that the company shall pay only such proportion of the loss as the sum insured bears to the full value of the property.

1. Thus, if property worth $9000 were insured for of its value, the company in case of loss, under the "percentage co-insurance clause would pay on of the loss; that is, in case of a total loss, the company would pay $6000; in case of a loss of $3000, it would pay $2000, etc.

2. Fire insurance companies may insure property at full value or for more than its value, but according to the terms of the policy the insured can only recover for loss or damage to the extent of the actual loss. They prefer that the insured be interested in its protection to the extent of part of the risk. 755. Certain fire insurance policies contain the following coinsurance clause:

"If at the time of the fire the whole amount of insurance on the property covered by each separate item of this policy on property as described in such item shall be less than 80% of the actual cash value thereof, this Company shall in case of loss or damage be liable for only such proportion of such loss or damage as the amount insured under said item shall bear to the said 80% of the actual cash value of the property covered by such item." 756. Marine Insurance Policies are issued on vessels for a specified time and on cargoes for a certain voyage.

In marine insurance the insurers are usually allowed one-third for the superior value of the new material used in repair of damage.

When a vessel sustains a loss, the insurance company pays only such a proportion of the loss as the amount of insurance bears to the total value of the property. Marine insurance policies usually contain the "percentage co-insurance clause."

These

757. Short Rates are certain rates of premium charged by companies when the term of insurance is less than a year. rates are proportionately higher than the rates for a year.

758. Salvage is an allowance made to those who voluntarily aid in saving a vessel or cargo in times of danger or distress.

759. To Cancel a Policy is to annul the contract between the insurance company and the holder of the policy.

This may be done at the instance of the company or of the policy holder. When by the former, a Return Premium is paid by the company, which bears the same relation to the entire premium as the unexpired portion of the term does to the whole term; but when canceled at the request of the policy-holder, the return premium is only what is left after deducting the "short rate premium " for the expired time from the total premium.

760. Computations in property insurance are made in accordance with the principles of percentage, the Amount Insured being the base, the Rate Per Cent. of Premium the rate, and the Premium the percentage.

EXAMPLES.

761. 1. A building was insured for $4500 at a premium of 11%. What was the cost of insurance?

2. A house was insured for $3000 and its furniture for $500 at 11%. What was the cost of insurance?

3. A farmer insured his house valued at $2400 and his barn valued at $900 for 3 of their value at 2%. What was the premium?

4. Mr. B. insured his house worth $3500 for of its value at 14%, and his barn valued at $1800 for of its value at 14%. What was the cost of his insurance?

5. The loss on a certain property was $7500. The property was insured for $2500 in the Ætna, $3500 in the Franklin, and $4000 in the Hanover. How much was paid by each company?

6. A grain dealer paid $270 for the insurance of a cargo of wheat at 14%. What was the amount of insurance?

7. At 50 cents a $100 worth, how much insurance can be secured for $25?

of its value at

8. An agent secured a house worth $8400 for 5%, and charged $1.50 extra for writing the policy. was the bill?

How much

9. Mr. Brown has merchandise valued at $15000 which one company offers to insure to of its value at 14%, and another to of its value at 14%. What was the difference in the cost of the premiums?

10. A cargo worth $10560 was insured for of its value at 24%. In case of shipwreck what would have been the actual loss to the owner?

11. A vessel worth $50000 was insured for $8000 in each of four companies. What insurance would the owner receive from each company if it should sustain a loss of $12000?

12. How much will it cost to insure a house worth $8750 for of its value, at 15% ?

13. A store valued at $7500 was insured for $6000. It was damaged by fire to the amount of $3000. The policy contained the "percentage co-insurance clause." What amount did the company pay?

14. A building was insured in the American Insurance Company for $3200, in the Orient for $4400, in the Traders' for $5200, and in the Delaware for $6800. A loss of $5880 was sustained by a fire. What was the sum paid by each company?

15. A cargo of grain valued at $27000 was insured for $24000, the policy containing the "percentage co-insurance clause." It was damaged to the amount of $18000. How much should the company pay?

16. A cargo worth $42520 was insured 14% premium. The ship was lost at sea. surance company lose?

for 80% of its value at How much did the in

17. A block of buildings was insured for three years for $25000 at 14%. At the end of the first year the policy was canceled at the request of the owner of the real estate. What was the return premium, if the short rate for one year was $.75 per $100?

18. For how much must a consignment of goods valued at $3412.50 be insured at a premium of 2%, so that, in case of total loss, the value of the goods and the premium may be covered?

19. A consignment of 6000 bu. of wheat worth 724 per bushel was insured for of its value at 14% premium. The wheat was totally destroyed by fire. What was the loss to the owner?

20. A stock of goods valued at $36000 was insured for 18 months at 14%. At the end of a year the owner returned the cancellation. The "short rate premium" being $1.20 per policy for

what was the return premium?

21. A man owning property worth $15000 had it insured for $10000 under the provisions of the 80% co-insurance clause. The property was damaged by a fire to the extent of $9000. How much was paid by the insurance company?

22. Under the provisions of the 80% co-insurance clause, how much would be recovered, in case of total loss, on property valued at $75000 and insured for $55000? How much if the same property were insured for $60000?

PERSONAL INSURANCE.

762. Personal Insurance is the insurance of persons. It includes Life Insurance, Health Insurance, and Accident Insurance.

763. Life Insurance is a contract to pay a certain amount of money at the expiration of a specified time, or in the event of loss of life.

764. Health Insurance is indemnity for loss occasioned by illness.

Health insurance secures a weekly allowance in case of illness.

765. Accident Insurance is indemnity for loss from disability caused by accident.

766. The Policy is the written contract between the insurance company and the person on whom the insurance is written.

767. Life Insurance Policies are of various kinds, the more common being the Ordinary Life Policy, the Term Policy, and the Endowment Policy.

768. The Ordinary, or Straight, Life Policy requires payment of premiums periodically during life, the policy being payable only upon the death of the person insured.

769. The Term Policy is payable upon the death of the person insured, if it occur within a certain specified time.

770. The Endowment Policy is payable to the person insured if he survive a specified number of years, or to a designated beneficiary if the person insured die before the expiration of the policy.

Life insurance may be secured by the payment of annual premiums for life; by a specified number of consecutive annual premiums; or by the payment of a single premium. The amount of the premium depends upon the age of the person insured, the amount of insurance, and the nature pere policy.