during the term of insurance, an additional premium will be charged or a rebate given.

4. Agreement. The agreement of the parties is evidenced in a contract called a policy. In this contract are included the usual elements of a written contract, and many special clauses are added, nearly, if not all, being restrictions in favor of the company. In making application for insurance, where one is required, the applicant is required to answer in writing a number of questions and his answers are known as representations, conditions, and warranties.

Representations are statements in writing, and are usually considered a part of the policy. If a material representation is false, the policy is void. A condition is expressly a part of the policy. It generally relates to the use of the building, changes, etc., and has a direct bearing upon the force and effect of the policy. A warranty is an express promise or undertaking, and is a part of the policy. The effect of these various statements and clauses is to impose upon the insured the exercise of the utmost good faith in all his dealings with the company.

5. Risk. The risk taken by the company arises from possible loss or damage by fire; but the policy may contain clauses relating to other risks, as, for example, loss by lightning and by tornadoes. Loss by fire includes all losses incident to extinguishing the fire. The loss is the value of the goods at the time of the fire. Fire insurance is strictly one of time, beginning on a certain date and expiring at a certain time. It is customary for the risk to begin at noon and terminate at noon. The risk, with the consent of the company indorsed on the policy may be transferred from one stock of goods to another, also to cover the same goods when transferred to another place. When a partial loss occurs and is paid, the amount of the policy is reduced accordingly.

6. Losses. The policy usually stipulates that when a loss. occurs, the company shall be notified in writing within a specified time. In the adjustment of losses, the policy usually provides the method of settlement, and it is usually optional with the

company as to whether it will pay the loss or repair or re-supply. A clause now frequently included is the one of co-insurance, whereby the insured is a co-insurer to the extent of the value of the property not insured.

340. Insurance in Several Companies. When the property offered for insurance is of great value, it is customary to re-write the insurance. One company may place the whole risk and reinsure the whole or a part, or a company may limit the amount of insurance it will assume, necessitating placing applications with several companies. Such insurance is generally negotiated by insurance brokers. Losses under such a policy are divided pro rata among the various companies issuing the policies.

341. Assignment. While an insurance policy represents a right and is therefore a chose in action, its assignability is controlled by the company, and an assignment can only be made with its consent. Policies usually contain blank assignments that may be filled out showing the consent and agreement of all parties interested.

342. Negligence. As a general rule, one's negligence contributing to or causing damage is a bar to an action. Yet in fire insurance this is not the case. Insurance is to protect one against his own carelessness as well as various other causes of loss. The company must pay even when the loss was caused by the carelessness of the insured. However, one must not actively contribute intentionally to produce a loss, as this is fraud.

The principal kinds of insurance are fire, life, and marine insurance. Fire insurance is an undertaking by an insurer to indemnify a property owner against loss by fire.

A mutual company is an association of property owners all of whom are insured, and against whom an assessment is laid whenever a loss

Occurs.

A stock company is an incorporated organization which charges a fixed rate for the protection afforded and out of the proceeds pays losses and dividends.

Any personal property may be insured, provided the person who takes out the insurance has an insurable interest.

The consideration paid for insurance is called a premium, and the contract itself is called a policy.

Premiums may increase or decrease during the term of insurance as conditions surrounding the property change.

A representation is an oral or written statement, made when the insurance is procured, not a part of the policy but avoiding it in case the statement is material and false.

A condition is an express part of the policy which restricts the use of the property insured or in some way limits the rights and privileges of the owner.

A warranty is an express promise or undertaking on the part of the insured and is a part of the policy. Representations' in the application are often made warranties.

The risk is the possible loss assumed by the insurer.

Time is strictly of the essence of all fire insurance contracts; that is, the contract begins and ends at a precise instant.

Where a company undertakes the entire risk upon a property of great value, it is not unusual for it to protect itself by reinsuring a part of the risk in other companies.

Upon consent of the insurer, a policy may be assigned.

By gross and intentional negligence the insured may lose his rights under the policy.

344. QUESTIONS

Mention the most important kinds of insurance. What is fire insurance? How are the parties designated?

Describe a mutual company; a stock company.
What may be the subject matter of insurance?

sideration?

By whom are insurance rates fixed?

What is the con

What is the agreement called and what are the elements?
Define representations; condition; warranty.

Discuss risk. How is it affected by the element of time?

What is insurance?

Are insurance policies assignable?

1

How does carelessness by the insured affect his right to recover for a loss?

345. Introduction. The business of life insurance is generally carried on by regularly organized associations that make this their sole business. The companies are very similar to fire insurance companies, and the terms and conditions of issuing policies are governed by the same general principles.

1. Parties. The parties to a life insurance contract are two in number, the insurer and the insured. As in fire insurance companies, the insurer may be an incorporated association for mutual protection, or an incorporated stock company organized for the purpose of affording protection to those applying and at the same time of producing profits for the stockholders. Many secret and partially secret societies have insurance departments that are a mutual benefit association. The cost of insurance in such a company is slight, or should be. The cost is proportioned to the loss by death. Stock companies are incorporated, and charge a regular rate for the protection. The rate is based on past experience and on the age of the insured. The companies produce profits from the premium charges, lapses, and the careful investment of capital.

2. Application. This is usually a written statement signed by the insured, containing in addition to the application the answers to a list of questions relating to the age of the applicant, his general health, his ancestors and their general health, if living, and if not, the cause of death.

This application becomes a part of the contract between the parties and is a warranty. The questions must be truthfully answered, or the policy may be avoided by the company and all payments forfeited. "The word health, as ordinarily used, is a relative term. It does not require absolute perfection. The most important question on applications for life insurance is, whether the applicant is exempt from any dangerous disease, i. e. one which terminates fatally."

3. Who May Insure. To begin with, all sane persons have an insurable interest in their own lives. A substantial pecuniary interest in the life of another is sufficient on which to base insurance. To allow one to insure the life of a person otherwise would be to encourage wagers of an objectionable character. A creditor has an insurable interest in the life of his debtor. Not only may the creditor so insure, but if the debtor dies, he may collect on the contract with the insurance company, and he may also recover payment of the debt from the estate of the deceased. Children or parents dependent upon each other have such an interest. If the interest exists at the time the contract is made, it is immaterial whether it continues or not, as a creditor may insure the life of his debtor and still collect the insurance even though the debt was paid subsequent to taking out the insurance. In this, life insurance differs from fire insurance contracts. The insured may apply for insurance in his own behalf payable to himself or his estate, or he may make it payable to any one who has an insurable interest, and such person at once acquires a complete interest in the insurance contract. The one in whose favor the insurance is taken is called the beneficiary.

4. Policy. As in fire insurance, this is the written contract setting forth the terms and the stipulations relating to and in any way affecting the contract. Policies usually contain restrictions