HAS happened before may, and most probably wILL happen again under similar circumstances." 1 1 "The result," says James, "has been fully demonstrated by experience — taking the average number of fires that have occurred in the nine years before 1845, as the probable number of fires that will happen in each trade, or, which is the same thing, the number of claims which will be made on the funds of each society in the year 1845 - presuming the number engaged in each trade in the Metropolis to be correctly stated in the Directory, and each trade to be associated into a separate club for assuring themselves against fire; we find the results to be as follows: The fractions here given express the probability of the number of claims occurring to any individual member of the society, and his proportion of the total fund to be raised to meet the claims, and of the actual experience of each society in the year 1845. If, instead of to six independent societies, all the cases had been taken to one general insurance office, the experience of that office would, on the aggregate, have departed but very slightly from the result estimated by the theory of probabilities: whilst the theorist would say, 'Your fires in these six kinds of risks will probably be 671 in the next year,' the actual experience of the office would be 658, only thirteen short of the number brought out by the theory, a difference of only two per cent. The following table shows the number of fires happening in London, from 1836 to 1845 inclusive, with the yearly average, loss of life, and relative insurances effected:- --- § 6. But, although it cannot be denied that this species of insurance affords great relief to individuals and often preserves whole families from ruin, it has been doubted, even by wise and intelligent persons, whether in a general, or national point of view, the benefits resulting from it are not more than counterbalanced by the mischief it occasions. The objections, in that point of view, which have been urged, are carelessness and inattention which security naturally creates, and temptation to arson. But, though it be admitted, that this species of insurance has been sometimes the cause of fires by carelessness, and even of intentional fires, the benefits, as a national concern, vastly outweigh the mischiefs which have been ascribed to, and which have undoubtedly, on some occasions, proceeded from it. The public have an interest in maintaining the validity of policies of One item alone in the above statement presents, indeed, a most alarming result; no less than the loss of the lives of 217 human beings, or an average of nearly 22 per annum: a state of things which we hope may induce more careful and temperate habits on the part of the population generally, and a rigid attention to at least the ordinary precautions against accidents by fire; for however beneficially the operations of insurance companies may act, with respect to compensation for damage sustained in property, they can offer no assistance in reducing the risk of fire, or making any possible reparation for the sacrifice of human life. With the hope of directing attention to the more prevalent sources of accident, we enumerate some of the causes of Metropolitan fires: insurance against fire, as they have a tendency to keep premiums down to the lowest rate; and to uphold associations for the purpose of insuring against fire, so essential to the present state of the country for the protection of the vast interests embarked in manufactures, and in consignments of goods in warehouses.1 As the practice of insurance against fire, on the property of the foreign merchant, in the hands of his consignees, greatly tends to promote the interests of trade, it ought to be upheld by any means not inconsistent with established rules of law.2 1 Carpenter v. Providence Washington Ins. Co. 16 Peters, (U. S.) R. 495. 2 Per Oakley, J., in De Forest v. Fulton Fire Ins. Co. 1 Hall, (N. Y.) R. 130. CHAPTER II. GENERAL NATURE OF A POLICY OF FIRE INSURANCE. § 7. THE Contract of Fire Insurance is in the nature of an indemnity1 given by the underwriters or insurers, against such loss or damage by fire as may happen to the assured in respect to his houses, buildings, stock, furniture, ships in port, warehouses and goods laid up in them, or other property covered by the policy, during a prescribed period of time, or, it may be called a transaction effected at an insurance office, whereby, in consideration of a single or periodical payment of premium the company agrees to pay to an assured person such loss as may occur to his property described in the policy, within the period therein specified, to an amount not exceeding a particular sum fixed for that purpose, by such policy. § 8. Insurances against fire are most generally effected by companies, (though they may be made by any single individual who is competent to enter into other contracts,) the institution of which concentrates the power requisite to give a practical effect to the theoretical principles of insurance. The conflagration of a cotton-mill, like the loss of a ship, is a calamity that would fall heavily even on the richest individual; but when distributed among several individuals, as above mentioned, each would feel it proportionally less; and 1 See ante, § 1. 2 See ante, § 7. 3 Park on Ins. 9; 2 Marsh. on Ins.; 3 Kent, Comm. 370; Ellis, 1. 4 See ante, § 6. 5 See ante, § 7. 6 Whart. Lex.; 2 Steph. Comm. 180; DeForest v. Fulton Fire Ins. Co. 1 Hall, (N. Y.) R. 84; Franklin Fire Ins. Co. v. Hamil, 6 Gill (Md.) R. 87. provided the number of those among whom it is distributed was very considerable, the inconvenience it would occasion to one in particular would be inconsiderable. Companies for the carrying on of the business of insurance have generally a large capital or such a number of proprietors as enables them to raise, without difficulty, whatever sums may at at any time be necessary to make good losses, and they do not limit their risks to small sums. It is the magnitude of their capitals, says McCulloch, that affords them the means of easily defraying a heavy loss, and their premiums being proportioned to their risks, their profit is, at an average, independent of such contingencies. In addition to the influence. which the high standing of the directors of a company may be able to bring to bear upon their business arrangements, other and active auxiliaries have been found expedient in extending the operations of an association beyond the mere limits of its place of establishment. Branch offices or agencies were thus suggested, which have been found eminently conducive to the objects in view; and it is with them to point out the advantages of the institution they represent, and to pay minute attention to their instructions.2 § 9. Whenever such companies are incorporated, as in this country is almost invariably the case, care should be exercised that the mode of pursuing their business prescribed by their charters is observed. Where, for example, an act incorporating an insurance company provides that all policies and other instruments made and signed by the president or any 1 McCulloch, Com. Dict. The first circumstance that cannot fail to strike the general inquirer into the practice of marine insurance, in England, is that while all the fire insurances are made at the risk of companies which include within themselves the desirable requisites of security, wealth, and numbers, the great bulk of marine insurances are made at the risk of individuals. As to the constitution and different kinds of Insurance Companies, see post, ch. xxi. 2 See James on Life and Fire Ins. 80. |