The Gisborne Times PUBLISHED DAILY. FRIDAY FEBRUARY 27, 1931. A MORAL OR A LEGAL OBLIGATION?

Gisborne Times, Volume LXXII, Issue 11451, 27 February 1931, Page 4

The Gisborne Times PUBLISHED DAILY. FRIDAY FEBRUARY 27, 1931. A MORAL OR A LEGAL OBLIGATION?

Tht:r c is much discussion m insurance circles concerning the decision of the Government that the State Tire Insurance Department shall pay out in respect of fire damage to policy holders in that of lice , "To suffered additional loss by the conllagratiou •which followed the recent, disastrous earthquake. Ii is, however, made clear that no payment will hq made in the case of damage to any structure unless insurers were also insured against that risk also. Companies in competition with the State -Office at once protested against the Government s decision on the ground that it P rt> ' posed to do something quite outside the terms of their policies. Further light thrown on the matter goes to show, it would seem, that, whilst private companies are entitled to stick to the terms of the contracts which they mado with those policyholders who did not take out the extra cover against lire consequent on an earthquake, it is most unlikely that the State Department could justify the adoption of a similar attitude. It will ho recalled that, originally, the Prime Minister, when indicating what tlio State Office intended to do asserted that itwould he a lead to th e private companies, and that the decision liad tfeen inado only in tlio special circums Lamp's that had arisen. In Jrffhi, the Hon. It. Masters the decision in question was duo to a> recognition by the State of a moral obligation to make somo reimbursement to policy-holders in respect of thoir fire insurance contracts! What is liow asserted in other quarters, however, is that tlio State Office alone amongst all the insurance companies is really under a legal obligation to make the payments I It is well-known that, after tho calamitous earthquake at Frisco most of tlio insurance companies doing business throughout tlio world' agreed ■ that, thoi eaftci, fire damage following upon an earthquake would not bo covered unless a policy-holder paid a special premium to cover that class of risk. Seemingly, however, no such exception has ever been made in the case of fiie policies issued by - tho ' ; State Office. Risks , not: covered ;by a State policy are described as under:

“The policy does nob cover buildings Or. goods hold in trust or on commission, or on joint accounts with others, or, goods sold but not delivered or paid for,, ill ’ whole or in' part, uliles's: expressly described .as sueli in tho proposal and allowed in the policy ;f nor i any deeds, bonds, bills of exchange, promissory " notes, money, securities for money/ account hooks, stamps, gun powder, or: other explosives. Nor will 1 -’ the general maiiager bb liable for loss prising; through' any -of-the following causes: i.e., spontaneous fermentation . or -heating, 9 invasion enemy, riot'or civil'commotion, volcanoes,. earthquakes, , hurricanes .pi*, explosions (coal, gas,• etc.); nor for loss by thpft at or after a fire; nor foN loss arising through or' in copsoquoiico of any neglect or deviation ' fro.iii i.pqlie.e' or 1 njunicipal' laws k. . -q" •'*' ',',l T ife/YStT/ iff: ' feinT ■' ffl 5 ffiff ff ' r

where any such exist; nor for loss or damage to buildings under construction or repair* or contents thereof, wherein carpenters or joiners arei employed, unless the special written consent of an authorised officer or agent ol; the general uianagor is first obtained ; and in iiq ease will tho general manager be liable to pay more than £lO in respect of any jewellery, watch, trinkqt, painting, print drawing, sculpture, medal, curiosity or articlo .of vertu, 'or £OO in respect of any article of household furniture, unless the sam© is particularised and valued in tliq pro-' posal and allowed in the policy.”

It seems that tho terms of the State Office'policy are read to mean that, if ail earthquake occurs, the policy-holder shall not be entitled to compensation for any damage apartfrom fire loss that arises out of such a visitation. THq private insurance companies, on the other hand, word their stipulations very differently, for they read; —

‘.‘This insurance does not cover loss'or damage directly or indirectly, proximatoly or remotely, occasioned or contributed to, by, or through, or in consequence df (a) subterranean fire, earthquake, typhoon, hurricane, volcanic eruption, or other convulsion of nature In the event of any claim being made under this policy tho insurod shall, when directed by the company, produce proof to the company’s satisfaction that the loss or dainago'was not'either directly or indirectly, proximatoly or contributed to, by, or through, or in consequence of any of the events herein referred to.”

It may, of course, be the case that tho attitude of the private insurance companies may be challenged, but they will be able. to. show, at any rate, that, since the Frisco disaster, they’ required special poFcies to be taken out wber© an insurer wished to be covered against fire following upon an earthquake.