IMPORTANT TO INSURERS AGAINST LOSS OR DAMAGE BY FIRE.

Lyttelton Times, Volume LXVII, Issue 8125, 23 March 1887, Page 6

IMPORTANT TO INSURERS AGAINST LOSS OR DAMAGE BY FIRE.

TO THE EDITOR. Sir, —Kindly permit me, through the medium of your valuable paper, to draw the attention of the insuring public, which I imagine includes every prudent man in this city, to a point of considerable importance as affecting their interest. The matter to which I refer is the peculiar position in which a mortgagor stands with the Insurance Company after a fire, he having previously, for valuable consideration received, transferred hia interest in the insurance policy to the mortgagee, the same same having been duly entered in the books of the Insurance Company and allowed. To illustrate the matter, I will folra a case in which the mortgage is for £3OO, and the owner of the property has an insurance effected on it of J 6500, a mortgage being executed on this property. The insurance policy is transferred to the mortgagee, unfortunately as has been too common lately. A fire occurs; now comes the mortgagor's trouble. Ho, poor man, having punctually paid the premium for perhaps years on the iJSOO, considers his property was covered for that amount, but now finds that the whole amount that he is legally entitled to, "as Z am informed by an insurance manager," is the <£3oo doe to the mort-

eaeee and the interest thereon, and if he recovers the balance it is an act of grace on the part of the Insurance Company for which he should be truly thankful. Take another case ; a business man purchases a property for £IOOO, paying £3OO cash, the vendor receiving a mortgage for the balance, £7OO, payable by monthly instalments extending over a number of years, for which a policy of insurance is taken out in the name of the vendor, the premiums being paid by the purchaser. In a few years there is only £3OO due to the vendor of the property, # the insurance policy still remaining in his name and for the original sum. When a fire takes placeresult total loss. Again the unfortunate payer of he is entitled to the balance of the amount the property was insured for, and again he finds it a case for extending kindness by the Directors of the Insurance Company to whose a<*ent he had for years paid the premiums, under the delusion that by such payment he was fully entitled to the amount his policy was supposed to cover, the agent of the Company and everyone interested feeling perfectly satisfied that the loss was a genuine one of £7OO, and no suspicion of fraud attaching to any person in the Again, a business man borrows £2OO and gives four promissory notes at three, six, nine and twelve months, at the same time depositing his deeds and transferring the invoice policy on his house, which is for £3OO. Having paid off two of the p.n. s, a fire occurs, and were the policy not transferred the claim would be good for £300; but having transferred it, and there being but £IOO due to the transferee, this is all the Insurance Company consider themselves liable to pay. One more instance and I have done. A tradesman having borrowed the sum of £3OO on security of his dwelling, which is insured for £3OO, and having transferred the policy, which also says on furniture contained therein £IOO, in the event of a fire, and the whole of the property contained in the' policy being destroyed, the unfortunate payer of premiums is again at the mercy of the Insurance Company, for the £IOO on the furniture, and again becomes the recipient of their charity or loses the money. In each of the above cases the probability is that the claims would he paid, as my experience of the action of the Directors and managers of Insurance Companies leads me to the conclusion that unless they had some suspicion of unfair dealing on the part of the claimant, they invariably pay their claims punctually and fairly, without relying strictly on their legal position. Having pointed out these cases, I think something should be done to place borrowers in the position in which they think they are, and on the faith of which they pay their premiums. Should I be wrong in the results that might follow in the cases above enumerated, I shall thank some of the numerous insurance agents in this city to correct me, as I have no other object in bringing these —as I suppose—facts before the public than a desire that they may know what might be the result of, an every-day business transaction. —I am, &c., H. L. BOWKEE.