A New Insurance.

Northland Age, Volume VIII, Issue 10, 27 October 1911, Page 5

A New Insurance.

We are all acaistomtd to fire inlurance and one might indeed almost «ay that insurance against fire is a universal practice in the civilised world, but, until a firu actually occurs, few of us realise the limitations of an ordinary fire “ policy. ” Without going into technicalities, the writer will attempt in the following notes to explain a new system of providing against loss by fire that has recently been developed by the majority of the large tnsurance corporations in England and throughout the world as a companion or complement to fire insurance. Take a few concrete cases of fire in various trades. A farmer insures hit farmhouse, cowsheds, stables and bis horses and cattle for say £SOO. A fire occurs, burning down his stables etc., and killing his ploughing horses and milch cows. The compensation paid covers the value of the goods, etc., lost, and after replenishing his stock he is able to continue operations. Now let us see to what extent he is still the loser by the fire. (l) His cows produced a certain amount of milk per diem, part of which he sold and part was used for buttermaking. The loss of sale is not covered by his policy. (a) He was in the ploughing season when the fire occurred, and now has to hire horses to continue the work. This again is not covered by his policy. (3) Accommodation is wanted for himself and family and may not be forthcoming gratis. Money will be wanted to pay for board and lodging while he is rebuilding. This again is not covered.

Take an hotel or storekeeper. In his case, during rebuilding he loses all the profits that his business would be earning during the weeks or months that follow the fire, white reconstruction is in progress, and though many people try to cover this by overinsuring their premises, when their claim comes to be settled by the company they will find that the compensation paid in no way meets their loss. Manufacturers, bakers, builders, carpenters, fishermen, whatever the trade may be, a fire policy cannot cover the lossof trade and consequent profit resulting from the fire, what are known as the “ standing charges,” i.e., rent, rates, taxes and salaries, that run on independently also have to be met.

This is where “ Profits Insurance,” as it is called, comes into play and the insurer finds what a valuable adjunct to fire insurance it can be when on looking at his books at the end of a year in which his premises have been attacked by fire he sees practically the same amount of net profit showing as in normal years. This is affected in a reasonably simple manner. A man wishes to take out a policy guaranteeing him against loss following a fire. He merely ascertains his average profit per annum and fixes this at the sum to be stated on the policy as the maximum compensation should he desire to be covered against loss for a period of twelve months following a possible fire. He can however insure for periods of three, six, or nine months, should he consider it possible for him to get his business in full working order again in less than one year. He states also in his application what “standing charges” he wishes to cover. Rent, rates, taxes and annual salaries, giving the amount spent on each per annum. Wages of course, for casual or weekly labour, need not be covered, as these would automatically cease on the occurrence of fire. These items are all embodied in the policy as also is the method by which he wishes his “loss of profit” to be ascertained. Some prefer to take the previous year as the standard, but others again wish for an average of 3,5, 7or even more years to be taken. The rates vary according to the period for compensation stated in the policy. Three months is usually one half of the fire, 6 months fire rate, 9 months fire rate and a quarter and twelve months fire rate and one half. It is usually only large factories with heavy machinery however that require to be covered for twelve months. The method of settling claims is also simple. An accountant, authorised mutually by the company and the claimant, is sent to examine the books of the business, and his estimate of the loss auffered is accepted and paid in full by the company. In the case of a watchmaker known to the writer, business was continued after an interval of 14 days in some adjoining premises. Here the hire of these premises, the cost of extra material for carrying on the business, the rates and taxes and also the wages of the permanent employees during the time of complete stoppage were all paid by the insurance company. Similar cases could be cited did space permit, but this article intended merely to show the advisability, one would almost say necessity, of taking up this branch of insurance. As to what company is the best, i.e., gives most benefits in its policy, it is extremely difficult to state, owing to the fact that all are practically modelled on the same general plan ; but an intending policy-holder would not be far wrong in applying to an old-established concern such as the Liverpool, London and Globe Coy., for his protection against loss of profits,