FIRE INSURANCE POLICIES

Otago Daily Times, Issue 16121, 9 July 1914, Page 8

FIRE INSURANCE POLICIES

QUESTION OF FUEL PAYMENT.

PRINCIPLES OF INSURANCE,

GFbom Ona Own Ojbeespondent.)

WELLINGTON, July 8.

The Minister in charge of the State Fire Insurance Office was asked to-day by Mr Buxton whether he would consider the advisability of bringing in legislation to compel insurance companies doing business in New Zealand to' pay out the lull face value of any policy issued, they having accepted the payment of a premium for the amount set forth on such policy, should the property so covered by any insurance company be totally destroyed by fire and the insured not desire the property to be restored or replaced, but to be paid in cash as purchased by premium paid.

In d note to his question Mr Buxton said:—"lt is well known that some companies doing business in New Zealand compete unfairly by accepting risks in excess of actual insurable values, relying on disputing claims and getting a settlement or a reduction of the claim under the policy for which full premiums may have been paid for 10 or 20 years, and, further, where a reduction of the claim has been agreed upon no return of premium is made.'

The Hon. Mr Fisher replied that legislation in the direction suggested would be in direct antagonism to the universally recognised and fundamental principles of fire insurance. A fire policy was an indemnity against loss on the part of the assured, and no one was entitled to obtain a sum greater than the actual value of the property destroyed by fire. The owner of a property was in the first instance responsible for the excessive insurance, as it was he who asked for the amount and placed the value on the property. If after the policy was taken out the value of the property decreased, then it was again the duty of the policy-holder to notify the insurance company and have a reduction made on the amount of cover and the amount of premium paid. If each insurance company were to be called upon to make frequent inspections and valuations of individual risks, it could only bo done by materially increasing the rate of premiums charged on account of the very large expense involved, and even then it would, be quite impossible to keep control of values, the consequence of which would be that in many cases a direct incentive to incendiarism would be offered.