EARTHQUAKE AND FIRE

Taranaki Daily News, 26 February 1931, Page 12

EARTHQUAKE AND FIRE

THE INSURANCE QUESTION. TERMS OF STATE POLICY. Reference to the Government's policy in regard to State fire insurance policies in the earthquake area was made by the Hon. R. Masters in his reply to a deputation on Saturday. According to the telegraphed report, the Minister said: “The Government, by paying out to State policy-holders, had shown that it recognised a moral obligation to make some reimbursement to them in respect of their fire insurance contracts.”

No suggestion of “moral obligation” has previously been made by the Government. Its decision was announced by the Prime Minister on February 7 in a statement, in which he said:—“ln view of the special circumstances, it has been decided by the Government that the State Fife Office will make ex gratia payments at the discretion of the general manager to policy-holders whose insured property has suffered damage.

FIRE DAMAGE ONLY. “Payments Will not in any case exceed the amount of the fire damage and will not extend in any circumstances to purely earthquake damage. This arrangement will apply only to fire damage which has already been sustained.” . Subsequently, in commenting on the statement issued by the associated insurance companies, Air. Forbes acknowledged that “the conditions of the ordinary fire policy certainty exclude fire loss or damages arising through earthquake.” However, in respect of the State Department, he considered that this was “not a time to stand on the strict legal position in regard to policy-holders who had suffered loss by fire.” The stipulations regarding fire associated -with earthquake are expressed in various forms on the policies of insurance companies, but the following is typical: —“This insurance does not cover lops or damage directly or indirectly, proximately or remotely, occasioned or contributed to, by, or through, or in consequence of (a) subterranean fire, earthquake, typhoon, hurricane, volcanic eruption, oi" other convulsion of nature. . . . In the event of any claim being made under this policy the insured, shall, when directed by the company, produce proof to the company’s satisfaction : that the loss or damage was not either directly or indirectly, proximately or remotely, occasioned by or contributed to, by, or throiigh, or in consequence of any of the events herein referred to.”

TEXT GF POLICY CONDITIONS. There is no such provisioq in the State Fire Office policy! “Risks not covered by the policy” are described as follows:— “The policy docs not cover buildings or goods held in trust or on commission, or on joint accounts with others, or goods sold but not delivered or paid for, in whole or in part, unless expressly described as such in the proposal arid allowed in the policy; nor any deeds, bonds bills or exchange, promissory notes, money, securities for money, account books, stamps, gun powder, or other explosives. Nor will the general manager be liable for loss arising through any of the following causes: i.e., spontaneous fermentation or heating, invasion, enemy, riot or civil commotion, volcanoes, earthquakes, hurricanes or explosions (coal, gas, etc.); nor for loss by theft at or after a fire; nor for loss arising through or in consequence of any neglect or deviation from police or municipal laws where any such exist; nor for loss or damage to buildings under construction or repair, or contents thereof, wherein carpenters or joiners are employed, unless the special written consent of an authorised officer or agent of the general manager is first obtained; and in no case will the general manager be liable to pay more than £IQ in respect of any jewellery, watch, trinket, painting, picture, print, drawing, sculpture, medal, curiosity or article of vertu, or £5O in respect of any article of household furniture, unless the same is particularised and valued in the proposal and allowed in the policy.” SAN FRANCISCO EXPERIENCE. The reason for the special provision in the ordinary fire policies Was explained iri the associated companies’ statement ap follows:—“Reference is frequently made to San Francisco. Insurance companies then were liable for fire, but not for shock damage, which was very slight. Out of the San rFancisco disaster came realisation that companies were operating in a manner which at any moment might create a liability that would firstly jeopardise the security of policies issued all over the world, and secondly place shareholders’ capital at the risk ,of total extinction. To remove these hazards was imperative, and a clause was framed eliminating all losses in any way attributable to earthquake. At the same timp provision, was made whereby prop-■erty-dwners could obtain protection and until now the rate at Napier would have been five shillings per cent, to cover both fire and shock damage. By making this form of insurance the subject of a special contract, the demand was limited arid could be provided for.”