A man may have an insurable interest in property which he does not own at all. Thus a salaried agent whose employment is contingent upon the continued existence of a given property, may insure it. But the value of his indirect interest must somehow be determined and agreed to by the insurer and the insured. In like manner, a stockholder of a corporation has an interest, real though difficult to determine, in the property of the corporation.

Alienation. Any change in ownership or possession of property, including sale for taxes or under a lien, will make it necessary to assign immediately the policy to the new owner, unless he chooses to take out a new policy. Assignment must be with the consent of the insurance company and recorded on the company's books.

What May Be Insured. Any kind of tangible property may be insured. Deeds, bonds, shares of stock, book accounts, bank notes, promissory notes, and bills of exchange, etc., are not insurable. These merely represent an interest which the party has in some property and, if they are destroyed, the claim may be proved by witnesses without them. Money may not be insured; the United States Treasury will redeem what remains of it.

What May Be Insured Against. A fire insurance policy insures for damages other than those caused by actual flames. Injury due to the heat of a fire in an adjoining building would be recompensed, as would also damage caused by the means used to extinguish a fire, or damage caused by removing the goods to a place of safety even though it later developed that such moving need not have been done. To insure against damage by lightning where there was no actual ignition, a special lightning clause must be attached to the policy.

Floating Stock. A merchant may insure his stock with the understanding that it is to be replaced by other material of the

same kind. His policy would be known as a floating one, and in case of damage, he may recover on the stock on hand when the fire occurred, regardless of what stock was on hand when the policy was issued.

Coinsurance. A coinsurance clause stipulates that, in return for a reduced rate, the insured must insure his property up to a certain percentage of its value, usually 80 per cent, and if he fails in so doing he must himself bear a proportion of any loss, thus making him a coinsurer with the company of his own property.

For instance, if his property were worth $10,000, an 80 per cent coinsurance clause would obligate him to carry insurance to the amount of $8,000. If he carried only $6,000 and a loss occurred, he would be paid only such a proportion of his loss as the insurance he carried bore to the amount he agreed to carry, in this case three-fourths. Therefore, if fire damaged his property to the extent of $4,000, he would receive only threefourths of this amount, or $3,000.

Reinsurance. For the better distribution of risks, a company after writing a policy often insures itself for the whole or a part of the risk it has just insured. If then, the original insurer has to pay, the reinsurer is liable to the insurer for the amount paid, or for the proportionate part of it, as may have been agreed. The insurer may not reinsure for more than the original policy. The amount to be paid by the reinsurer is the amount the insurer has to pay, or a part of it, with one exception. If the reinsurer pays the claim of the insurer before the claim of the insured is settled, then it does not matter to the reinsurer what terms the insurer makes with the insured. If the insurer becomes insolvent, makes a final settlement and is discharged, he will receive from his reinsurer only what he paid. But when the insured has been paid off, then the other creditors can have no claim on what is due the insurer from the reinsurer unless the reinsurance has been

taken into account in making the calculations of dividends under which the insured was paid.

Notes:

I. In changing the location of personal property always be sure to take out a new policy.

2.

In buying buildings of any kind, the first thing to do is to arrange for their insurance.

3. A person living in a house for which he is paying by instalments has an insurable interest in it.

§ 233. Warranties and False Representations

False representations are misstatements made to the company and its agents when applying for the policy, or afterwards as to any change in the condition of the property of which the company has a right to know. If such misstatements materially affect the policy they will render it void.

Concealment is the suppression of any material facts which the insurer does not know or is not presumed to know. Such suppression may be of the fact at the time application is made or of some later change in the condition which the insurer ought to know.

Any fact is material that might properly influence the insurer in taking or refusing the risk or that would affect the amount of the premium charged.

Warranties are representations which are included in the policy. They may consist in answers to a schedule of questions which are attached to the policy and made a part of it. If any of the warranties are false the policy is of no value. Even an inaccurate statement made through an honest mistake, if it is made a part of the policy, renders it useless.

Other Insurance. Misstatements as to other insurance where the policy is of the standard form will render it of no effect whether they are warranties or mere representations.

Increasing the insurance on the property increases the temptation to be careless or to have "accidental" fires, and the law is strict that the company must know of and consent to insurance on the property in any other company. Where a property is covered by policies in different companies, any one insurer is liable only for the proportion of the loss that his policy bears to the total amount of insurance.

Notes:

I.

2.

Be very careful to make only the most accurate statements in answer to any schedule of questions to be filled out in making application for the policy. If these statements are wrong, and the schedule is attached to and made a part of the policy, your policy may be of no value.

To conceal matters material to the risk may avoid the policy.

§ 234. Settlement of Losses

When a loss occurs the insured must at once notify the company and then make out an inventory of the damaged property, stating the value of each article separately. This inventory must be sworn to. The New York standard policy gives the company the option to require that it be confirmed by the certificate of a magistrate or of a notary public. In this inventory the insured must state if there are any other claims against the property; or, if it is partly owned by others, who they are and what is their interest in it, and what, to the best of his knowledge, was the cause of the fire.

The company usually sends out an adjuster to investigate the loss. He must be shown all the damaged property and any papers relating to its value, or plans, specifications, etc., which would aid in determining the value of the property destroyed. The insured must be ready to submit to any ex

aminations which the company may wish to make and to make any relevant affidavits it may require.

If the insured and the company cannot agree on the amount necessary to cover the loss, the company and the insured each appoint one appraiser and the two go over the property and value it. They select an umpire who decides between them in case there is any dispute as to the proper valuation. Their decision settles the amount which the company is liable to pay.

A mortgagee has the right to recover from the insurance company whatever is due him under the mortgage at the time of the damage, provided of course the face of the policy covers the amount due and that the policy bears the customary mortgagee clause. This right, however, does not run with the land. That is, if the mortgagor sells the property subject to the mortgage, the buyer, who assumes the mortgage, may insure it without the mortgagee's having any interest in the policy. But if the buyer insures it, making the loss payable to the mortgagee, he may not revoke or cancel the insurance without the mortgagee's consent. In the same way, if a policy taken out by the owner, is made payable to the mortgagee as his interest may appear, his rights cannot be destroyed by any act of the owner. If the owner assumes to accept a settlement of a claim without the mortgagee's consent, he will not be bound by it.

Options Which the Company May Exercise. Under the standard policy in New York, the company has the right to replace or repair the property instead of paying for the loss. Or it may take the property on paying the appraised value for it. If the property is capable of being repaired, the company pays only the amount which is adjudged necessary to restore it to its former condition.

If the insured has any claims against persons other than the company for the value of the property, he must transfer them to the company when he is paid the amount adjudged