gaged and it is desired that in case of fire the insurance shall be paid to the mortgagee to satisfy his claim, it is the custom to attach a mortgage clause which provides that the insurance shall be paid to the mortgagee named as his interest may appear. In such cases it is customary for this mortgagee to hold the original policy.

Notice of Loss. After a loss it is the duty of the insured to give immediate notice to the company. Under the standard form of policy this notice must be in writing. The damaged goods must be inventoried, and a proof of loss duly sworn to must be filed within sixty days.

Unless the notice is given as stated and the proof of loss filed within the specified time, no recovery can be had on the policy.

Pro Rata Clause. The standard policy contains a pro rata clause, under which the insured can not recover more than the amount of his loss in the property insured, where there is more than one policy on the same property. Thus a man may have his house insured in three companies, as follows: in number one for $4000, in number two for $6000, and in number three for $2000. The house is damaged by fire to the amount of $6000. The insured can recover only this amount, and the companies will be compelled to pay their pro rata portions; that is, number one will be required to pay $2000, number two $3000, and number three $1000. This rule does not apply to the case of several persons with different interests in the same property, but to the case of any insured who, if he recovered the full amount on all policies, would be getting double insurance upon the loss.

QUESTIONS

1. What is the object of the “standard form of policy"?

2. What does the policy against loss by fire include?

3. Is damage caused by lightning covered by a policy against fire?

4. Is the company liable if the fire was caused by an incendiary?

5. How does change of location of the property insured affect the

policy? Why?

6. In case of fire what amount is recoverable on the policy?

7. (a) What is the "additional insurance" provision in the standard

policy? (b) What is the reason for this provision?

8. What is the "alienation clause"?

9. Are fire insurance policies assignable? Explain.

10. What are the provisions of the standard policy with reference to occupancy of dwelling property?

II. Mention some of the provisions applicable to the insurance of factory buildings.

12. (a) How may a policy be renewed? (b) How may it be canceled? 13. What is a "mortgagee clause" in insurance policies?

14. In case insured property is damaged by fire, what steps should be taken?

15. What is the "pro rata clause" contained in the standard policy?

4. LIFE INSURANCE

Definitions. Another form of insurance is life insurance. This kind of contract appears in an almost endless number of forms. It is in its simplest form an agreement upon the part of the insurer to pay a specific sum of money upon the death of a certain person, called the insured, to a specific person called the beneficiary. The consideration paid by the insured is called the premium, and is generally a certain amount payable annually or monthly.

Forms of Agreement. There are many different forms of life insurance agreements. The most common are termed endowment insurance, term payment insurance (10, 15, or 20 payment life policies), investment or income insurance, and straight or whole life insurance. In most forms of life insurance except the whole life policy, the insured, after paying the premium for a given number of years, will receive a certain sum of money, or if he dies before the expiration of the period, the amount of the policy will go to the beneficiary. The beneficiary, instead of being a specific person, may be the estate of the insured Insurable Interest. Every person has an insurable interest in his own life and also in the life of any person upon whom he depends either wholly or in part for education or support, and in the life of any person who is under a legal obligation to him for the payment of money. In short, a person may be said to have an insurable interest in the life of any one whose death would naturally cause him a pecuniary loss or disadvantage.

Bevin advanced to Barstow $300 and some articles of personal property, under an agreement that Barstow should go to California and labor there for

at least one year, and then account to Bevin for one half the profits. Bevin then insured Barstow's life for $1000. Held, that Bevin had an insurable interest in Barstow's life and could recover the amount of the policy.

- Bevin v. Life Insurance Co., 23 Conn. 244.

A partner has an insurable interest in the life of his copartner, and a creditor of the partnership in the life of each partner.

A creditor of a firm has an insurable interest in the life of one of the partners thereof, although the other partner may be entirely able to pay the debt, and although the estate of the insured is perfectly solvent.

Morrell v. Life Insurance Co., 10 Cush. (Mass.) 282.

A woman has an insurable interest in her husband's life, and a man has the same interest in the life of his wife. Mere relationship is not enough to give an insurable interest. There must be an element of dependency coupled with the relationship. A nephew has no insurable interest in the life of his uncle nor has one brother in the life of another.

If the person taking out the policy has an insurable interest to support the policy at the time it is obtained, he may make it payaple to any one, and it is generally held that he may subsequently assign it to any one whether such beneficiary or transferee has an insurable interest or not, unless it is apparent that the transaction is a mere cover for a wagering contract.

If the person taking out the insurance had an insurable interest at the time, the fact that the interest ceases does not affect the policy. Therefore, if a man insures the life of his debtor and the debtor subsequently pays the debt, the policy may still be continued and enforced at the death of the party insured.

In the case in which the insured designates another person as beneficiary the right of such beneficiary as a general rule becomes vested at once and it cannot be disturbed by assignment or in any other way without the consent of such beneficiary, unless the right to make a new appointment is reserved in the policy itself.

When a father takes out a policy of insurance upon his own life in favor of an infant daughter, paying all of the premiums himself and retaining the policy, the contract is between the insurance company and the daughter, and upon the father's death the legal title to the policy vests in her and she is entitled to the possession of it.- Glanz v. Gloeckler, 104 Ill. 573.

Premiums. The premiums on life insurance are graded according to the age of the insured. The person insured must undergo a physical examination, as only healthy persons are insured. The amounts of the premiums are determined by average results computed upon the length of life of a large number of persons carefully arranged and tabulated. These results so arranged are called mortuary tables.

Effect of Concealment.

The contract of life insurance, like that of fire insurance, requires the exercise of good faith between the parties, but to avoid the policy the concealment of a material fact not made the subject of an express inquiry must be intentional.

Misrepresentation.

A misrepresentation, if material, will avoid the policy. The same rules apply to misrepresentations in life insurance as in fire insurance, but warranties are statements of facts which are a part of the policy and must be strictly performed or the policy is avoided.

The policy made the application a part thereof. In the application the insured falsely stated that she had not consulted a physician and had not had a certain disease. These false answers constituted a breach of warranty and avoided the policy regardless of their materiality.

- Flippen v. Life Ins. Co., 30 Tex. Civil Appeal 362.

Life insurance companies generally ask many questions in their applications and unless the application is expressly incorporated in and made a part of the policy, the answers to these questions are considered as representations and not as warranties. If they are so included, they must be strictly true.

If the questions are not answered or are only partially answered, there is no misrepresentation or breach of warranty.

In the application this question was asked, “Has any application been made to this or any other company for insurance on the life of the party? If so, with what result?" To this inquiry there was no answer. Held, that the failure to disclose unsuccessful applications for additional insurance did not avoid the policy. The issuing of the policy without further inquiry was a waiver by the company of the right to inquire further.

- Phoenix Life Insurance Co. v. Raddin, 120 U. S. 183.

Forms of Policies. There is no standard form of life insurance policy, and the forms of the different companies vary materially. It is customary to have the policy provide that the

application be made a part of the contract, thereby making the statements in the application express warranties. So a denial that one is affected with a disease avoids the policy if untrue. The application often inquires as to what other insurance is carried, and a deceptive statement on this point is fatal to the policy. So also a statement as to age is material and the answer must be correct.

Payment. If the policy contains a provision that the insurance ceases unless the premium is paid when due and that the policy is not to take effect until the first premium is actually paid, the condition must be strictly complied with or the policy fails. Prompt payment is essential.

Sickness or other inability to comply with the terms of payment offers no excuse. If the insurer accepts the payment of the premium after it is due, the breach will be waived.

Suicide. If the policy contains no express stipulation to the contrary, the insurance company is liable on a policy if the person insured commits suicide, in case a third party is the beneficiary. If the insured is the beneficiary, the rule will be otherwise. The policy frequently contains a clause exempting the company from liability if the insured commits suicide within a certain time.

A policy, payable to the insured, his executors, administrators, or assigns, contained no stipulation against suicide. The insured killed himself while sane. The court held that there could be no recovery on the policy, as being contrary to public policy and opposed to sound morality. Ritter v. Mutual Life Ins. Co., 169 U. S. 139.

It was held that suicide while sane is no defense to an action on a policy of life insurance payable to third persons as beneficiaries, where there is no stipulation against suicide in the policy, since the beneficiaries have acquired vested rights in the policy which cannot be defeated by the wrongful act of the insured. Patterson v. Life Ins. Co., 100 Wis. 118.

When the exemption does not expressly state that the company shall not be liable whether the insured be sane or insane, the suicide clause does not vitiate the policy if the suicide is committed while the person is insane. If the clause contains these words, "it is vitiated in case of suicide under any conditions"; then, if the insured dies by suicide, sane or insane, the policy becomes null and void.

A life insurance policy provided that it should be null and void if the insured died by suicide, sane or insane. The company pleaded that he

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