FAEMEKS' MUTUAL INSURANCE COMPANIES' UNION. 359 



only paying tvro-thirds of a partial loss the man is only protected for two- 

 thirds of the two-thirds in case of a partial loss? He is not paying on two- 

 thirds the valuation of his building, but only two-thirds of the two-thirds 

 valuation in case of a loss. Out in Iowa we think we are lucky if we get 

 what we buy in insurance, but we do want what we pay for. If Mr. 

 Clark's theory is correct I am going back to the State of Iowa and tell 

 the companies tliere how they can save money. Now I want to know 

 if this is a correct principle? We have a great many partial losses, and 

 if we can get rid of paying a proportionate part of these partial losses 

 we are going to make money in Iowa, although I am afraid our members 

 would not feel they were getting what they paid for. If I insure a build- 

 ing worth $1,500 for $1,000, the only reason you take that building is on 

 account of the moral hazard; the only reason you make a distinction in 

 I'egard to valuation is on account of the moral hazard. You say to the 

 man who wants insurance, ''Because you may be dishonest and burn j^our 

 buildings we will onlj' carry two-thirds of their cash value; but in case 

 your property is partially destroyed the company agrees to pay you face 

 value up to the extent of your loss." 



Mr. Clark: Is this the first time you ever heard of this plan of 

 paying partial losses? 



Mr. Forbes: Yes, sir. 



Mr. Clarke: When Brother Forbes goes home and begins to study 

 over the justice of this plan I think he will change his mind. I believe 

 insui'ance is a matter of justice, and I can not conceive how we can treat 

 two men equally when we pay one man the same amount of money as 

 another when one has lost one-third more than the other. In the case 

 cited one man has lost all his barn and the other has $1,350 worth of 

 barn left. In that case we do not pay him 66§ per cent, of his loss; we pay 

 him three-thirds of his loss. We owe two dollars out of three all the time, 

 and the other man carries one-third, which he agrees in the beginning to 

 do. We settle on that basis, and are certainly doing what we agree to 

 do in our constitution and by-laws. 



Mr. Forbes: There is only one thing I wish information in regard to. 

 A man has buildings worth nine hundred dollars, on which he gets a policy 

 of six hundred dollars. Another man gets a policy for the same amount. 

 They both pay the same amount of fees and assessments, both losing the 

 same amount of money so far as the company is concerned. The company 

 knows no one-third in case of a loss; it takes no notice of the one-third 

 the man liimself lias lost. It is only the actual loss the company is looking 

 at, and consequently they owe the man who has lost his entire building 

 six hundred dollars. The other man saved one-third of his house, but 

 as he has paid for six hundred dollars insurance the company should pay 



