THE ORGANIZATION OF FARJIKRS MUTUAL KIRE INSURANCE COMPANIES 25 



cation. It has been argued that wliile, for example, a bam may involve 

 a greater hazand cf fire than a dwelling, each member, as a rule, owns a 

 bam and a dwelling and there is therefore little injustice. It has been 

 argued also that classification would involve an undesirable amount of 

 additional work for the ofiicers of a company, particularly for the secretaiy 

 who would have to multiply the amount of insurance on each class of risk 

 by its particvilar rate, and ascertain the sum of these products for each po- 

 icy. In spite however of these arguments and the prevailing methods, 

 there is, as we indicated in our pre nous article, an increasing and not decrea- 

 sing tendency to differentiate among risks as a company progresses econo- 

 mically. The larger commercial companies, and such of the larger mutual 

 companies as classify- or select their risks, are making increased efforts to 

 insure farm buildings so constructed as to reduce the risk of fire to a mi- 

 nimum. By making reasonable concessions when insuring in such cases a 

 company encourages a farmer to improve his property by eliminating 

 needless danger of fire. We will presently- reproduce a suggested classifi- 

 cation of farm propert}^ contained in the model b>-laws drawn up by the 

 United States Department of Agriculture. 



There should be provisions for arbitration as to indemnities dae. The 

 cost of arbitration should be borne equally by the company and the insured. 



The damage done to a property by fire or lightning often seems to the 

 owner more serious than it really is. A provision that the company may 

 satisfy a claim by building or repairing is therefore often valuable. 



The question of whether a farmers' mutual insurance company should 

 aim at establishing and maintaining a reserve land leads to the question 

 of how far it should imitate the plan now imposed by law upon all capital- 

 stock insurance companies and, in general, larger mutual companies, the 

 plan, namely, of maintaining a reserve proportionate to the amount of 

 business transacted. The opinion seems to be growing among farmers' 

 mutual companies that a reserve fund, collected by annual asse,ssments, 

 of about §3,000 per million dollars of insurance in force is useful as a pro- 

 vision against crises. 



§ 3. Essential provisions of the model by-laws of a^farmers' 

 mutuai, fire insukance company. 



We think it useful to reproduce here the chief provisions of the model 

 by-laws, drawn up by the Office of Markets and Rural Organizarion of the 

 United vStates Department of Agriculture. They show the direction of 

 the eflforts of the government to encourage and guide this form of insurance. 



" Section 2. Property that may be insured. — This company shall 

 insure only farm or country property consisting of detached dwellings 

 and their contents ; farm buildings, including silos, and their contents ; 

 farm machinery ; vehicles ; grain and hay in bin, stack, or loft : and live 

 stock ; and detached risks of similar hazard witliin the cor^xirate limits 

 of cities or villages, not less than 100 feet -distant from all other risks 



