The numerous possible combinations of these provisions make the 

 insurance contract a highly flexible, legal instrument which enables 

 the insurer to tailor the insurauQce policy to fit the particulars of 

 any risk. Although some uniformity prevails in practice, differences 

 in the terms of insurance contracts make it difficult, if not impossible, 

 to compare precisely the cost of insurance betveen risks over time. An 

 attempt is made here to measure the extent of protection which the 

 insurers gave to the vessel owners in this study during the 1950-5'+ 

 period by taking into consideration the key monetary and nonmonetary 

 contractual provisions. In spite of nimierous qualifications the 

 chosen contractual provisions can be considered a reliable and 

 sati sf actory approximation . 



Information concerning both the premium paid by the insixred 

 vessel owner and the protection guaranteed by the insurer axe necessary 

 in order to arrive at a satisfactory appraisal of the situation. Insiir- 

 ance may become costlier to the vessel owner by the payment of a 

 higher premium without changing the extent of the coverage. But the 

 cost of insurance may also rise by a reduction in the coverage without 

 a change in the premium. Of course, insurance becomes costlier if 

 both conditions develop or less costly if the opposite takes place. 



B. HULL INStJRAIJCE 



1. Insurance cost in terms of gross premium . Our samples show 

 that gross premium has risen during the yesirs 1950- 5^ considerably in 

 New England, less in the Gulf Area, and slightly in California. 



In New England there was almost a steady increase of gross 

 premium per policy per year studied--from $2,225 in 1950-51 to 

 $2,820 in 195^-55, or a rise of about 27 percent. The rise was 

 smaller in the Gulf Area. Gross premium per policy yeax increased 

 from $1,008 in 1950-51 to $l,2l8 in 1954-55, or a rise of about 21 

 percent. California appears to have had a different experience. 

 Gross premd\am dropped in the last two yeeirs from a high of $7,219 

 in 1952-53. However, the average gross premiiM for the first two 

 years, I95O-52, was $6,2^^2, $190 on the average lower than the 

 $6,432 average of the last three yeaxs (1952-55) of the five-year 

 period. 



There are a nimiber of factors which understate the actual rise 

 of insurance cost in terms of gross premium. Arithmetic averaging 

 has the tendency of concealing a great deal from the real picture 

 by evening out the extremes. Most of the increase in gross premium 

 originated from the two- thirds of policies with a larger gross 

 premium in New England and from the upper one-half in the other 

 two geographical areas. (Table A-27 in Appandix A). For some 

 vessel owners the rise of insurance costs in terms of gross 

 premiums has been accompanied by a curtailment of the coverage 



kQ 



