362 



Canadian I'orestry Journal, July, ip20. 



Can Timberlands Be Fire-Insured? 



By Hon. W. R. Brown 



General Loss in Forests Aht 



Greater than other Forms 



of Property 



The idea of insurance on standin.c: 

 timber srrew out of observations and 

 records obtained after six years of fire 

 protection in the United States. In 

 the years before adequate fire protec- 

 tion to timberlands by Federal. State 

 and private associations was afi^orded. 

 there had been a disinclination to con- 

 sider standing- timber as insurable, 

 due to the lack of means for appre- 

 hending and extinguishing incipient 

 fires or combatting larger ones. After 

 six years of fire protection carried on 

 by^ over thirty private associations, 

 fifteen State departments and the For- 

 est Service of the Federal Govern- 

 ment, with the co-operative assistance 

 of towns, railroads and other agencies, 

 data was collected and combined to 

 show the character of stands burned 

 over, the extent and frequency of fire 

 occurrence, situations most exposed, 

 and total values destroyed in relation 

 to the total value of all timber in the 

 region. 



These data showed the average 

 yearly loss in value over widely 

 separated areas, as the Pacific 

 Northwest, Quebec forest region. 



New England States, and the 

 Michigan- Wisconsin region, to be 

 below one-half of one per cent an- 

 nually, which compared favorably 

 with the loss by fire in all other 

 forms of property. 



Presuming that the cost of manage- 

 ment would also not much exeed one- 

 half of 1 per cent yearly — the usual 

 average cost of doing business in in- 

 surance companies — the possibility 

 of giving protection to their wood- 

 lands was seriously considered in the 

 winter of 1917 by a group of New 

 Hampshire timberland owners. The 

 various forms of commercial, mutual, 



and interinsnrance or^'anizations were 

 studied, and it was decided that the 

 mutual form was the most desirable 

 to meet the State laws of New Hamp- 

 shire and give the greatest latitude 

 for organization. A bill was intro- 

 duced and passed by the New Hamp- 

 shire Legislature of 1917 to authorize 

 the incorporation of the Timber Lands 

 Mutual Fire Insurance Company of 

 Concord, the first company of its kind 

 organized in the United States, for the 

 purpose of effecting insurance of stand- 

 ing timber against loss and damage 

 by fire, lightning or other destructive 

 elements or cause. 



A form of policy was adopted which 

 provided for additional security 

 through the pledging of the policy hol- 

 der to meet a loss if called on to the 

 amount of twice his annual premium. 

 The company was authorized to write 

 a line in New Hampshire to the ex- 

 tent of $5,000 at 2 per cent annual 

 premium on a mutual basis, it being 

 understood that the policy holders re- 

 tained their rights and interests in 

 any unexpended balances there might 

 be at the end of the year, when used 

 to build up a reserve. The policy also 

 bound the policy holder by a co-in- 

 surance clause to an approximately 

 correct estimate and valuation of his 

 stand to within 10 per cent, so that 

 beyond 110 per cent or under 90 per 

 cent of true value he would be the 

 co-loser with the company in a dam- 

 age settlement in the proportion that 

 the amount he over or under-valued 

 his stand bore to the actual amount 

 found existent by careful estimate 

 and appraisal made after the fire. 



Scottering the Risks 



The general principle followed was 

 to scatter the risks widelv through- 



