CHAPTER XXXIX. 



INSURANCE . 



'HE substance of this chapter has been talked at our 

 Ohio institutes by the writer and published in our 

 annual report. But I have taken much pains to 

 inform myself more fully on some points before 

 writing this. We have heard enough about insur- 

 ance from the one side the company's but this 

 paper will treat the matter entirely from a farmer's standpoint. 

 The basis of it, of course, is our experience in insurance what 

 we are doing and think best. 



I have heard farmers say that they would keep their money 

 and insure their own buildings run their own risk. I^et us con- 

 sider whether or not this is a sound business policy. A farmer 

 has a house, we will say, worth $1,000. A payment of $2 a year 

 will insure him against all loss by fire and lightning. At least, 

 this is rather more than we pay per year per thousand dollars, 

 but we have to get insurance for five years at a time to get so low 

 a rate. Suppose him to be thirty years old now. He can hardly 

 expect to live more than forty years longer. During that time he 

 will pay out but $80, not counting the interest on the payments. 

 Sh'ould the house burn during the last year of his life, or forty 

 years from now, he would have saved in premiums $80, and in 

 premiums and interest at 6 per cent, somewhere near $300. 

 That is, the premiums saved and put at interest would amount in 

 the forty years to about $300. Had this farmer put his first $10 

 in a bank at 6 per cent, interest for five years, and then, at the 

 end of five years, put another $10 with it and loaned it for five 

 years, accumulated interest and all, and kept doing this for forty 

 years, if I figure correctly, he would have but $315 due him. 

 Thus, if the farmer's house should burn forty years from now and 

 had been kept up in repair so as to be still worth $1,000, his loss 

 would then be about $700. Add to this the always possible con- 

 tingency that it may burn to-night, and it is hard to see how the 

 individual farmer can make any money out of insuring his own 

 property. But, you ask, how can the insurance company afford 

 to do it if I cannot ? Because they know about what the chances 

 are for fire, and by taking a large number of risks, they can take 

 a little from each farmer and be able to pay all losses, and do a 

 safe business. But they cannot do this unless they do take a 

 large number of risks ; the larger the safer. Small mutual com- 

 panies are liable to be broken up by a heavy loss, where they have 



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