No. 2. 



Remarks on Insurance ngainst Ln<t.s hy Fire. 



43 



quence of it Perhaps there may he uhjec- 

 tions to this plan that don't occur to mo. I 

 therefore throw it before the n-aiicrs of the 

 Cabinet for examination and investigation, my 

 only object being to have every pcrs<in's proj)- 

 erty in the community protected by insurance 

 from loss by fire, so that even heedlessness 

 cannot prevent an owner from deriving all the 

 benefits which the careful and thrifty enjoy by 

 being prompt in action in securing their best 

 interests.* 



I would suggest in conclusion that a man's 

 credit is considerably enlarged by having his 

 property insured, as those who loan iiim mo- 

 ney, or sell him on a credit have much better 

 security for its repayment. A person who 

 every hour of his life is in danger of being 

 made an insolvent debtor by the operation of 

 fire, it is not very safe or prudent to trust ; 

 and many money lenders understand this so 

 well, that they uniformly have no money to 

 lend on real estate, unless it is adequately in- 

 sured and the policy transferred, and I have 

 known several cases where this circumspec- 

 tion has saved borrowers from absolute insol- 

 vency when the buildings have been bunied, 

 but 



A word to the wise is sufficient ; 

 And a fool, wlio can instruct. 

 Augnst 16tli. 1P33. FI R E, 



Observer.— iVo. 15. 



REMARKS ON INSURANCE AGAINST LOSS BY FIRE. 



A writer in the last Cabinet, atler recom- 

 mending the advantages of insurance against 

 loss by fire, asks — "Why, then, remain without 

 insurance for a single vveekl" — He however 

 answers the question himself and correctly 

 too when he says " it is attended with too 

 great an expense to justify it." 



The answer thus given is designed for those 



who have not examined and do not understand 



the subject "But let us examine this matter 



of expense, and see what it amounts to." — 



From his own data the expenses for insuring 



a bam worth one thousand dollars would be 



Making survey and contract, say $3.50 



Premium 535 dollars — say interest 2.10 



Deduction of 5 per ct in premium 1.75 



Cost of insurance for one year i|7.35 

 The first and third items of expense only 

 occurring once, reduces the cost in proportion 

 to the number of years the contract is allowed 

 to stand. Thus in a contract for ten years it 

 would be reduced to $2.62^. The writer has 

 indeed excluded these small items from his 

 estimate altogether, and fixed the annual ex- 

 pense of insurance for a barn worth .^1000 at 

 .$2.10. He seems hardly willing to accept the 

 boon so cheap; "it seems too cheap and could 

 not be afforded for so small a pittance unless 



♦ See page 71. 



an ofjic(^ had a lame number of such risks, 

 tcir llie deposits made on a very lartje rinmlter 

 of rioks i)nt to interesl produd's a large sura 

 in the ti)rm of interest, and this enables tiie 

 insurers to make good tlioir losses and save 

 something besides." Now the " risk" or 

 cliance of loss may be against either the in- 

 surer or the insured. If the risk is ayainst 

 the insurer, it is difficult to discover how a 

 very large number of such risks would ena- 

 ble him to make good the losses and save 

 something besides. If the risk is against the 

 insured it i.s as difficult to discover liow he is 

 to be benefited by the contract. The fact is — 

 insurance is a^ speculation — ui^rrme (f chance 

 — a species of gambling, in which the chance 

 of the game is always in favor of the insurer 

 and against the insured. It is a Iciiul o\' lottery, 

 wherein the insured pays to tln' insurer not 

 only all the remunerating fund which they 

 are to receive back in case of loss — but they 

 also pay the whole expense o\' \Ui^. policy and 

 furnish the profts of the game beside. Just 

 so of lotteries, the purchasers of tiie tickets 

 pay all the prizes — defray the expenses of the 

 scheme and also the profits of the game.* 



There is probably no class of the commu- 

 nity more exempt from the chari-'e of gam- 

 bling than farmers — honest industry and do- 

 mestic economy are their distincruishin,' char- 

 acteristics. It is tlie more to be refrretted 

 that they should engage in the insurance 

 speculation. An appeal to facts will su.stain 

 me in the foregoing remarks. 



The township where I reside probably con- 

 tains about 175 barns, and Ihfire has only been 

 one such building burned within the last 26 

 years — nor is it believed that snch ciisujtltie.^ 

 have been more frequent in other towns noar. 

 I will however assume 20 years as the aver- 

 age period in which one barn will be destroyid 

 by fire out of 175. — Or one out of every 

 3500 in each year. Aihnitting tlie value of 

 these barns to be $1000 each, the risk to the 

 insurer would be 



As 3500 : 1 : : 1000 : .2S5or29i 

 cents for each buildinir. 



If the foregoing 175 barns were each in- 

 sured for only one year at the admitted cost 

 of $7.35 each, the company would receive 

 the enormous sum of $1286.25 annually, or 

 $25,725 during the 20 years in wliich one 

 barn is supposed to be burned, leaving $24,- 

 j725 as the savings of the game. But even 

 this deduction need not be made, for tlie in- 

 jterest accruing on the annu:il rcceip's would 

 Imorethan liquidate the losses which would be 

 sustained. 



Instead of insuring for one year — suppose 

 the insurance to be perpetuil. Even throw 

 away collateral expenses and bring the cost 



' * See page 71, 



