CROP insueance: risks, losses, etc. 19 



being included in such investment. If it is attempted also to cover 

 the loss of prospective profits by partial damage to a crop promising 

 a yield above the average, the cost is sure to be prohibitive. 



If insurance consisting of the collection of premiums and the dis- 

 tribution of such premiums to those incurring a loss under the insur- 

 ance contract could be conducted without expense, it might be wise to 

 insure against every conceivable source of loss, thereby practically 

 ■equalizing and standardizing the income. It is, of course, no more 

 possible to achieve this than it is for a locomotive to turn into 

 tractive power all the energy contained in the coal that it consumes. 

 A greater or less proportion of the amount contributed by the in- 

 sured as premiums must be used to meet the expense of conducting 

 the business, of, to carry out the figure, to overcome the frictional 

 element of the insurance machine. It is, therefore, possible in the 

 long run for an insurance company to pay back in ihclemnities to its 

 members or patrons only a materially smaller amount than the sum 

 collected from the insured in the form of premiums. 



The important fact to be made clear may be further explained by 

 pointing out that, covering a period of years, a farmer ordinarily 

 secures a greater net income by carrying his own risk than will 

 accrue to him if he purchases anj form of crop insurance from year 

 to year. This is true, however, only on condition that no loss suf- 

 fered is sufficiently serious to cause him to lose his farm or to handi- 

 cap him in his farming operations. It must be concluded, therefore, 

 that insurance is to be recommended against such crop losses as would 

 seriously cripple the farmer. On the other hand, it is a form of 

 extravagance to insure against such losses as he can bear without 

 undue inconvenience. 



It may be laid down as another principle that the ideal crop in- 

 surance will, to the extent indicated, provide protection against all 

 unavoidable hazards to which the crop is subject. If one of these 

 hazards is left unprovided for in the insurance contract, the insured 

 may lose his crop from that hazard and find himself worse off for 

 having carried insurance by the amount of premium paid or premium 

 obligation assumed. 



In the final analysis, there is little more logic in carrying crop in- 

 surance against certain specified hazards with the insured carrying 

 the total risk against other hazards than there would be in taking 

 out a life insurance policy against certain specified diseases. The 

 thing that the buyer of life insurance seeks is the positive assurance 

 that in the case of his premature death the economic loss sustained 

 by his dependents will to a greater or less extent be made good by 

 the insurance. Similarlj^, the thing needed by the producer of crops 

 is the assurance that if these crops fail to produce a reasonable har- 

 vest, no matter what the cause of such failure may be, assuming 



