20 BULLETIN 1043, U. S. DEPARTMENT OF AGEICULTUEE. 



that he himself has fully performed his part, he will be indemnified 

 for the loss that he has sustained. 



It is hardly necessary to point out that in no case should the in- 

 surance safeguard a man against his own negligence or carelessness. 

 Any insurance which does this tends to create a form of moral hazard 

 that no company can afford to assume and also to diminish the effi- 

 ciency and productivity of agriculture as a source of national wealth. 



While the crop insurance policy to meet requirements fully must 

 cover all unavoidable hazards, it would no doubt be going to ex- 

 tremes to assert that, in the absence of an offer of such a policy on 

 favorable terms, no insurance should be purchased. In certain parts 

 of the country the hail hazard is relatively severe. The average loss 

 for a State by reason of hail is rarely if ever as large or as wide- 

 spread as the loss from certain other climatic hazards, but the loss 

 to those who do suffer from it is often very severe. Not infrequently 

 the crops of individual farmers are totally ruined. Because of this 

 peculiarity^ of the hail hazard, losses therefrom being concentrated on 

 a relatively few and the damage therefrom being readily distinguish- 

 able from that brought about by other causes, it is practicable from 

 the point of view of the insurance organization to give protection 

 against this hazard alone and to hold down its expenses to a reason- 

 able percentage of the premiums. The protection offered by hail 

 insurance may be well worth what it costs. Where so-called crop 

 insurance covering a variety of hazards is offered, however, the hail 

 hazard should certainly be included. It should not be necessary -for 

 the farmer to secure tAvo insurance contracts in order to be pro- 

 tected against serious or total loss. Economy in insurance operations 

 and convenience to the insured argue for complete coverage in a 

 single policy. 



It has already been pointed out that the farmer can not wisely shift 

 to an insurance company the risks which he can carry himself without 

 rmdue danger to his safety and prosperity. It may also be empha- 

 sized that the farmer can not afford to buy insurance protection 

 against an}'^ of his risks if the expense item involved in the insurance 

 operation is unduly large. The insurance machine must operate with 

 reasonable efficiency if the seeker of insurance protection is to find 

 it profitable for his needs. Assume, for instance, that 50 per cent or 

 more of the premiums collected were absorbed in expense of opera- 

 tion, thereby making the total cost to all the insured equal or 

 exceed the amount received by them in indemnities to cover losses 

 incurred. It is obvious that it would be wiser for each one to take 

 a chance on a serious loss and thereby have also a chance of retaining 

 a liberal income in prosperous years. Under the conditions assumed, 

 llie purchaser of even a reasonable amount of protection would pay 

 out in premiums a large part of his income in good years and possibly 



