23 
as the company is willing to give him. To a large extent, the com- 
pany for the same reason can give justice as between good and poor 
land as well as between good and poor farmers in a particular local- 
ity, merely by an adjustment of the amount an acre written, and 
without making any change in the rate of premium. This plan is 
not uniformly applicable, however, for the reason that climatic con- 
ditions make wide variations from the average yield much more 
frequent in some localities than in others. 
The best method of determining the indemnity due in case of loss 
raises an equally difficult question and one quite as important as that 
of determining the amount of insurance that may be written. The 
first of the three forms of contract outlined provides that in case 
the yield an acre valued at the price stipulated in the policy does 
not equal the amount of insurance an acre, the company will indem- 
nify the insured to the amount of such difference. Under this plan 
it is of no financial consequence to the company whether prices go 
up or down. The risk involved in price fluctuations, in so far as it- 
affects income from yield obtained, rests entirely on the farmer. A 
simple illustration will make this point clear. 
A farmer insures his wheat at $7 an acre under this plan. The 
wheat is valued by agreement in the policy at $1 a bushel. By rea- 
son of drought or other cause the yield is reduced to 5 bushels an 
acre. The indemnity due under these conditions is $2 an acre, re- 
gardless of whether the local market price of wheat at harvest time 
is $0.75 or $1.50 a bushel. If the lower price prevails, however, the 
farmer will receive only $3.75 for the 5 bushels harvested, while he 
will receive $1 a bushel for each of the two bushels! that he fell 
short of 7 bushels, the quantity in effect guaranteed him. His total 
income an acre will be $5.75. If, on the other hand, wheat sells for 
$1.50, the amount harvested will be worth $7.50, equal, with the $2 
indemnity, to $9.50 an acre. To the company, however, it makes no 
direct difference whether prices advance or fall except as the col- 
lection of premiums not fully paid in advance ma} T be affected. 
In the case of the second form of policy outlined, this situation 
becomes essentially reversed. Assume that a farmer insures his 
wheat at $12 an acre under this plan, which, as against the hazards 
covered, guarantees him a yield that at market price will equal the 
amount of insurance. In case of total destruction of his crop he 
will be paid for such operations and such investment as have been 
already made in connection with the destroyed crop. Suppose, how- 
ever, that by reason of one or more of the hazards insured against, 
the yield is reduced to 8 bushels. If the wheat at harvest time sells 
for $1.50 or more, no indemnity will be due, since the amount har- 
vested will bring a return equal to or greater than the sum stipu- 
