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A FARMERS’ MUTUAL FIRE INSURANCE COMPANY. 8 
BUSINESS TERRITORY. 
There has been a growing tendency in recent years on the part of 
legislatures to permit farmers’ mutuals a wide business territory. 
Several States now permit companies of this kind to operate in the 
entire State. The tendency on the part of the companies to avail 
themselves of this privilege has been somewhat less marked. While 
it seems a natural ambition on the part of a farmers’ mutual to desire 
to grow by extension of its territory as well as by adding to its risks 
within the territory already partly covered, there is danger that such 
ambition eventually will lead to less desirable results. One of the 
most important advantages that farmers’ mutuals in general enjoy 
over larger companies is that of a community interest and a com- 
munity pride in the success of the undertaking. Each member dis- 
tinctly feels himself a part of the company. The individual member 
actively promotes the interests of the organization, is anxious to see 
all losers receive equal justice, and is usually satisfied with a reason- 
able settlement in case he himself suffers a loss. These conditions, 
together with the knowledge of one another’s character and business 
affairs, tend to reduce the moral hazard to a minimum. 
Even if a case of overinsurance in a farmers’ mutual should occur 
in connection with property owned by an unscrupulous member who 
would be quite ready to occasion a loss to a large insurance company, 
located perhaps in a distant city, such a member is likely to hesitate 
to throw the loss upon his own neighbors. Thus the moral hazard is 
greatly reduced in the local farmers’ mutual. Many of the local 
mutuals have done business for half a century or more without a 
single lawsuit. Such a record would rarely be possible except in a 
company founded on true cooperation and embodying the principle 
of community interest in some direct form. When risks are con- 
fined to a limited territory the saving in traveling expenses of di- 
rectors, inspectors, and adjusters is also a large item. 
MEMBERSHIP AND VOTING PRIVILEGE. 
All persons whose applications for insurance have been accepted 
should be members of the company in every sense of the word. The 
character of the owner as well as the physical condition of the prop- 
erty should be considered before the application is approved. Once 
his application is accepted and a policy is issued to him, however, the 
new member should be treated in exactly the same way as the charter 
members. 
Active cooperation of all the members should be the aim. The 
annual meeting should be well advertised and, if possible, made an 
interesting and significant community event. Occasionally a set of 
directors and officers are well satisfied to have the members neglect 
the annual meeting, thus leaving to those already in office all responsi- 
