CHRISTIANIA GENERAL INSURANCE COMPANY, Christiania, Norway. Organized 1847. Entered the United States in 1918. J. M. Wennstrom, United States manager, New York, N. Y. (Fire reinsurance business.) CINCINNATI EQUITABLE INSURANCE COMPANY (Mutual), Cincinnati, O. Organized 1826. Frank J. Jones, president; E. H. Ernst, secretary. CINCINNATI FIRE UNDERWRITERS ASSOCIATION of Cincinnati, Ohio (1304 First National Bank Building). President Louis A. Lent; vice-president, Wm. Klappert; secretary and treasurer, John F. Ankenbauer. CITIZENS INSURANCE COMPANY, St. Louis, Mo. Organized 1837; capital, $200,000. Charles E. Chase, president; R. M. Bissell, vice-president; J. H. Carr, vice-president; P. O. Crocker, secretary; George Gordon, assistant secretary. CITIZENS MUTUAL INSURANCE COMPANY, in the town of Brighton, Concord, Mass. Incorporated 1846. George W. Hinkley, president; Adams Tolman, secretary; E. R. Howard, assistant secretary; Prescott Keyes, vice president and treasurer; C. F. Bowers, vice-president and assistant treasurer. CITY INSURANCE COMPANY OF PENNSYLVANIA, Pittsburgh, Pa. Organized 1870; capital, paid in, $250,000 President, John G. Sell; vice-president, Amos Bloom; treasurer, W. A. Shipman; secretary, G. R. Dette. The company is controlled by interests allied with the North Branch Fire, of Sunbury, Pa. CITY OF NEW YORK INSURANCE COMPANY, New York, (Maiden Lane and William street.) Organized 1905; capital, $600,000. Major A. White, president; William P. Dixon, vice-president; Fred W. Kentner, vice-president; J. Carroll French, secretary; Richard S. Kissam, assistant secretary. CLAUSES, LIMITING, IN FIRE INSURANCE POLICIES. [See Policy Forms, Fire.] CLAUSES LIMITING THE LIABILITY OF THE INSURER, IN FIRE INSURANCE. [See Co-Insurance Clause Policy Forms, Fire.] CLEVELAND FIRE INSURANCE CLUB. (See Fire Insurance Club of Cleveland.) CLEVELAND INSURANCE SOCIETY, Cleveland, Ohio, was organized in June, 1912, and officers were elected as follows: President, A. W. Neale; vice-president, C. H. Patton; secretary, Kenneth R. Taylor; treasurer, George C. Simpson; librarian, L. W. Theis. The present officers, elected in June, 1918, are: President, James B. Oswald; vice-president, Walter J. James; secretary and treasurer, L. E. Falls; assistant secretary and treasurer, J. W. Warner; librarian, Kenneth R. Taylor. CLEVELAND NATIONAL FIRE INSURANCE COMPANY, Cleveland, Ohio. Incorporated 1911, began business 1914; capital, paid up, $839,580. E. Kimball, president; Archibald C. Kemp, vicepresident, treasurer and managing underwriter; Wm. C. Doolittle, assistant secretary and treasurer. CO-INSURANCE CLAUSE IN FIRE UNDERWRITING. The 80 per cent. co-insurance clause, which was adopted by fire insurance companies and associations, went into effect on rated risks in New York, New England, and many of the principal cities from 1892 to 1899, but encountered considerable opposition from property-owners almost solely because it was not understood, and excited hostile legislation in a large number of legislatures. Laws prohibiting the co-insurance clauses are in force, therefore, in twelve states: Missouri (1893, modified in 1903 and 1915 as to cities), Iowa (1897 and 1911), Louisiana (1894 and 1908), Indiana (1895 and 1901), Georgia (valued policy law, 1895), Michigan (1895, 1907, and 1913), Wisconsin (1897), New Jersey (1900), Texas (1911 and 1913), Minnesota (1895, 1903, and 1915), Tennessee (1893 and 1903), North Carolina (1915 standard policy law), South Dakota (standard policy law). 66 The laws with the exception of those of Texas and Louisiana are optional; that is, permit the use of the clause upon the application of or the written consent of the insured. The Texas law, however, permits the use of the clause in policies covering cotton, grain, or other products in process of marketing, shipping, storing, or manufacture. The Louisiana law does not apply to personal or movable property whenever the words: "This policy is issued subject to the conditions of the coinsurance clause attached hereto," are stamped on the face and back of the policy. The Missouri law contains a provision that the section shall not apply to policies upon personal property" in cities of 100,000 population or more, Whenever the insured sign an agreement endorsed across the face of said policy to be exempt from the provisions thereof." The South Dakota law permits the use of the clause, which is styled reduced rate average clause," on written application of the insured, and provided such company shall before accepting such application, inform the applicant of the rates of premium demanded with and without such clause." The Wisconsin and North Carolina laws require the same information regarding the rate to be given, and the commissioner of North Carolina has ruled that neither broker nor agent is permitted to sign an application for the use of the co-insurance clause, but the insured must make the application. The Minnesota law permits the use of the clause in policies of $5,000 or more, “if the insured requests the same in writing, and, if, in consideration thereof, a reduction in the rate of premium is made. The Tennessee law requires that if the clause is accepted by the insured "it shall be a condition precedent to its validity that a reduction in rate has been allowed. The reduction to be allowed is specified, and is dependent on the percentage clause used. The clause can apply only in cities and towns having a population of more than 15,000. Iowa, while requiring written request, provides that in no case shall the clause apply to dwellings or farm property nor to any risk where the value of property insured is less than $25,000," except grain elevators and warehouses and their contents. The laws of Iowa, Michigan, and South Dakota not only prescribe the form of application for the use of the clause, but also prescribe the form of the clause itself. The Michigan clause is a part of the application and reads: "It is hereby agreed that the assured shall maintain insurance during the life of this policy upon the property hereby insured, to the extent of at least.. per cent. of the actual cash value thereof, and that failing to do so, the assured shall be a co-insurer to the extent of the difference between the amount insured and the said. ..per cent. of the cash value, and to that extent shall bear his, her, or their proportion of any loss. It is also agreed that if this policy be divided into two or more items, the foregoing conditions shall apply to each item separately: ' The South Dakota form, which is styled the "reduced rate average clause," reads: It is a part of the consideration for this policy and the basis upon which the rate of premium is fixed that the assured shall maintain insurance on the property described in this policy to the extent of at least.. per cent. of the actual cash value thereof, and that failing to do so, the assured shall be a co-insurer to the extent of such deficit and to that extent shall bear his, her, or their proportion of any loss; and it is expressly agreed that in case there shall be more than one item or division in the form of this policy, this clause shall apply to each and every item. The clause prescribed by the Iowa law reads: In consideration of the acceptance by the insured of a reduction in premiums from the established rate of.. . per cent. to........per cent. it is hereby agreed that the insured shall maintain insurance during the life of this policy upon the property insured: I. To the extent of.. 2. To the extent of at least. .....dollars, or ..per cent. of the actual cash value thereof at the time of fire (whichever may be agreed upon) and, that failing to do so the insured shall be a co-insurer to the extent of such deficit. The Wisconsin legislature in 1915 passed an act authorizing the following either in the policy or as a rider: A provision that the insured shall bear the first part of any loss as provided therein to a specified percentage not exceeding five per centum of the amount of in surance. In any case of loss, the company or insurer shall pay the excess after deducting from the adjustment the part aforesaid. No such provision shall be valid unless there be stamped, written, or printed upon the filing back of the policy, an indorsement hereby authorized, which shall read: "Rate reduced from $.. ..to $.. in consideration of the insured bearing the first part of any loss as herein provided." Both blanks must be filled. Kentucky in 1916 enacted a law which is a paragraph of the valued policy law, but which provided that the valued policy provisions should not apply to policies containing a co-insurance clause, the use of which is authorized in the following terms: It shall be lawful for corporations, firms, or individuals doing a fire insurance business in this State to contract with the assured that the assured shall during the life of such contract, maintain insurance upon the property insured to the extent of an agreed proportion of the actual cash value of the property at the time that a fire occurs, and that should the assured fail to do so, the assured shall be a co-insurer to the extent that the insurance then in force is less than the amount of such agreed proportion, and to that extent shall as such co-insurer bear his part of any loss. It is provided further that "the acceptance of such contract shall be at the option of the assured and that a reduced rate shall be given when such clause is used." [For text of laws enacted prior to 1914 see Cyclopedia for 1913-14 and also Cyclopedia for 1915.] THE CO-INSURANCE CLAUSE DEFINED What is known in the United States as "co-insurance has been common to marine underwriting under the name of " average from the earliest knowledge we have of insurance. The principle involved is that of a common peril shared by all interested. If any portion of a cargo was jettisoned in order to save the rest, or if the whole cargo was thrown overboard to save the ship, all whose interests were imperiled contributed to make good the loss. In fire insurance the principal is applied to all policies issued in France, Belgium, Germany, and Russia. It is used in floating policies in the United Kingdom, and in English policies in Egypt, India, China, and Japan. It has been used in a desultory fashion in the United States, at different times, but it is only within a few years that a serious attempt has been made to apply co-insurance universally to fire insurance policies in this country. The principle is that the entire property at risk should bear the burden of the loss of any part of it. That can only be done when the property is either fully insured or is totally destroyed. The coinsurance clause is only operative in partial losses, which are a large percentage of the fire losses. In these cases the owner contracts that he will either carry insurance to the limit required, or himself become a co-insurer for the deficiency. Without this clause the underwriter cannot intelligently rate any risk. Property worth $10,000 and insured for $10,000 is a very different risk from the same property insured for $1,000. In the one case the destruction of one-tenth of the property means a 10 per cent. loss, and in the other case it means a total loss. The two risks cannot properly be written at the same rate, because they do not involve the same hazard. The effect of the universal application of the principle would be that the amount of insurance would be somewhat increased, the premium rate would be reduced, while rates would be equalized as between the owners who have heretofore carried partial insurance and those who have carried full insurance. For some reason, which it would be difficult to explain, except upon the hypothesis that the property-owner does not know the exact value of his property, but that he ought to be able to guess within a named percentage of it, the clause which came into use in the United States was known as the "percentage co-insurance clause," and read: If at the time of fire the whole amount of insurance on the property covered by this policy shall be less than.. . per cent. of the actual cash value thereof, this company shall in case of loss or damage be liable for only such portion of such loss or damage as the amount insured by this policy shall bear to the said ..per cent. of the actual cash value of such property. The French clause translated reads: If at the time of a fire the value of the objects covered by the policy is found to exceed the total of the insurance, the assured is considered as having remained his own insurer for that excess, and he is to bear in that character his proportion of the loss. The German clause employed is: If in case of a fire the insured objects should exceed the sum insured, and they should be partly saved, the assured will be considered as self-insurer for the excess, and is to bear his share of the loss pro rata. To make another illustration of the operation of the co-insurance clause in the United States policy: suppose the percentage inserted in the clause is 80, if the whole amount of insurance at time of fire be less than eighty per cent. of value of the insured property, the owner must bear his share of any loss for the difference between the total amount of insurance carried and eighty per cent. of the value of the property insured, just as though he were an insurance company and had issued his policy for this amount. Thus, with a stock of goods worth $10,000 and an insurance of only $5,000, $8,000 would be eighty per cent. of value, which would make the owner, in case of a fire, be interested to the extent of $3,000, just as though he were an insurance company and had issued a policy insuring his own property for $3,000. This would make the necessary $8,000 insurance, or eighty per cent. of value, he having become a co-insurer with the regular insurance company, having its policy on the risk for $5,000. A fire doing a damage, say, of $4,000, would be paid for in the following way: Regular insurance company would pay five-eighths of $4,000 or. Making up the whole loss.. 44 $2.500 1,500 $4,000 Suppose now that his regular insurance had been $8,000, the co-insurance clause would cost him nothing, as the regular insurance company would pay him as the amount of insurance shall bear eighty per cent. of value," which means, in this case, the regular company would pay him eight-eighths of $4,000, or his full loss. On the other hand, suppose the property to have been entirely destroyed, or a total loss, he would get the full amount of his regular insurance, because five-eighths of $10,000 would amount to more than the face of the policy. Again, suppose a man with $10,000 value is insured in the old way for but $5,000, a rate of one per cent., making his yearly premium $50, and a fire causes loss of $5,000. He collects this from the companies, while his neighbor, with the same value, hazard, and rate, gets insured for $8,000, at a cost of $80 per annum, and he has a damage of $5,000; the one gets the same as the other gets, only No. 1 has paid less than No. 2 paid for his insurance, while if the eighty per cent. co-insurance clause were a part of both contracts, No. I would have received from the companies but $3,125, while No. 2, who had enough to satisfy the demands of the eighty per cent. co-insurance clause, would receive his full loss, or $5,000. |