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263. By Insurance is meant security against loss or damage of property by fire, storms at sea, and other casualties. This security is usually effected by contract with Insurance Companies, who, for a stipulated sum, agree to restore to the owners the amount insured on their houses, ships, and other property, if destroyed or injured during the specified time of insurance.
264. The written instrument or contract is called
The sum paid for insurance is called the Premium.
The premium paid is a certain per cent. on the amount of property insured for 1 year, or during a voyage at sea, or other specified time of risk. Hence,
265. To compute Insurance for 1 year, or the specified time.
Multiply the sum insured by the given rate per cent. as in interest. (Art. 237.)
Obs. 1. Insurance on ships and other property at sea is sometimes effected by contract with individuals. It is then called out door in
2. The insurers, whether an incorporated company or individuals, are often termed underwriters.
Ex. 1. How much premium must a mechanic pay annually for the insurance of his shop and tools worth $350, at 11 per cent. ?
Solution. $350 X.015= $5.25. Ans.
2. What amount of premium must be paid annually for insuring a house worth $875, at & per cent. ?
3. Shipped a box of books, valued at $1000, from New
QUEST.–263. What is Insurance ? 264. What is meant by the policy? The premium? 265. How is insurance computed? Obs. When insurance is effected with individuals, what is it called? What are the insurers sometimes called ?
York to New Orleans, and paid 14 per cent. insurance : what was the amount of premium?
4. A powder mill worth $925, was insured at 15) per cent. : what was the annual amount of premium ?
5. A merchant shipped a lot of goods worth $1560 from Boston to Natchez, and paid 14 per cent. insurance : what amount of premium did he pay?
6. A gentleman obtained a policy of insurance on his house and furniture to the amount of $2500, at 34 per cent. per annum: what premium did he pay a year ?
7. A man owning a sixteenth of a whale ship, which cost him $2750, got it insured at 75 per cent. for the voyage : how much did he pay?
8. The owner of a schooner worth $3800, obtained insurance upon it, at 5 per cent. for the season : what amount of premium did he pay
? 9. A crockery merchant having a stock of goods valued at $7500, paid 2 per cent. for insurance : how much premium did he pay a year?
10. A merchant shipped $3765 worth of flour from Cincinnati to New York, and paid i} per cent. insurance: how much premium did he pay?
11. What is the annual premium for insuring a store worth $7350, at 4 per cent. ?
12. An importer effected insurance on a cargo of tea worth $65000, from Canton to Philadelphia, at 3 per cent. : how much did his insurance cost him?
13. A manufacturer obtained insurance to the amount of $76500 on his stock and buildings, at 4 per cent : how much premium did he pay annually ?
14. A policy was obtained on a cargo of goods valued at $95600, shipped from Liverpool to New York, at 2} per cent. : what was the amount of premium ?
15. The owners of the whale ship George Washington obtained a policy of $58000 on the ship and cargo, at 74 per cent. for the voyage : what was the amount of premium?
16. A gentleman paid $60 annually for insurance on his house and furniture, which was 2 per cent. on its value : what amount of property was covered by the policy?
Note. This example is similar to those of Problem III, in interest. (Art. 254.)
Solution. Since the rate of insurance is 2 per cent, or .02, it is plain that $60 is tão of the amount insured. Now if $60 is lốo, Too is half as much, or $30 ; and 100 is $30 x 100, or $3000. Or thus : 60-.02=3000. Ans. $3000.
Proof.--$3000 X.02=$60, which was the annual premium paid.
17. If I pay $250 premium on silks from Havre to New York, at 1} per cent., what amount of property does. my policy cover ?
18. A merchant paid $1200 premium, at 2} per cent. on a ship and cargo from London to Baltimore, which was lost on the voyage : what amount should he recover from the Insurance Company?
19. If a man pays $60 premium annually for the insurance of his house, which is worth $3000, what rate per cent. does he pay?
Note. This example is similar to those of Problem II, in interest. (Art. 253.)
Solution. $60-$3000=.02. Ans. 2 per cent.
Proof._$3000 X.02=$60, which is the premium paid.
20. A merchant paid $40 premium for insuring $5000 on his stock : what rate per cent. did he pay ?
21. If a man pays $75 for insuring $15000, what rate per cent. does he pay ?
22. If the owner pays $2800 for insuring a ship worth $40000, what rate per cent. does he pay?
23. A blacksmith owns a shop worth $720 : what amount must he get insured annually, at 10 per cent., so that in case of loss both the value of the shop and the premium may be repaid ?
Analysis.--Since the rate of insurance is 10 per cent., on a policy of $100, the owner would actually receive but $90 ; for he pays $10 for insurance. The question then resolves itself into this : $720 is of what sum ?
If 720 is 90
do is 720-90=8, and 10: is 8 x 100= 800. Ans. $800,
PROOF.—$800 x.10=$80, the premium he would pay, and $800 – $80=$720, which is the value of his shop.
24. If I send an adventure to China worth $6250, what amount of insurance, at 8 per cent., must I obtain, that in case of a wreck I may sustain no loss by the operation ?
25. What amount of insurance must be effected on $11250, at 5 per cent,, in order to cover both the premium and property insured ?
PROFIT AND LOSS.
266. Profit and Loss in commerce signify the sum gained or lost in ordinary business transactions. They are reckoned at a certain per cent. on the purchase price, or sum paid for the articles under consideration.
1. A merchant bought a barrel of flour for $6, and sold it at a profit of 10 per cent. : how much did he sell it for ?
Suggestion. Since he made 10 per cent. profit, if we add 10 per cent. to the purchase price, it will give the selling price. Now 10 per cent. of $6 is 60 cents, (Art. 225,) which added to $6, make $6.60. Ans. He sold it for $6.60.
2. A grocer bought a box of oranges for $5, and sold them for 12 per cent. profit: how much did he receive for his oranges
? 3. A farmer bought a ton of hay for $9, and sold it
QUEST.–226. What is meant by profit and loss? How are they reckoned ?
for 10 per cent. more than he gave : how much did he sell it for?
4. Bought a sleigh for $12, and sold it at a loss of 8 per cent. : how much did I receive for the sleigh ?
Solution. 8 per ct. of $12, is 96 cts. ; and $12-96 cts. leaves $11.04 Ans.
5. Bought a box of honey for $5, and having lost a portion of it, sold the remainder at 11 per cent. loss : how much did I receive for it?
6. A shop-keeper bought a piece of calico for $7, and sold it at 12 per cent. profit: how much did he sell it for ?
7. A lad bought a sheep for $3, and on his way home was offered 15 per cent. for his bargain : how much was he offered for his sheep?
8. A farmer bought a colt for $20, and offered to sell it for 5 per cent. less than he gave: how much did he ask for it?
9. A gentleman bought a horse for $100; after using it for awhile, he sold it at 7 per cent. loss : how much did he get for his horse ?
10. A man bought a building lot for $150, and in consequence of the rise of property, sold it for 10 per cent. advance : how much did he get for it?
11. A hackman bought a carriage for $200, and after using it for one season, sold it for 15 per cent. less than he gave
for it : how much did he sell it for? 12. A man bought a house for $800, and sold it the next day for 10 per cent. advance: how much did he sell it for ?
EXERCISES FOR THE SLATE.
1. A merchant bought a quantity of grain for $75, and sold it for 8 per cent. profit: how much did he gain by the bargain?
Solution. $75 X.08=$6.00. (Art. 225.) Hence,