911. Perpetual Policies are sometimes issued, the rate being usually equal to that of ten annual premiums.

In Perpetual Policies the premium is considered merely a deposit with the Insurance Company; for at any time, at the instance of either party, the policy may be cancelled, and 90% of the premium or deposit must be returned to the policy holder.

912. The Quantities considered are: 1. The Amount Insured; 2. The Rate of Insurance; 3. The Premium; 4. The Valuation of Property.

CASE I.

913. Given, the amount insured and the rate, to find the premium.

1. A man insured his store for $6850, at 14%; required the premium.

SOLUTION. The premium on $6850 at 1% is .01 times $6850, which is $85.62.

OPERATION.

$6850x.01 $85.621

=

Rule. Multiply the amount insured by the rate, to find the premium.

2. Funk & Co. insured of a vessel worth $32,000, at 13%, and of the cargo worth $28,500, at 14%; required the premium. Ans. $657.50.

3. A man secures a policy of insurance on his house for $2500, furniture $1200, library $550, the policy costing $1.25; what is the whole cost, premium 3% ? Ans. $33.12.

4. My agent in Liverpool notifies me that he has shipped goods valued at £573 12s. 6d. I have insured them in New York at 21%. What does the insurance cost, the policy being $1.25, and the pound sterling valued at $4.8665? Ans. $64.06.

5. An insurance company took a risk of $40,000, at 3%, reinsured of it with another office at %, and 4 of it with another at %; what did the company clear by reinsuring? Ans. $52.50.

6. What is the premium on a $1500 policy, dated Nov. 19, 1877, and expiring March 25th, 1878, annual rate on the risk being $.65 on $100 ? Ans. $5.85.

7. R. Brown effects a perpetual insurance on his dwelling

to the amount of $9000; what is the deposit premium, the annual rate on his risk being 1%%?

Ans. $270.

8. Mr. Garland orders insurance as follows: $7500 on grain storage for 1 mo., $7500 on do. for 2 mo., $7500 on do. for 3 mo., and $7500 on do. for 4 mo., all in same warehouse, the annual rate being $.75 on the hundred dollars; also at the same time orders a policy for $3000 on his dwelling and $1500 on his barn, for 5 years, annual rate %; for what must he draw his check to the company? Ans. $145.50.

9. Mr. Warfel takes out an insurance of $12000 for 3 mo., on cotton stored in a warehouse, rated at 1% per annum ; at the expiration of this time, not having sold, he has the policy renewed for 1 mo. longer; what would he have saved by taking out the insurance for 4 mo. at first? Ans. $12. 10. Mr. Michener takes out an insurance on his property for 6 months, annual rate %; next day he meets with a total loss by fire; how much does he save by not taking a perpetual policy as advised, the amount of insurance being $4000? Ans. $223.20. NOTE.-The rates in the 7th and the following examples are found in the short rate tables in the Appendix.

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CASE II.

914. Given, the rate and the premium or the value of the property, to find the amount insured.

1. A man paid $174.371⁄2 to insure the transportation of a lot of goods, at 11%; required the value of the goods.

SOLUTION.-At a premium of 14%, .01 times the amount insured equals the premium, which is $174.37; hence the amount insured equals $174.371.01, or $13,950.

OPERATION.

174.37

.011

$13,950

Rule.-Divide the premium by the rate, to find the amount insured.

NOTE. To find what amount must be insured to cover the premium in case of loss, we divide the valuation of the property by 1 minus the rate. 2. The premium for insuring of the value of a house, at 11%, is $60; required the value of the house. Ans. $5000. 3. I insured my hotel at 13%, paying $1050 premium and $7.75 for policy and survey; what was the amount insured? Ans. $60,000.

4. I insured to cover $3870 on my barn, and the premium, at 31%; what was the amount insured? Ans. $4000. 5. A consignment of grain was insured at 31% to cover of the value, $2850, and the premium; what was the amount insured? Ans. $2945.73.

6. A cargo of French silks was insured at 51% to cover of its value; the premium was $105; what was the value of the silk? Ans. $2500.

7. Took a risk at 13%; reinsured of it at 21%; my share of the premium was $43; what was the amount of the risk? Ans. $17,200.

8. Took a risk at 21%; reinsured of it in a mutual company at a rate equal to 3% of the whole, by which I lost. $37.50; what was the value of the risk? Ans. $5000.

9. Took a risk at 13%; reinsured $8000 of it at 2% and $6000 of it at 21%; my share of the premium was $55; what amount was insured? Ans. $20,000.

10. I took a risk on a house worth $40,000, at 2%; reinsured of it for 21% and 1 at 21%; in each case the amount covers premium; how much did I gain? Ans. $99,558.

11. Hunter & Bro. pay $22.50 for a 5-year policy on their stable, annual rate on which is 1%; what is the amount of the policy? Ans. $750.

12. The premium on a perpetual policy of insurance was $91; what was the amount insured, if the rate charged was .21% for 5 months? Ans. $2600.

13. A merchant insured his store for of the value, at 11% annually for 7 years; the store was burned down, and his loss was $4681.871; what was the value of the store, and what was the loss of the insurance company?

Ans. Value of store, $12,375; loss, $7,693.12.

CASE III.

915. Given, the premium and the amount insured, to find the rate.

1. Paid $478.12 for insuring of the value of a church worth $85,000; required the rate.

Rule. Divide the premium by the amount insured, to find the rate.

2. If the premium is $43.75, and the amount insured $2500, what is the rate? Ans. 12%. 3. If I pay $1125 for insuring of a vessel worth $75,000, what is the rate? Ans. 21%.

4. I paid $145.50, including the cost of the policy and survey, $5.50, for insuring $8000 on my house; required the Ans. 12%.

rate.

5. I insured $15,000 on my house, $10,000 on my furniture, and $1750 on my library, for 5 years, paying a premium of $702.183; what was the annual rate? Ans.

%.

6. A draws his check for $135.60, in favor of an insurance agent for 2 policies as follows: $135 to apply to the payment of a perpetual policy on his dwelling for $4500, and the remainder to a 3 months' policy for $500 on a piano stored therein; what is the annual rate? Ans. %.

CASE IV.

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916. To find the return premium on a cancelled policy.

917. To Cancel a Policy is to annul the agreement between the party insured and the insurers.

When the policy is cancelled at the instance of the company, a pro rata proportion of the premium paid is returned; when done at the request of the policy holder, the company pays back a return premium governed by what are known as Short Rate Tables.

When a partial loss has been paid, the return premium is to the whole premium as the balance of the policy after deducting the partial losses paid is to the whole amount of the policy as first issued.

1. Mr. Carson effects an insurance on his stock of mdse. to the amount of $8000 for 8 mo., at short rates, his risk being rated at 85 on $100; in consequence of a reduction of stock at the end of 5 mo. he wishes his policy cancelled; to how much return premium is he entitled?

SOLUTION.-The rate for 8 mo. as found in the table is $.0068, and for 5 mo., $.0051, hence the return premium is the difference between $.0068 and $.0051 multiplied by 8000, or $13.60.

OPERATION.

.0068.0051= .0017 $.0017 x 8000 = $13.60

Rule.-Multiply the amount insured by the difference of the rates for the two periods, to find the return premium.

2. Mr. Montgomery takes out a perpetual insurance on his house to the amount of $7500, his risk being rated at % annually; what is the deposit premium, and if he afterward surrenders his policy for cancellation, how much return. premium should he get? Ans. $281.25; $253.12.

3. Mr. Byerly has an annual policy of $3000 upon his house; at the end of 8 mo. a fire occurs which damages his property to the amount of $750, which the insurance company pays and indorses the payment on his policy; 3 months afterward he sells his house and surrenders the policy for cancellation in full; what is his return premium, the annual rate being% on his risk? Ans. $.22.

4. A person holds a $1200 policy on his stock in store; 81 days after date of the policy, he requests a reduction of of this amount on account of a decrease in stock; 50 days after this the insurance company desires to cancel the policy in full. What is the total return premium paid to the assured, the annual rate being % and the term one year? Ans. $3.36. 5. A perpetual policy of $6000, annual rate %, is returned for cancellation after a partial loss of $233.34 has been paid thereunder; how much unearned premium is due the assured? Ans. $129.75.

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CASE V.

918. To adjust the loss on a risk between several different insurance companies.

919. When several companies are interested in a risk, a loss is shared by the companies in proportion to the amounts of the several policies.

Companies usually prefer to attach on different items in the same proportion.