V. INSURANCE OF PROPERTY AND PERSONS

33. Buildings, household goods, automobiles, and other property may be destroyed by fire or wind; persons may lose their incomes because they are unable to work on account of illness; families may lose their incomes because of the death of some member. In these and other ways persons suffer financial losses.

While all persons may suffer such losses, only a small number actually do suffer losses of any one kind during a limited period of time. For this reason, if a large number of persons agree to protect one another for a brief period of time against loss of some particular kind, the cost for each person is much less than the loss any one person would suffer if he had to bear it all alone.

Thus, 100 owners of automobiles valued at $1000 each, might agree that they will contribute enough to purchase a new car for any one of their number whose car may be stolen during one year from the date of the agreement. If one car is stolen, each person would have to pay $10. Each man is willing to pay this amount to protect himself against the possible loss of $1000.

Out of this simple arrangement has grown the business of protecting people against financial losses of various kinds.

This business is conducted by insurance companies. Such companies are represented in every town by insurance agents.

There are many kinds of insurance companies. Fire insurance companies furnish protection against loss by fire; life insurance companies, protection against loss on

account of the death of some person; accident insurance companies, protection against loss of income on account of injury received in an accident, etc.

By inquiry learn the names of some other kinds of insurance.

An insurance policy is the agreement between the company and the person insured. It states the amount of protection in dollars, called the face of the policy, and the conditions under which the insurance is furnished.

Every one taking out any kind of insurance policy should read it carefully, and should ask to have the meaning of all conditions explained.

The insurance premium is the amount paid an insurance company in return for the insurance.

FIRE INSURANCE

34. Most fire insurance companies use the Standard Fire Insurance Policy. It provides insurance "to an amount not exceeding " a number of dollars mentioned in the policy, for any loss directly due to fire; this amount of money is called the face of the policy. This means that the actual cash value of any property damaged or destroyed on account of a fire will be paid by the company up to but not more than the face of the policy.

A person may divide his insurance on any piece of property among two or more companies, with the consent of the companies. In case of loss, each company pays as much of the loss as its insurance is of the total insur

ance.

Thus, suppose a man has $3000 of insurance in one company, and $2000 in another company, all on the same property. His property suffers $1000 damage by fire. Then the first company will pay of the $1000, or $600, and the second company will pay , or $400.

35. The fire insurance premium, or the cost of a fire insurance policy, depends upon the kind of fire department and water system provided in the community in which the property is located, the kind of business conducted in the building, the number of families living in the building, etc. The insurance rate is usually given as a number of cents per $100.

Thus, the rate may be 22¢ per $100. In this case, the premium for $1500 of insurance is 15×22¢, or $3.30.

The rates of insurance are determined by experts who are employed by one of two associations of fire insurance companies. A definite rate is usually recommended for each piece of property in a business district, and general rates are recommended for all other kinds of property. Below is a part of the table of rates for insurance upon dwellings and property within them, in a certain city.

36. Upon some kinds of property, a policy can be taken out for a term of three years or of five years. When a policy is taken out for three years, the rate is two and one half times the rate for one year; and the rate for five years is four times the rate for one year.

EXERCISE 34

1. What is the premium for $1500 insurance for one year when the rate is:

a. 24¢ per $100?

b. 18¢? c. 28¢? d. 32¢?

2. What is the premium at 26¢ per $100 for a oneyear policy for: a. $800?

b. $600? c. $2500?

d. $1500?

3. a. If the rate for one year is 28¢ per $100, what is the premium for a policy for $750 for 1 year?

b. At the same rate, what is the premium for a policy for $750 for 3 years? for 5 years? (See § 36.)

4. When the rate of insurance is 25¢ per $100, what rate per cent is this insurance rate?

5. a. What is the premium on a one-year policy for $5000 if the rate is 75¢ per $100 per year?

b. If the agent receives a commission of 25% of the premium, what is his commission?

6. a. What is the premium on a three-year policy for $1200 if the rate is 28¢ per $100 for the first year? b. What is the agent's commission at 15%?

c. How much does the insurance company receive? 7. Consulting the table of rates on page 64, what will be the rate for insurance on household goods of a family living in a two-family frame building? What would be the premium on a policy for $1800? What is the agent's commission if he receives 25%? What does the company receive?

8. John's father wants $1500 insurance on his brick garage. What will it cost him for such a policy? a. for one year? b. for three years? c. What will the agent receive as commission, if John's father takes out a threeyear policy, if the commission is 15% of the premium?

Determine the premium for each of the following policies, and the agent's commission at 25%.

16. A factory worth $18,500 is insured for 80% of its value at 65¢ per $100.

a. What is the annual premium?

b. What is the agent's commission at 25%?

c. What does the company receive?

17. A building worth $20,000 is insured for 75% of its value for three years, at the annual rate of 72¢ per $100. What is the total premium and the agent's commission at 15%?

18. A man insured his house for five years for $6000 at the annual rate of 28¢ per $100, and his household goods for $4000 for the same length of time at 36¢ per $100. What was his total premium?

19. The rate on a farm barn is 60¢ per $100 per year if the farm is occupied by the owner, and is 15% higher if the farm is occupied by a tenant. Find the annual premium on a $3500 barn, on a farm occupied by a tenant.

20. A large company carries $5000 of insurance in company A, $3000 in company B, and $2000 in company C. The rate of insurance in each company is 43¢ per $100, and the agent's commission is 15%.