and occupation of the premises and Surroundings, whether unoccupied or subject to careful supervision; the facilities for extinguishing fire; the efficiency of the fire department, and many other particulars from which they may determine whether the risk is a good one, or whether it is hazardous, extra hazardous, specially hazardous, or undesirable at any price.

Formerly much of this information was obtained from the insured by means of the written application containing such interrogatories as were appropriate to give the desired facts. But now the use of a formal application is for the most part confined to Western farm property. In the East, and especially in the cities, the insurers have come to rely very much upon their own means of examination; and for use in the larger cities they have prepared careful insurance maps showing the character of the risk involved in every building.

In marine insurance the rating of ships and statistics regarding them are to a considerable extent a matter of record, but more or less information is often required by the insurers from the insured in relation to the proposed risk. They must be advised from some source of the ownership, quality, and nationality of the vessel, the course of the proposed voyage, the character of the captain, the nature of the commodity carried, the state of political relations, and in time of war whether the ship is to sail with convoy.

In marine insurance the scale of premiums varies very greatly according to circumstances, and may sometimes well. nigh equal the value of the insured property. The subject of insurance is sometimes insured "lost or not lost," provided neither party knows whether the risk has already terminated.

§ 12. Mortuary Tables.-The premiums to be charged for life policies are based upon calculations made from mortality tables, which are tabulated exhibits of the number of survivors and the number of those dying each subsequent year among a given number of persons taken at various given ages respectively. A considerable number of such tables have been prepared at different times, the earliest of which are so rough and inaccurate that they possess only a historical interest. Of the more reliable tables which have been in use in recent times

may be mentioned the Northampton Table, which was constructed by Dr. Thomas Price from the registers kept in the parish of All Saints, Northampton, England, for the fortysix years, 1735 to 1780. Another English table very extensively used by insurance companies was the Carlisle Table, constructed by Mr. Joshua Milne from materials furnished by the labors of Dr. John Heysham. These materials comprised two enumerations from the population of the parishes of Saint Mary and Saint Cuthbert Carlisle in 1780 and 1787, and the abridged bills of mortality of those two parishes for the nine. years 1779 to 1787.

Since then many mortuary tables have been prepared in England and the United States, based upon much more carefully collected statistics and giving more accurate results. The mathematics of the business, of great practical consequence, are managed by actuaries. New York and other States have adopted the American Experience Table, with four and a half per cent. interest; while Massachusetts, Connecticut, and other States use the Actuaries or Combined Experience Table, with four per cent. interest; but in New York the liabilities of the life companies are now valued by both standards. A net premium is the rate at which, according to the table of mortality and interest, an insurance could be effected. But to this must be added in practice an important percentage which is called "loading," or "margin," in order to defray the expenses of the business, and to provide for a possible excess of mortality. A gross or office premium is the net premium increased by the loading.

§ 13. Reserve. - That portion of the premiums of a policy with the interest thereon which is required to be reserved or set aside as a fund for the payment of the policy. when it becomes due is called the "reserve." The mean or average duration of the life of an individual after any specified age, according to a given table of mortality, is called the "expectation of life." Statistical observations on the duration of human life point to the conclusion that, after the period of extreme youth is passed, the death rate among any given body of persons increases gradually with advancing age; and where the annual premium is fixed at a uniform rate during the life

of the policy, as is customary in life insurance, it is evident that if the policy is surrendered by the insured before its expiration, the insurers can generally afford to make a return of a portion of the premiums which have been paid. Of the reserve value which the policy is estimated to have at the time of surrender, a part called "the surrender value," the company offers to pay to the insured in return for the cancellation of the policy before its natural expiration.

From these same considerations it appears, also, that in the event of the insolvency and winding up of a life insurance company, there is a basis for calculating the present value of the unexpired policies, by which an equitable distribution of assets may be made to all the policy holders in accordance with the laws of priority.

The test of solvency is the rule which the insurance department is required to apply to determine the ability of a company to pay all losses which, according to the standard table of mortality and rate of interest, may occur. The liabilities of a company consist of its actual unpaid losses, its expenses and contingent obligations, for the payment of which its assets are held liable. The whole amount insured is really a contingent obligation, but in testing the present solvency of a company, this is regarded as a liability only to the extent of the reserve on each policy.

14. Different Kinds of Policies.-The forms of printed policies of insurance in use are varied and numerous. They are filled up in writing to suit each particular case, and are often further modified by special clauses, which may be pasted or attached in the shape of printed riders to the more general form.

A valued policy is one which expresses on its face an agreement that the subject of insurance shall be valued at a specified sum; for example, a policy upon "the ship Argus, valued at $10,000," Policies upon lives are almost invariably valued. Policies upon ships are generally valued, but other kinds of policies not so universally. Certain States have valued policy laws, but these are not to be commended, because they impose too arbitrary a standard, and may be used as an instrument of fraud.

An open policy is one in which the value of the thing insured is not agreed upon in the policy, but is left to be ascer*tained in case of loss; for example, a policy upon a house for $10,000. The term "open policy" or "running policy is also employed to indicate a very general form of insurance frequently used where the insured is likely to effect many successive insurances from the same company. It covers such goods, at such amounts of insurance, in such storehouses and places, or, if a marine policy, in such ships, and at such rates of premiums, as from time to time shall be agreed upon and indorsed on the policy or in a book attached thereto, the purpose being to obviate the necessity of executing a fresh policy for every transaction.

A floating policy is also a general form of insurance, but usually upon goods belonging to the insured within a certain specified area of territory, or otherwise designated, and is intended to cover property which cannot well be described specifically because of its fluctuating quantity and location; as, for example, merchandise in freight trains, warehouses, or lighters. The amount of goods covered by such a policy is ascertainable at the moment of loss only; and if at the time of loss the amount of goods at the place of the fire exceeds the amount of insurance, it is generally provided, that, for the excess, the owner must be his own insurer, and share the loss pro rata with the insurer. The terms "open policy," "floating policy," and "blanket policy," are sometimes used indiscriminately.

A time policy is one in which the duration of the risk is defined at the beginning and at the end, by a fixed date; as, for example, from noon of January 1, 1892, until noon of January 1, 1893.

A voyage policy is one in which, irrespective of time, the duration of the risk is established by geographical termini; as, for example, from New York to Liverpool, or from New York to Chicago.

A life policy is one payable on the death of the person insured. A term policy is one taken for a limited number of years, the sum insured being payable only in case of the death of the insured during this period. A joint-life policy is one payable on the earliest death of either of two or more persons

insured. A survivorship policy is one payable on the death of the survivor of two or more persons.

An endowment policy is one which is payable when the' insured reaches a given age, or upon his decease if that occurs sooner. A tontine policy is one in which it is agreed that certain profits of the business shall be apportioned among those of the insured of a certain class surviving, at certain intervals; for example, every ten, fifteen, or twenty years. The lapsed policies of the class forfeit their reserve and dividends to the survivors. A tontine dividend is the distribution of such profits among the survivors who are entitled to it after the given period. A semi-tontine policy is one in which it is agreed that the dividends only shall be apportioned among the survivors of the class.

In the case of a mutual company or benefit society, the policy or certificate is at once evidence of the contract and of the fact of membership, and generally refers to the by-laws and conditions subject to which it is received by the insured. A specimen of the form of a certificate of a benefit society, and of its bylaws and rules, will be found in one of the late Connecticut cases already cited.1

§ 15. Reinsurance.-A feature of insurance business which has developed into great magnitude is the practice of reinsurance. Where a company finds itself in embarrassed circumstances, or for any reason desires to limit its liability, in certain classes of risks, or in certain localities, or under a particular policy, it secures, if possible, policies of reinsurance from other companies. The entire business of an insurance company is not infrequently absorbed in this way by some stronger competitor.

§ 16. Authority of Insurance Agents to Bind the Companies.—At least some general understanding of the agency system employed by insurance companies in the United States is a prerequisite to the intelligent consideration of the numerous legal questions to which it gives rise, and which, especially under the doctrine of waiver and estoppel, assume a peculiar importance in the law of fire and life insurance.

Lawler v. Murphy, 58 Conn. 294 (1890).