by deducting a commission from the premiums which they collect. Agents for soliciting only are sometimes appointed by general agents, but as a rule must be approved by the manager or home office. They have no express power to issue or alter policies, but they are to submit the proposals received by them to the superior authority. Sometimes, however, they are allowed to give binding or interim receipts, which protect the property of the applicant under the terms of the usual policy until the application is accepted or rejected, and often they are allowed. to collect premiums and give credit. Where a written applica tion is used, the applicant generally answers the questions orally, and the agent is expected to fill in the blanks, and is, in fact, intrusted with some power and discretion in this regard, like other agents engaged in canvassing for the benefit of their principal; thus questions of estoppel may arise like those already suggested. After this paper is signed by the applicant, it is forwarded by the agent to the proper office. § 19. Agents of Marine Companies.-Some marine companies require that all proposals for insurance shall be passed upon at the home office. Others grant this authority to their outside agents. The applicant often fills up the blanks of a short printed form with a few essential particulars describing the subject of the proposed insurance, and sends it to the company as a note of inquiry, with a request to the company to name a rate, and the statements contained in the note of inquiry sometimes serve as the representations upon which the insurance is based. Marine insurances are generally closed in this country by binding-slips, and often through the intervention of agents or brokers, or both. In London and in many other places the custom is for the broker to give a credit to the insured for the premium, and for the company to give credit to the broker. In that event the policy becomes binding upon its delivery, irrespective of the actual payment of the premium. In Great Britain, by the Stamp Act, a valid marine insurance can be effected only by a written policy; but in case of alleged error in the policy, the binding-slip is admissible in evidence to shed light upon the probable intent of the parties. CHAPTER II. GENERAL PRINCIPLES. Nature of the Contract. 20. Indemnity.-The controlling principle underlying the contract of insurance is indemnity. The agreement is aleatory or speculative in one sense; that is, the parties may not know whether the event insured against will occur or not but compensation and not profit must be aimed at, and consequently the party insured must have at least an appreciable pecuniary interest in the subject of insurance, or else the contract will be altogether void.1 Hence, it follows that the sum named in the policy is not the measure but the limit of recovery, and this is true whether there are successive losses or only one loss under the policy; and if the property is injured without total destruction, no matter how large the amount of insurance, the recovery is limited to the loss actually sustained. The principle that the contract of insurance is one of indemnity is in practice subjected to various modifications and limitations, which will presently be noticed. Such modifications have been engrafted upon the general rule largely out of regard to convenience. Thus the parties are permitted to agree in advance upon the value of the subject of insurance by a valued policy, which in case of total loss is then conclusive evidence of the value, in the absence of fraud or an intent to evade the law, although in fact the estimated value may be erroneous; but this infringement upon the strict theory of indemnity is of great practical convenience, for often the 2 Irving v. Manning, 6 C. B. 391. Valued policy conclusive unless fraud. ulent. Patapsco Ins. Co. v. Biscoe, 7 Gill. & J. 293; s. c. 28 Am. Dec. 219. Halford v. Kymer, 10 B. & C. 725. Commonwealth Ins. Co. v. Sennett, 37 Pa. St. 205; 78 Am. Dec. 418. Eager v. Atlas Ins. Co., 14 Pick. 141; 25 Am. Dec. 363. 2 casualty which destroys the insured property destroys with it the best evidence of its value. Accordingly, some of the States have passed valued policy laws applicable to realty, which provide that in the absence of fraud the value of the building written in the policy shall be taken to be its true value and the amount of loss where the building is wholly destroyed. These laws are not to be commended, however, although it is said that they are not intended to disturb the general doctrine of indemnity.1 The rule requiring an insurable interest to give support to the contract is grounded upon the most important considerations of public policy, and has for many years been recognized as reasonable and expedient by all the courts. Wager contracts of insurance were at one time tolerated in England, but were forbidden by two statutes, applicable to marine and life policies respectively (19 Geo. II. c. 37; 14 Geo. III. c. 48). The preamble of the former statute is as follows: "Whereas it hath been found by experience that the making of assurances, interest or no interest, or without further proof of interest than the policy, hath been productive of many pernicious practices whereby great numbers of ships with their cargoes have either been fraudulently lost and destroyed or taken by the enemy in time of war, and such assurances have encouraged the exportation of wool and the carrying on of many other prohibited and clandestine trades," etc. In most of the States of the Union there are statutes against wagering contracts, and no excuse can be found in our day for doing away with the wholesome rule that insurance must be for indemnity and not for betting, notwithstanding a recent writer advances the contrary view. A wager policy is more to be condemned than an ordinary wager, for it is not only at variance with sound business ethics, but it also offers peculiar inducements to the insured to bring about fraudulently the event insured against. § 21. Insurance does not always Grant Full Indemnity.—Only such damages as are caused proximately by the specified perils are covered by the policy. This rule, 1 Ampleman v. Citizens Ins. Co., 35 Mo. App. 308. 2 Cooke on Life Ins., § 58, 59. also, is grounded upon considerations of utility, and ordinarily limits the scope of the contract because of the inconvenience of attempting to form an estimate after loss of the extent of remote, uncertain, and fluctuating elements of damage. Thus the incidental loss of trade, or of the use of a building or ship while being repaired, or of prospective profits, or any pretium affectionis attaching to the property destroyed, is too remote, and is not supposed to enter into the calculation of the contracting parties. Where, however, the parties do in fact expressly take into their account these more remote items of damage, they may make them the subject of a valid insurance. Thus the loss of use and occupation or of expected profits may be specifically insured as such, and frequently is. In marine insurance profits are generally added in the shape of a percentage to the value of the goods. What results of fire and marine casualties are proximate, and what are remote, will be considered under the clauses of the policies. $22. Insurance Grants Indemnity for Results of Negligence.-Where the loss is caused proximately by the peril insured against, the fact that the negligence of the insured or his agent contributed to the disaster will not deprive him of the protection of his policy; because it is of the nature and purpose of insurance to grant indemnity for the results of carelessness as well as of accident. This rule, as originally adopted by the courts, was somewhat arbitrary, but is also eminently just and sensible.' In the case of fire insurance, for example, the security offered to the insured by his policy would be seriously impaired if it were open to the insurers to plead in defense contributory negligence on the part of the insured or his servants; for many if not most fires have their origin in some act of carelessness. Accordingly the insured has the right to look to the company for indemnity notwithstanding any amount of carelessness in occasioning the loss, provided it does not involve an element of evil design, or illegality, or a violation of some contract 'Mathews v. Howard Ins. Co., 11 Union Ins. Co. v. Smith, N. Y. 21. 124 U. S. 405. Orient Ins. Co. v. Adams, 123 U. S. 67. Gore v. Far- obligation on his part, and provided the loss is the proximate result of the peril insured against. This consideration, however, will not avail to excuse a breach of warranty, imposed upon the insured by the contract, which has been brought about by the negligence of himself or his agent; as, for example, a violation of the implied or express warranty that the ship must be seaworthy at the commencement of the voyage. Nor will it relieve the insured from the obligation of any other engagements of the contract; as where in the accident policy it is provided that the insurers shall be exempt for losses caused by voluntary exposure to unnecessary risk; or where in the fire policy it is stipulated that the company shall not be liable for loss caused by neglect of the insured to use reasonable means to save the property at and after a fire.1 § 23. Rule of Indemnity Qualified in Marine: Insured a Co-insurer.-In case of a partial loss, the rules of recovery applicable to fire and marine insurance, respectively, differ in a very important particular. In fire the insured recovers his damage up to the amount of the policy; but in marine, when the insurance is short, the insured recovers only such proportion of the amount insured as the loss bears to the value of the whole interest of the insured in the property. This limits a recovery unless the property is fully insured.2 Thus if a man takes out an open fire policy for $5,000 on his furniture worth $10,000, and a loss of $2,500 occurs, he will recover his loss in full; but if he has an open marine policy for $5,000 on his cargo worth $10,000, to which a loss of $2,500 occurs, he will recover only $1,250. Sometimes by the attachment of a co-insurance clause the fire policy is made to resemble the marine contract in that respect. Otherwise in fire insurance where the property is only partially covered by insurance, the insured recovers in case of partial loss under the policy as much as though he had Richelieu & Ont. Navigation Co. 2 Nicolet v. Ins. Co., 3 La. 366; 23 v. Boston Marine Ins. Co., 136 U. S. Am. Dec. 458. 408. Whitney v. Ocean Ins. Co., 14 La. 485; 33 Am. Dec. 595. |