FIRE INSURANCE POLICY 1. Insurance policy.—In the year 1873, the State of Massachusetts adopted a standard fire insurance policy. If the companies elected to use it, that fact was duly published and thereafter all their policies in that state were issued under the standard form. Some few years later, the standard policy, which had worked so well in its permissive form, was made mandatory and thereafter no policy of fire insurance could be issued in Massachusetts except under the standard form. On May 1, 1887, a standard policy went into force in the State of New York.
Previously the companies had been permitted to prepare their own policy forms. Inasmuch as most properties were insured not in one company, but in several, some degree of uniformity in policies soon be i came necessary and did in fact exist among the com panies. But there were sufficient variations to pro duce a somewhat exasperating effect at times. This led to the compulsory standard policy which no one would be willing to depart from today. The impor tance of the State of New York as a commercial com monwealth has given a widespread use to its stand ard policy, altho it is of later date than that of Mas sachusetts.
The standard policy is lettered from A to F for the first six lines and thereafter in numerical order for convenience of reference. The first six lines read as follows : / In cons ideration of the stipulations herein mentioned and of $ premium does insure for the term of from the day of , 19. ., at noon, to the day of , 19.., at noon against all direct loss and damage by fire except as herein after provided to an amount not exceeding $ to the following described property while located and contained as described herein and not elsewhere, namely, etc.
A few points in connection with the opening will be noted: (1) The consideration is not merely the premiums paid but the stipulations which are a part of the policy. (2) The courts have decided that the noon specified is that of local time and not standard time, but in Massachusetts there is a special statute which fixes the time as standard. (3) The insurance
is against direct loss and damage by fire. Direct loss and damage means not merely damage from the flame but also from smoke and water. (4 ) The company desires at all times to have the most definite knowl edge concerning the property it insures and the lo cation is of primary importance. Therefore, unless the policy is what is called a floating policy, it will apply only where the property is in a special location.
From the point given the policy is numbered line by line. It is unnecessary to repeat the exact lan guage, as the general tenor will be gathered from the comments made. The first ten lines set forth briefly the limit of the company's liability which cannot, of course, be more than the face value of the policy, or the actual cash value of the property destroyed by the fire, in case this is less than the face value.
Cash means the nearest approximation that can be arrived at, between the company and the insured, as to the amount of cash that will make the insured whole at the time the loss has occurred. The value of the goods destroyed may have been more at the time of the fire than when they were purchased. The in sured is entitled to a settlement at the value at the time of the fire. The value may have been less and if that is the case the settlement must be on this lower value. It is not intended that the insurance policy shall do more than indemnify the insured. It aims to make him whole and to put him in as good a posi tion as he was before the fire occurred, but not in a better one.
2. a document as rigid as a stand ard policy, since it is a part of the state law, some pro vision must be made for insuring certain classes of property which the company may be willing to in sure, or for granting certain privileges which the com pany may be willing to grant, but about which it wishes to have exact knowledge.