(2) $ On household furniture and other personal property usual to a dwelling, but excluding accounts, bills, currency, deeds, evidences of debt, money, notes or ties ; all while contained in the building while occupied as situate Permission is granted to use kerosene oil stoves, to be filled by daylight only ; also to keep on hand not exceeding one quart of gasoline, benzine or naphtha for household use, but the use of gasoline, benzine or naphtha for cooking, heating or lighting is prohibited unless special permission is en dorsed hereon.
Permission is given for mechanics to be employed for ordi nary alterations in the described premises, but this shall not be held to include the constructing or reconstructing of the building or buildings, or additions or the enlargement of the premises.
Permission granted for the building to remain unoccupied a portion of each year.
The first represents the style where many words are used and the second represents a modern attempt to reduce the language to the least possible limits. It is doubtful, perhaps, whether the language in the latter is quite sufficient to meet the conditions of the stand ard policy, but these two are furnished as illustrations for comparison.
11. Clauses.—There are certain fundamental pro visions which both parties to the contract may be will ing to embody in the policy. A good illustration of this is the matter of coinsurance. The state provides that the policy may be written under the terms of coin surance,but if so, that the clause which expresses this fact must be the one provided by the state.
12. Average clause.—The standard clause in use with the New York Standard Policy, where the policy is issued with the understanding that the insured shall carry insurance for a certain percentage of the prop erty, usually eighty per cent, reads as follows: This company shall not be liable for a greater proportion of any loss or damage to the property described herein than the sum hereby insured bears to per centum ( %) of the actual cash value of said property at the time such loss shall happen.
If the insurance under this policy should be divided into two or more items, this average clause shall apply to each item separately.
The important thing in the consideration of this part of the contract of insurance is not the language but the thing itself. A great deal of misapprehen sion exists as to the true aim and purpose of this part of the insurance contract. The clause makes it ob
ligatory upon the insured to carry insurance equal to a certain percentage of the value of the property. Ordinarily this is fixed at 80 per cent. Sometimes in sprinkled risks it is fixed at 90 per cent; very rarely at WO per cent. There is a common .error of sup posing that if the policy• has the 80 per cent average clause attached it means the insured will collect only 80 per cent of the amount of the loss. If the insur ance equals the amount called for, the clause will have no effect in settling the loss. Perhaps an illustration of the effect of a clause in an actual case will be better than any words of explanation. The property is valued at $10,000 and insured with the 80 per cent clause which makes it obligatory on the insured to carry $8,000 of insurance. The property is damaged to the extent of $4,000 by a fire. When the policies are brought in, it is found that the insured has $8,000 worth of insurance and so will receive the full amount of his loss, $4,000. Let us suppose, however, that when the policies are brought in for checking up, the insurance carried is not $8,000 but $6,000. Now this $6,000 is three-fourths of the amount which the insured agreed to carry and therefore as he has failed by one-fourth to fulfil the obligation which he as sumed, he will fail to recover his loss in the same pro portion at the settlement. Instead of recovering $4,000, the amount of his loss, he will recover $3,000 which is one-fourth less than the amount of the loss.
The whole aim of the average coinsurance clause is to make sure that practically the whole body of prop erty that may be subject to a loss, is covered by a pol icy of insurance. The fire insurance business has for many decades been working to the point where a fixed percentage of insurance is called for. The time will come when the state will demand that property shall be insured for at least 80 per cent of its value. The provision will be based on the simple equity, that the assessment of the fire insurance premium which in many respects resembles a tax, must be subject to the same law to which other taxes are subject, that is, property to be assessed must be assessed for its full value. Without such a provision it is impossible to distribute the fire cost among different policyholders in an equitable manner.