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University of California. 










Sir Isaac Pitman & Sons, Ltd., 1 Amen Corner, E.G. 

Bath and New York 


Each IS. net. 

Pitman's Practical Primers 
of Business 

ByjJ. P. 


H. W. PoRRiTT and W. Nicklin, A.S.A.A. 

SHIPPING. By Arnold Hall and F. 

SPONDENCE. By J. F. Davis, D.Lit., 
M.A., LL.B. 

WRITING. By W. Jayne Weston, M.A., 
and Edgar Bowker. 

By A. H. Douglas, LL.B. (Lend.). 

MARKETS. By Emil Davies. 

Oiher Volu>nhs iH ^'Preparation. 

Printed by Sir Isaac Pitman 

& Sons, Ltd., London, Bath 

and New York 


This little book is in no sense intended for the use of insurance 

It has been the aim of the Author to give in as concise a 
manner as possible sufficient information to enable the young 
student to obtain a useful knowledge of the chief branches 
of insurance, and the principles and practice upon which it 
is based and conducted. To this end the work has been 
written in a light and non-technical style. 

Those desirous of extending their knowledge of the subject 
dealt with, by a study of more advanced works, will find at 
the end of the present book a list of works by well-known 
authors ; from many of them the author has personally 
received much help, which he here gratefully acknowledges. 

In the treatment of such wide subjects as Fire, Life, Marine, 
and Accident Insurance, in a limited work of this kind, it will 
be readily understood that it has only been possible to touch 
upon the main outstanding features. 

The necessity for such a primer as this was experienced 
by the Author himself very early in his insurance career, so 
that when the opportunity presented itself of producing a 
book that would help those desirous of obtaining information 
upon the subject, he willingly acquiesced in the suggestion 
that he should prepare it. 

With regard to the subject of Workmen's Compensation — 
which is a highly contentious one — the Author has endea- 
voured to make clear the purport of the Act, but the reader 
would be wise in having by his side a copy of the Act itself, 
so as to make himself conversant with the full text. 

The Author gratefully acknowledges his indebtedness to 
several friends for suggestions given and for assistance in 
reading through the proof sheets. He also desires to express 
his thanks to his colleague, Mr. C. H. Madden, who was good 
enough to write a large proportion of the chapter on Life 




I. *^ workmen's compensation insurance 

^ (a) -drivers' RISKS. 


























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Elements of Insurance 


workmen's compensation insurance 

By Workmen's Compensation Insurance is generally under- 
stood a contract of indemnity under which the insurers 
undertake to indemnify the employer against his legal liability 
under the Common Law, the Fatal Accident Act, 1846, the 
Employers' Liability Act, 1880, and the Workmen's Com- 
pensation Act, 1906, in respect of accidents happening to 
his workpeople, and the cost incurred in contesting or setthng 
claims made. 

As the policy conditions of the majority of the leading 
offices are identical, an intending insured is saved the necessity 
of comparing the terms of several varied contracts, as he is 
bound to do in dealing with any other class of accident 
insurance. It is, however, of the first importance that he 
should select an office whose financial standing is beyond 
criticism, for the liability he wishes to insure is more far- 
reaching than many employers seem to realise. The Work-^ 
men's Compensation Act, 1906, renders an employer liable for 
half the earnings of an employee during incapacity by acci- 
dental injuries arising out of and in the course of the employ- 
ment. As in the event of a serious accident permanently 
disabling an employee, the employer may be liable to pay an 
annuity (equal in value to one half of the injured employee's 
earnings) , or in the alternative a lump sum which may amount 
to several hundred pounds— -to compound the annuity — it is 
clear that only from an office of undoubted stability can he 
obtain satisfactory cover. In this connection regard should ^ 
be had not only to the present but to the future, as security 
is required not for one year only, but for the whole life of a , 
permanently injured man. With one or two minor exceptions, 


2 * c c ' , « E^EjyjjrJj^^rS OF* INSURANCE 

the insurers under a Workmen's Compensation Act policy 
undertake to do nothing more nor less than assume the 
liability of the employer. 

It would be impossible in a book of this kind to deal with 
the question of rates for this class of insurance in any way 
that would give more than a rough idea to the uninitiated ; 
it should suffice to say that there are no less than two thousand 
five hundred separate ratings in vogue with the majority of 

Up to within a few months of the passing of the 1906 Act, 
the offices acted independently of each other in the matter 
of the classification and rating of risks. The comparatively 
small experience gained by the individual office was not 
sufficient, speaking broadly, to enable it to arrive at a true 
average, whereby it could, with any degree of certainty, rate a 
particular class of risk. Consequently a very undesirable 
condition of things prevailed. 

It often happened that the rates quoted by competing 
offices for the same risk differed to the extent of from 50 
to 100 per cent. The result was that a number of offices 
experienced severe reverses and were compelled to seek the 
shelter of their rhore successful competitors ; some losing their 
identity by absorption, and others, after reconstruction, 
continuing to carry on business in their old names, but under 
the direction of the company acquiring the business. 

In 1906, however, an Association of Accident Offices was 
formed, having for its main object the pooling of experience 
upon which to base rates, with results manifestly to the 
advantage of the insuring public as well as to the offices 

With these preliminary remarks we will proceed to consider 
'the law on the subject. 

To enable the reader to appreciate fully the advantages 
bestowed upon the industrial community by the passing of the 
Act of 1906, which is the latest Act dealing with the liability 
of employers to their workpeople, it is desirable that we 
should first of all obtain some knowledge of the conditions 
prevailing prior to the coming into force of this Act. The 
limits of this work, however, will only allow of a very brief 
reference thereto. As, however, both the Common Law and 
Employers' Liability Act remedies are still open to an injured 


workman (and indeed under certain circumstances he majr 
still find it advantageous to bring his action under one or 
the other, in preference to suing under the 1906 Statute), it is 
necessary that we should have some idea of the liability 
which existed prior to 1907. In order to do this, we must 
go back to a time antecedent to the passing of the Employers** 
Liabihty Act, 1880. 

Common Law. 

Prior to that date the only remedy the workman had 
against his employer was at Common Law. 

Common Law is the unwritten law of the land, founded on. 
customs and usages and confirmed by the decisions of courts 
of law which have come down from one generation to another. 

Common Law is older than Statute Law, i.e., the writtert 
law based on Acts of Parliament, and comprehends all law 
other than that specially covered by Statute. Common Law,- 
however, is overruled by Statute Law. 

The outstanding differences between Common Law and 
Statute Law have been summarised as follows — 

The important and distinguishing difference in the appUcation of 
the Common Law and Statute Law is the difficulty in the former of 
applying a rule deduced from one set of facts to another set, resulting 
very often in ostensibly conflicting decisions, whereas in the latter 
the ambiguity of language is the chief source of difficulty. 

Under Common Law, a workman, can only recover damages 
from his employer if and only when the injury complained 
of results from personal negligence on the part of the latter. 
Even then the workman's right to claim is limited by three- 
defences which are open to the employer, so that in effect 
the workman's position is inferior to that of a stranger. The- 
defences referred to are — 

(1) Common Employment. — Accidents caused by the negligence 

of a fellow workman. 

(2) Where the injury results from a danger known and appreciated 

by the workman. This doctrine is expressed in the maxim,. 
Volenti non fit injuria — He who runs a known risk cannot 

(3) Contributory Negligence. — Where the injury is proximately 

due to the workman's own negligence, rather than to any 
failure by the master in his duty to his servant. 

In the event of the injury causing death the master was 
relieved of all liability. 


Lord Campbeirs Act, 1846. 

In 1846 Lord Campbell's Act, so named after its author, or, 
as it is sometimes called, the Fatal Accidents Act, became law. 
With the passing of this Act a new cause of action arose, for 
whereas previously no action was maintainable against a 
person who through neglect or wrongful act caused the death 
of another person, such right to claim as the deceased person 
would have enjoyed under Common Law, had he lived, is 
now vested in the executor or administrator. By a subse- 
quent amendment, 27 & 28 Vict., c. 95, provision was made, 
where there was no executor or administrator, for an action 
to be commenced by the persons who would have benefited 
had such action been brought by the executor or administrator, 
had such existed. 

This Act was undoubtedly a step in the right direction, and 
must have been a boon to many widows and orphans, who, 
but for the Act, would have had no right of claim against the 
person causing the death of those upon whom they were 
•dependent. The reason for this is to be found in the Common 
Law doctrine, which is expressed in the maxim — Actio 
personalis moritur cum persona. 

There is no limit to the compensation recoverable at 
Common Law. 

Employers' Liability Act, 1880. 

In the year 1880 an Act called the Employers' Liability Act 
became law. 

We have already seen that at Common Law a master has 
three defences open to him, the principal one being Common 
Employment. This defence had the effect of placing a 
workman in a worse position than a stranger, inasmuch as 
in the event of an accident happening to him through the fault 
•of a fellow workman, he had no right of action against his 
employer. By a study of the main provisions of the 
Employers' Liability Act we shall see that the effect of this 
•doctrine is considerably reduced. 

The Act gives the right of compensation to an injured 
workman (in the event of his injuries proving fatal the right 
is extended to his representatives), with certain exceptions 
mentioned in the second section of the Act, where the injury 
is caused — 


(1) By reason of any defect in the condition of the ways, works, 

machinery, or plant connected with or used in the business 
of the employer ; or 

(2) By reason of the negligence of any person in the service of the 

employer who has any superintendence entrusted to him 
whilst in the exercise of such superintendence ; or 

(3) By reason of the negligence of any person in the service of the 

employer to whose orders or directions the workman at the 
time of the injury was bound to conform and did conform, 
where such injury resulted from his having so conformed ; or 

(4) By reason of the act or omission of any person in the service 

of the employer done or made in obedience to the rules or 
bye-laws of the employer or in obedience to particular 
instruction given by any person delegated with the authority 
of the employer in the behalf ; or 

(5) By reason of the negligence of any person in the service of the 

employer who has the charge or control of any signal, points, 
locomotive engine, or train upon a railway. 

The exceptions referred to limit the workman's statutory 
right to sue by providing that the employer shall not be liable 
in the following circumstances — 

(1) Unless the defect in the ways, machinery, or plant, etc., arose 
from, or had not been remedied owing to, his personal negli- 
gence or the negligence of a person entrusted by him with the 
duty of superintendence ; or 

(2) Unless the injury resulted from some impropriety or defect 
in the rules or bye-laws or instructions ; 

(3) Where the workman knew of the defect or negligence which 

caused his injury and failed to report the same to his employer 
or overseer, unless he was aware that his employer or superior 
knew of the defect or negligence. 

The other two Common Law defences are, however, still 
open to the employer. 

Lord Young, in Morrison v. Baird & Co., clearly states this 
to be the case. He says — 

'* The Employers' Liability Act does no more than remove a defence 
in the class of actions to whith it refers, which was therefore competent 
by providing that an employer, against whom such action is raised, 
shall not in certain instances, specified in the Statute, be entitled to 
plead what the Common Law entitles him to plead : that he is not 
responsible to one workman for the fault of others. The Statute does 
no more than remove that defence in certain specifiec^ circumstances." 

Whilst the Act had the effect of increasing the number of 
accidents for which an employer was responsible, the vast 
majority were outside its provisions. 

The maximum compensation recoverable under the Act 


is an amount equivalent to the estimated earnings during the 
three years preceding the injury. 

An action for injury is not maintainable under this Act 
unless notice of the injury has been given within six weeks, 
and the action commenced within six months from the 
occurrence, except in cases of death, when the limit is 
extended to twelve months. 

In the latter event (i.e., death), however, the want of such 
notice is not to be a bar to the maintenance of such action 
if the judge is satisfied that there was reasonable excuse for 
such want of notice. 

The Act was passed for seven years only, i.e., 1880 to 1887, 
and is kept in force by being included in the Expiring Laws 
Continuance Act passed from year to year. 

Workmen's Compensation Act, 1897. 

The next Act to be placed upon the Statute book was in 
1897, and was known as the Workmen's Compensation Act.. 
A reference here to a Bill to amend the existing law, entitled 
The Employers' Liability Bill, 1893, which passed the House 
of Commons in that year, will not be out of place if for one 
reason only, viz., that on the second reading of the Bill the 
Rt. Hon. Joseph Chamberlain moved an amendment to the 
following effect : — that any proposed change in the law 
relating to the Liability of Employers would not be final 
or satisfactory if it did not provide compensation for 
all injuries received in the ordinary course of employ- 
ment, subject to the injury not being the result of the 
workman's own acts or faults. The amendment was,, 
however, withdrawn. 

The Bill, owing to the action of the House of Lords, did not 
become law, nevertheless the principle enunciated by Mr. 
Chamberlain became the root principle of the subsequent Act 
of 1897. 

The Workmen's Compensation Act, 1897, which came inta 
operation on the 1st July, 1898, very considerably increased 
the hability of^masters to their servants. Previously, in order 
to substantiate a claim, a workman had to prove that his 
injury resulted through the negligence of his master, or arose 
out of a negligent act of a person for whom the master was 
legally responsible. Now, for the first time in England, an 

workmen's compensation insurance 7 

employer to whom the Act apphed was responsible for all 
accidents which *' arise out of and in the course of the workman's 

The Act was frankly acknowledged to be a tentative one. 
In speaking of it on one occasion Lord Brampton said : 
*' It is so framed as to provoke, rather than minimise, litigation.'' 
It was, however, limited in its scope to the more hazardous 
trades. Employments to which it applied are set forth in 
Sect. 7 of the Act as follows — 

This Act shall apply only to employment by the undertakers as 
hereinafter defined, on or in or about a railway, factory, mine, quarry, 
or engineering work, and to employment by the undertakers as herein- 
after defined, on in or about any building which exceeds thirty feet 
in height, and is either being constructed or repaired by means of a 
scaffolding or being demolished, or on which machinery driven by 
steam, water, or other mechanical power is being used for the purpose 
of the construction, repair, or demolition thereof. 

Then followed certain definitions as to what was meant by 
a railway, factory, etc. 

Compensation under the Act was limited to half-wages, not 
exceeding £1 per week during disablement. Minimum pay- 
ment at death ;£l 50 and maximum £300, where any dependants 
were left. The workman was not, however, entitled to 
compensation for the first fourteen days of disablement. 
This was a wholesome and necessary clause reducing the 
opportunities for malingering in connection with trivial 

The Act was fruitful of much litigation. Perhaps no 
previous Act of Parliament has caused so much valuable time 
to be wasted and money to be spent in lawsuits to the ultimate 
aggrandisement of the lawyers. 

By a further Act known as the Workmen's Compensation 
Act, 1900, the benefits of the 1897 Act were extended to 
employment in agriculture. 

It is estimated that about another million of workpeople 
were brought within the range of the new legislation, making 
together with those already enjoying the benefits of the 1897 
Act, about six millions. 

Both these Acts were repealed by the Act of 1906, so that 
we need not spend further time upon them, but proceed with 
our consideration of the Act of 1906. 


Workmen's Compensation Act, 1906. 

This is the latest Statute deahng with the habihty of 
employers for accidents to their workpeople. 

The Act created important and far-reaching changes in 
the law. 

We have seen that under Common Law the master's 
liability was limited to his own personal negligence ; the 
Employers' Liability Act, 1880, extended the liability so that 
a master became liable, with certain reservations already 
referred to, for his own negligence and for the neglect or 
fault of those to whom powers of superintendence or direction 
were entrusted by him. The Workmen's Compensation Act^ 
1897, set up a new condition of things, imposing, for the 
first time in the history of English legislation, liability upon 
employers, irrespective of negligence, for accidents to their 
workmen, arising out of and in the course of their employment.. 
The scope of this Act was, however, limited to certain 
hazardous trades. 

Now the Act of 1906 in its turn has increased the liability- 
existing under the previous statutes of 1897 and 1900, which 
it repealed, so that instead of merely including within its 
scope certain specified trades, as did the Act of 1897, it 
reversed the old order of things and specified the exceptions^ 
so that all trades — except those specially mentioned, which 
are few — are now included. Further, the Act applies to- 
employers in their private and domestic capacity. Certain 
diseases have also been scheduled as coming within its scope. 
Whilst much has been done by the legislature to remove 
many anomalies which existed under the previous Acts, yet 
owing to its wide range the Act bristles with technicalities and 
problems. Prudence, therefore, dictates to the vast majority 
of employers the need for covering their liability by insurance. 

The Act became law on the 1st July, 1906, and enacted^ 
Sect. 1— 

(1) If in any emplo3'ment personal injury by accident arising out 
of and in the course of the employment is caused to a workman, 
his employers shall, subject as hereinafter mentioned, be liable 
to pay compensation in accordance with the First Schedule 
to this Act. 

With the exception of persons employed in the naval or 

workmen's compensation insurance 9" 

military service of the Crown mentioned in Sect. 9, Sub-Sect. 1, 
every person who is a workman within the meaning of Sect. IS- 
(to which reference will be made later) is included within the 
provision of the Act. 

"Personal Injury by Accident." — Under the Act of 1897 
the House of Lords in the case of Brintons v. Turvey gave a 
wide meaning to these words. In that case it was held that 
the death of a wool-sorter who had contracted the disease 
of anthrax (a disease due to a germ found particularly in 
certain foreign skins and wools) in the course of his employ- 
ment, was due to accident, on the reasoning that the alighting 
of the germ on a man's eye was an accident. 

No expression of opinion was, however, given by the House 
of Lords in their judgment on this case as to whether or not 
any zymotic disease contracted in the course of a workman's 
duties would constitute an ''accident" within the meaning 
of the Act. 

The present Act (1906), however, as already mentioned^ 
embodies in its provisions a schedule of industrial diseases. 

The definition of the word " accident " remained in an 
unsatisfactory state until the notable case of Fenton v. Thorley 
(1903), when the House of Lords defined accident to mean 
*' an unlocked for mishap or an untoward event which is not 
expected or designed.'' 

The case was one of rupture through over-exertion on the 
part of a workman. 

Lord McNaughten, in the course of his judgment, said he 
regretted that in previous decisions the word '' fortuitous " 
should have been applied to the term '' accident." 

•The definition above referred to gave a more extended 
meaning to the word than had previously been given to it. 
As a result, similar cases of injury previously decided by the 
Courts as not coming within the definition of accident would 
now be held to be accidents within the meaning of this Act. 

The following case will illustrate the point. In Hensey v^ 
White (1900), which was a case decided under the 1897 Act, it 
was part of the deceased man's duties to start a gas-engine,, 
and in endeavouring to set the driving-wheel in motion he 
strained his stomach. The medical evidence on the point as 
to whether it was an accident or not was conflicting, but the 
County Court judge found that death was due to disease. 


although possibly accelerated by the strain, and gave judgment 
ior the employers. The case went to the Court of Appeal, 
which upheld the County Court judge's findings. 

Lord Justice Collins, in the course of his judgment, said — 
" In the ordinary course of his work he was applying more than 
•ordinary pressure to the wheel, and it is said that the injury which he 
received while doing so was the result of an accident ; what he was 
doing, however, he was doing deliberately and in the ordinary course 
of his work and that which happened was in no sense a fortuitous 
•event. ... In the present case there is an entire lack of the fortuitous 

In view of the decision in Fenton v. Thorley such a case as 
this would undoubtedly be held to come within the meaning 
of the word '' accident." 

The case of Williamson v. Ismay, Imrie & Co., was the first 
appeal to the House of Lords under the Act of 1906 on the 
meaning of the word '' accident." 

The facts of the case were as follows : — Williamson was 
-employed as trimmer on the steamship Majestic, his duties 
being to '' rake out ashes that had fallen from the furnace." 
When doing this on the 11th July he fell down in a faint from 
lieat-stroke, ultimately succumbing. The medical evidence 
showed that the body of the deceased was in a very emaciated 

The Lord Chancellor in reviewing the case said — 

" I agree with the judgment of the Court of Appeal. The county 
court judge has found that this man died from an accident. There 
•does not seem to me any reason for dissenting from that view. To my 
mind the weakness of the deceased which predisposed him to this form 
of attack is immaterial. The fact that a man who has died from a heat 
stroke was by physical debility more likely than others so to suffer can 
have nothing to do with the question whether what befell him is to be 
regarded as an accident or not. In the case of Fenton v. Thorley the 
meaning of the word accident was very closely scrutinised. That 
case stands as a conclusive authority, and I would not depart from it 
if I could, nor need I repeat what was there said. The only question 
is of applying the law there laid down to the particular facts of this 
case. In my view this man died from an accident. What killed him 
was a heat stroke coming suddenly and unexpectedly upon him while 
at work. Such a stroke is an unusual effect of a known cause, often, no 
doubt, threatened, but generally averted by precautions which 
•experience, in this instance, had not taught. It was an unlooked for 
mishap in the course of his employment. In common language, it was 
a case of accidental death. I feel that, in construing this Act of Par- 
liament, as in other cases, there is a risk of frustrating it by excess of 
subtlety, which I am anxious to avoid." 

workmen's compensation insurance 11 

From the foregoing it will be seen that a very wide inter- 
pretation is now being placed upon the word '' accident " by 
the Courts. 

" Arising out of and in the Course of Emplo5mient. * * — Before 
a person can claim compensation he must show that : The 
accident arose both out of and in the course of the employment. 

These words involve questions of law and fact. They 
were fruitful of much litigation in connection with the 1897 
Act, and the decisions given under that Act are useful guides 
to the interpretation of the words in the present Act. 

In Smith v, Lancashire & Yorkshire Rly. Co., a ticket 
collector who had jumped on to the footboard of a train in 
motion, to speak to a friend, after having finished collecting 
the tickets for that train, was killed whilst jumping off. It 
was held that the accident did not arise out of the employment. 

The obvious reason in this case is that the deceased man 
was at the time of his death doing something for his own 
private interests in no way necessitated by his employment. 

In Keenon v. Flemington Coal Co., a miner left his work 
to obtain a drink of water, and when returning was killed 
by a runaway truck. In this case the Lord Justice Clerk 
(Court of Session) decided that the accident arose in the course 
of the man's employment — he reasoned that it was incumbent 
on the master as a matter of decency to provide water for his 

Qualifying Period. — Sub-Sect. 2a of Sect. 1 provides that 
an employer shall not be liable under the Act in respect of an 
injury which does not disable the workman for a period of 
at least one week from earning full wages at the work at which 
he was employed. 

To properly understand this sub-section we must read along 
with it proviso (a). Schedule (1), paragraph (l)b, which provides 
that '* If the incapacity lasts less than two weeks, no com- 
pensation shall be payable in respect of the first week.'' In 
practice this means that if a workman is disabled from 
following his employment for — 

(1) Seven days. — No compensation is payable. 

(2) Ten ,, — Compensation for three days. 

(3) Fourteen days. — Compensation is to commence from the day 

of the accident. 

The qualifying period under the Act of 1897 was two weeks. 



The alteration under the present Act has undoubtedly ac- 
counted for a large number of claims for minor accidents for 
which the employers were previously not responsible. 

The question as to the wisdom of reducing the time limit 
is a debatable one, and there is undoubtedly much to be said 
on both sides. Suffice it to say the insurance companies 
regard it as appreciably enhancing the risk, and it has accord- 
ingly played an important part in the assessment of the present 
rates for insurance. 

Option of Proceeding Independently of Act. — Sub-Sect. 2b 
of Sect. 1 gives to the injured workman an option ; either to 
claim compensation under the Workmen's Compensation Act 
of 1906, or, when the injury is caused by the personal negligence 
of the employer or of some person for whose act or default the 
employer is liable, to take proceedings by action for damages 
under Common Law, or the Employers' Liability Act, 1880. 

An employer, however, cannot be held liable to pay com- 
pensation for injury both independently of and under the 
1906 Act. 

The value of this option to the workman is materially 
increased by Sub-Sect. 4 of Sect. 1, inasmuch as should a work- 
man bring an action independently of the 1906 Act, i.e., under 
Common Law or the Employers' Liability Act, 1880, and fail 
to establish his claim, he can there and then apply to the Court 
to assess such compensation as he would have been entitled 
to, had he claimed under the 1906 Act in the first instance, 
assuming liability existed. 

Defence to a Claim. — Sub-Sect. 2c of Sect. 1 disqualifies 
a workman from claiming compensation when it can be 
proved that the injury is attributable to the serious and wilful 
misconduct of that workman, except when the injury results 
in death or serious and permanent disablement. 

It will be seen that the defence here given to the employer 
is so restricted as to be of very little practical use. It is in 
those instances where a large sum of money is involved, such 
as where the injury results in the death or total disablement 
of the workman, that the defence which is denied to the 
employer under this section would be of value to him. 

It should be noticed that the misconduct must be both 
serious and wilful. 

What constitutes *' serious and wilful misconduct " is a 

workmen's compensation insurance 13 

question for the Judge to decide on the facts of any given case. 
Lord Justice Bramwell has defined " wilful misconduct " to 
mean " Misconduct to which the will is a party." This means 
that the misconduct must be deliberate and not merely an act 
committed on the spur of the moment. 

The onus of proving that the workman has been guilty of 
serious and wilful misconduct rests upon the employer. 
Further it must be shown that the injury was attributable 
to the misconduct. These words were given a very broad 
interpretation by the House of Lords in the case of Johnson v. 
Marshall. This was a case in which a workman was killed 
whilst using a lift contrary to the express instructions of his 
employer. These instructions were that an employee was not 
to use the lift except when it was loaded, whereas at the 
time of the plaintiff meeting with the accident the lift was 
empty. It was held that though there was '' wilful mis- 
conduct'' the act complained of was not ''serious misconduct," 
since it could not reasonably be said that the workman could 
have perceived any injurious result from making use of the 
empty lift. 

Time for Taking Proceedings. — By Sect. 2, Sub-Sect. 1, it 
is provided that notice of an accident must be given as soon 
as practicable after the happening thereof, and before the 
workman has voluntarily left his employment, and a claim 
for compensation must be made within six months. Failure 
or defect in notice or failure to make a claim, however, within 
six months is no bar to proceedings if the failure is occasioned 
by mistake, absence from the United Kingdom, or other 
reasonable cause. 

Contracting Out. — Sect. 3 deals with what is known as the 
'* Contracting-out Clause." 

It is not permissible for an employer to contract out of his 
liability to his workpeople under the Act, unless he provides 
a scheme of compensation, benefit, or insurance, which is 
satisfactory to the Registrar of Friendly Societies, and the 
terms of compensation are not less favourable than those 
under the Act. Having satisfied these conditions it is still 
essential that the scheme should be approved by a majority 
of the men to whom it is applicable. 

Sub-Contracting. — By Sect. 4, where any person (the 
principal) in the course of or for the purpose of his trade or 


business, contracts with another person (the contractor) for 
the execution of certain work undertaken by the principal, 
the latter is responsible to compensate the contractor's men 
for any injury they may sustain, as though they were 
immediately employed by him (the principal). 

The object of the legislature was evidently to prevent an 
employer from escaping liability by contracting with another 
for the execution of work, which, had he undertaken personally, 
would have created in him a liability to compensate those 
workmen so employed in the event of their meeting with an 
accident, or in other words, to safeguard the interests of the 
workman in the event of the contractor being a man of 
'' straw." The Section is not free from doubt as to its exact 
meaning ; it would, however, appear to be very far-reaching 
in its effect. It would seem that not only does the Section 
apply as between a contractor and a sub-contractor, as for 
instance where a building contractor A undertakes to erect 
a house for B, and sub-lets a portion of the work to another 
builder C, so as to make A responsible to compensate the 
workmen of C in the event of their meeting with an accident 
in connection with the job ; but it would apply equally to a 
manufacturer who for the purpose of his trade or business 
arranges with another person to execute the whole or any 
part of any work undertaken by him. That the effect of the 
Section is limited by the word *' undertaken '' seems clear, 
but much controversy is certain to range round the meaning 
of this word, though undoubtedly it will be given a wide 
interpretation by the Courts. 

Take the following example : — A box manufacturer, 
in order to expedite the delivery of his orders to his 
customers, supplements his own carrying staff by entering 
into an arrangement with a firm of cartage contractors to 
deliver the boxes to his customers. The manufacturer 
would undoubtedly be responsible for any accident happening 
on his premises to a workman in the employ of the cartage 
contractor, inasmuch as he satisfies the section by himself 
undertaking part of the cartage work ; but supposing he did 
not do any of the actual cartage himself, would he still be 
liable ? It would depend a great deal on the facts of the 
case. So long as the contractor undertaking the carting 
is financially sound and in a position to meet a claim by any 

workmen's compensation insurance 15 

of his workmen, notwithstanding the decision in the Scottish 
case of Cooper v, Mac Govern, it would appear not. But 
where the contract is in respect of work which is clearly 
a part of that undertaken by the principal, the mere fact of 
employing a contractor in a small way of business would not 
relieve the principal of responsibility under this section. This 
view seems to be strengthened by the second paragraph of this 
section which provides " where the contract relates to threshing, 
ploughing, or other agricultural work, and the contractor 
provides and uses machinery driven by mechanical power for 
the purpose of such work, he, (the contractor), and he alone, 
shall be liable under this Act to pay compensation to any 
workman employed by him on such work.'* 

Inferentially, this proviso by exempting those engaged in 
agricultural work from liability in cases where the contractor 
provides and uses machinery, would make them liable in 
connection with all general agricultural work carried out by 
a contractor. 

The view which the writer holds in reference to the wide 
interpretation likely to be placed on this section by the Courts 
has been confirmed in the recent case of Dittmar v. Wilson, 
Sons & Co,, Ltd., which was an appeal by the owners of a 
lighter frOm a decision given against them under this section, 
in respect of an injury to a sailor during navigation. It 
appears that the owners of the lighter entered into a contract 
with a Captain Glover to navigate the lighter to Cape Verde, 
in consideration for which they agreed to pay £192 10s., 
Capt. Glover to provide an efficient crew and to pay their 
wages, and also to indemnify the shipowners against claims 
made by the crew. 

The Master of the Rolls, in the course of his judgment, said — 

" In the circumstances I think the Appellants {i.e., the shipowners) 
in the course of or for the purpose of their trade or business, contracted 
with Glover for the execution by or under Glover of part of the work 
PROPER to their undertaking, and in that sense undertaken by them, so 
that the case falls within the precise terms of the section." 

By Sub-Sect. 2 the principal is entitled to indemnification, 
in cases where he is liable under this section, by any person 
who would have been responsible to pay compensation to the 
workmen independently of such section. 

Under Sub-Sect. 3 the workman has the right of recovering 


compensation under this Act from the contractor instead of 
the principal. 

The habihty of the principal under Section 4 is limited 
to accidents occurring on, in, or about premises on which the 
principal has undertaken to execute the work or which are 
otherwise under his control. 

The words on, in, or about, are applicable to Sect. 4 alone, 
and do not apply to any other section of the Act. 

The decisions given by the Courts upon these words under 
the Act of 1897 were very conflicting and chiefly centred 
around the word " about." Lord Justice Collins describes 
the word '' about " as ''a geographical expression denoting 
physical contiguity." Per Lord Atkinson '' about " is 
equivalent to ''in close proximity to." 

Bankruptcy of Employer. — By virtue of Section 5 of the 
Act an injured man (under certain conditions) where his 
employer becomes bankrupt, is given priority over all ordinary 
creditors under the '' Preferential Payment in Bankruptcy 
Amendment Act, 1897," up to £100,. and then ranks as an 
ordinary creditor in respect of the balance of any sum for 
which the employer may be liable. 

Remedies both Against Employer and Strangers. — Section 6. 
In cases of accidents which arise under circumstances creating 
legal liability in some other person than the employer to pay 
damages, this section provides that the injured workman 
may either take proceedings against his employer under this 
Act or against the other person. If the injured man elects 
to be paid and receives compensation from his employer 
under the Act, then his employers shall be entitled to be 
indemnified by the person who would have been liable to 
pay damages independently of this Act. The workman 
cannot recover both compensation and damages. 

Seamen. — Section 7. By this section the Act is made to 
apply to— 

" Masters, seamen, and apprentices to the sea service, and apprentices 
in the sea-fishing service, provided that such persons are workmen 
within the meaning of this Act, and are members of the crew of any ship 
registered in the United Kingdom, or any other British ship or vessel 
of which the owner, or (if there is more than one owner) the managing 
owner, or manager resides or has his principal place of business in the 
United Kingdom." 

Certain modifications follow prescribing the manner in 

workmen's compensation insurance 17 

which notice of accident is to be given, and intimating that 
weekly payments shall not be payable during the period 
for which the owner of a ship is responsible to defray expenses 
of maintenance, that is to say, until after the landing of the 
injured seaman in a home port ; also that the compensation 
payable shall be paid in full by the owner notwithstanding the 
fact that under the Merchant Shipping Act, 1894, he (the 
owner) would only be able to recover, by way of indemnity, 
from a third party {i.e., where the injury to the seaman results 
from the negligence of another person) a limited sum. The 
Merchant Shipping Act (Section 6), which has reference to 
loss of life or personal injury, limits the shipowner's liability 
to ;£15 for each ton of the ship's tonnage. 

Members of the crews of fishing vessels who are remunerated 
by shares in the profits or gross earnings of the working of 
such vessels are, however, specially excluded from the benefits 
of the Workmen's Compensation Act. 

Industrial Diseases. — Sect. 8. This section constitutes a 
new departure in English legislation, and for the first time 
makes employers responsible to compensate their workmen 
for industrial diseases, i.e., diseases due to the nature of the 
workman's employment. We have seen that under the Act 
of 1897 the Courts held that a zymotic disease (anthrax) 
came within the purview of that Act, but it was a condition 
precedent to the workman's right to recover in such instances 
that he should prove the disease was an '' injury by accident." 
This condition of things is now modified. 

The diseases to which this section applies are stated in the 
Third Schedule to the Act ; thus — 

Anthrax . . . . Handling of wool, hair, bristles, hides and skins. 

Lead Poisoning, or ) Any process involving the use of lead or its 

its Sequelae. / preparation or compounds. 

Mercurv do do ^ ^^^ process involving the use of mercury or 

•^ * * ) its preparations or compounds. 

Phosphorous do. do.l A"y .P''°<='=^^ involving the use of phosphorous 

/^ j or its preparations or compounds. 

\rsenic do do 1 ^^^ process involving the use of arsenic or 

') its preparations or compounds. 

Ankylostomiasis . . Mining. 

Since the passing of the Act this list of diseases has been 
considerably added to. 

Sub-Sect. 10 preserves the workman's right to claim for 


a disease not specified, but which can be shown to be a personal 
injury by accident within the meaning of the Act. The 
section is of far-reaching apphcation, and is hkely to create 
trouble. The framers of the Act reahsed this, and have made 
provision that if the disease be of such a nature as to be 
contracted by a gradual process, such as, for instance, lead 
poisoning, not only the immediate employer of the injured 
man but all those employers for whom he has worked during 
the twelve months prior to the disease revealing itself shall 
be liable to contribute towards the compensation payable. 

Definitions. — Sect. 13. In view of the importance of this 
section the writer has deemed it expedient to give it in extenso. 
As the marginal note in the Act itself declares, the section 
defines the meaning of certain words mentioned in the Act. 

The importance of the definition of the word " workman," 
for instance, is appreciated by those who have to administer 
the Act, seeing that no such definition was given under the 
1897 Act. 

In this Act, unless the context otherwise requires, — 

" Employer " includes any body of persons corporate or un- 
incorporate and the legal personal representative of a deceased 
employer, and, where the services of a workman are temporarily lent 
or let on hire to another person by the person with whom the workman 
has entered into a contract of service or apprenticeship, the latter shall, 
for the purposes of this Act, be deemed to continue to be the employer 
of the workman whilst he is working for that other person ; 

" Workman " does not include any person employed otherwise than 
by way of manual labour whose remuneration exceeds two hundred 
and -fifty pounds a year, or a person whose employment is of a casual 
nature and who is employed otherwise than for the purposes of the 
employer's trade or business, or a member of a police force, or an out 
worker, or a member of the employer's family dwelling in his house, 
but save as aforesaid, means any person who has entered into or works 
under a contract of service or apprenticeship with an employer, whether 
by way of manual labour, clerical work, or otherwise, and whether the 
contract is expressed or implied, is oral or in writing ; 

Any reference to a workman who has been injured shall, where the 
workman is dead, include a reference to his legal personal representative 
or to his dependants or other person to whom or for whose benefit 
compensation is payable ; 

" Dependants " mean such of the members of the workman's family 
as were wholly or in part dependent upon the earnings of the workman 
at the time of his death, or would but for the incapacity due to the 
accident have been so dependent, and where the workman, being the 
parent or grand parent of an illegitimate child, leaves such a child so 
dependent upon his earnings, or, being an illegitimate child, leaves 

workmen's compensation insurance 19 

a parent or grandparent so dependent upon his earnings, shall include 
such an illegitimate cnild and parent or grandparent respectively ; 

" Member of a family " means wife or husband, father, mother, 
grandfather, grandmother, step-father, step-mother, son, daughter, 
grandson, granddaughter, step-son, step-daughter, brother, sister, 
half-brother, half-sister ; 

" Ship," " vessel," " seaman," and "port" have the same meanings as 
in the Merchant Shipping Act, 1894 ; 

" Manager," in relation to a ship, means the ship's husband or other 
person to whom the management of the ship is entrusted by or on 
behalf of the owner ; 

*' Police force" means a police force to which the Police Force 
Act, 1890, or the Police (Scotland) Act, 1890, applies, the City of 
London Police Force, the Royal Irish Constabulary, and the Dublin 
■Metropolitan Police Force ; 

" Outworker " means a person to whom articles or materials are given 
out to be made up, cleaned, washed, altered, ornamented, finished, 
or repaired, or adapted for sale, in his own home or on other premises 
not under the control or management of the person who gave out the 
materials or articles ; 

" Public authorities." The exercise and performance of the powers 
and duties of a local or other public authority shall, for the purposes 
of this Act, be treated as the trade or business of the authority ; 

" County court," " judge of the county court," " registrar of the 
county court," " plaintiff," and " rules of court," as respects Scotland, 
mean respectively sheriff court, sheriff, sheriff clerk, pursuer, and act 
of sederunt. 

The definitions themselves, however, present many 
difficulties. For example : What is the position of a person 
earning over ;f250 per annum, who is engaged chiefly in 
manual labour, although a part of his duties may be clerical ? 
There is little doubt, if the words in the section are strictly 
construed, such a case would be excluded from the Act, but 
bearing in mind the broad interpretation given by the 
Courts under the Act of 1897, it is very probable that such 
a case will be held to be within the scope of the present Act, 
on the ground that the man's main duties are of a manual 

Remuneration. — As to how the remuneration is to be com- 
puted is not at all clear. The term '' earnings '' is possible 
of wide interpretation and includes, besides wages, such things 
as are capable of being estimated in money, i.e., board and 
lodgings, uniform, use of house rent free. Regard must be 
had also to tips and commissions. 

Work of a Casual Nature. — A person whose employment is 
of a casual nature and who is employed otherwise than for the 


purposes of the employer's trade or business is not within the 
scope of the Act. 

The words '' casual nature " have created a good deal of 
speculation as to their meaning when applied to employment 
in regard to domestic engagements, or in the words of the Act, 
" otherwise than for the purpose of an employer's trade or 

The dictionary meaning of the word casual is '' depending 
on chance,'' " occurring or coming at uncertain times,'" 
'' unsettled,'' and so on. 

The conception uppermost in these meanings is 

It has been laid down by the Courts in recent cases, however, 
that the mere fact of an employment being intermittent does 
not necessarily make it of a casual nature so as to exclude a 
workman so employed from benefits under the Act, when there 
is evidence of a definite contract or arrangement. Whether 
an employment is of a casual nature or not will depend on the 
agreement existing between the employed and the employer. 

The following cases, recently the subjects of decision by the 
Court of Appeal, illustrate the principle — 

Hill V. Begg. The deceased man was a window-cleaner, and 
met his death while cleaning windows at a private house. He 
was in the habit of cleaning the windows at irregular intervals 
of a month to six weeks — on each occasion instruction was 
given him by postcard. The Court of Appeal held '' There 
was no engagement that he (the window-cleaner) should be 
employed. No complaint could have been made if any other 
person had been employed. It was uncertain when any 
person would have been employed." 

In contradistinction to this case is the one of Dewhirst v, 
Mather. In this case, a washerwoman was engaged to attend 
'' every Friday and every other Tuesday." Having received 
injury in the course of her employment, a claim was made 
under the Act, and the County Court Judge held that " there 
was evidence of a contract," and that she was a workman 
under the Act. This decision was subsequently confirmed 
by the Court of Appeal. 

If a person employs another for the purpose of his trade or 
business, it does not matter whether the employment is of a 
casual nature or not — ^liability exists under the Act. 

workmen's compensation insurance 21 

Definition of Workman. — Concisely put, any one (with the 
exceptions enumerated in the Act) who works is a workman 
within the meaning of the Act, and entitled to compensation 
provided his remuneration does not exceed £250 a year, be 
he a clerk, commercial traveller, mechanic, or dustman. 
Females as well as males are included in the term " workman." 
In order to bring a person under the Act there must be a 
contract of service so as to establish the relationship of master 
and servant, and this can only exist where there is the right 
of control both as to the order in which certain work shall be 
done and the manner of doing it. 

The limits of an elementary work will not permit of our 
going more deeply into these definitions, although there is 
much more of great interest that could be said in regard 
to them. We must now pass on to our last point for 


Scale of Compensation. — Sub-Sect. 1. This section of the 
Act deals with the scale and conditions of compensation which 
are briefly as follows : 

(1) Where death results from the injury an amount equal to three 

years' earnings — or a sum of ;^150 — whichever of these sums 
is the larger, but not exceeding in any case ;^300 — where 
there is a total dependency. 

(Example. Where the average earnings of a workman 
previous to death were 15s. per week, the minimum amount 
of ;^150 would be payable. 

If the weekly wages were 50s. per week then ;^300 only would 
be payable). 

(2) A sum reasonable and proportionate to the loss sustained 

where only partial dependency exists. 

(3) Reasonable expenses of medical attendance and burial (not 

exceeding ;^10) where the deceased leaves no dependants. 

(4) Where the injury results in Temporary Total Disablement 

half weekly wages (not exceeding ;^1) during incapacity. 

No compensation, however, is payable in respect of the first 
week of disablement unless the incapacity lasts for two weeks, 
then compensation is payable from the date of the accident. 

An example as to the working of this section in actual 
practice has been given under Sub-Sect. 2a of Sect. 1 (Page 11.) 

Workmen under Twenty-one. — Exception is made in the 
case of workmen under twenty-one years of age at the time 
of the injury, where the average weekly earnings are less than 


20s. ; then 100 per cent, of the earnings is payable, but in 
no case is the payment to exceed 10s. per week. 

In order to appreciate the reason for this special treatment 
of minors we must revert to the days of the Act of 1897. 

Under that Act no such special provision was made, and 
consequently in the event of a young person earning 5s. per 
week meeting with an accident the utmost compensation he 
could obtain was half- wages, i.e., 2s. 6d. per week. This 
proved a great hardship where the injuries were of a permanent 
character. This difficulty has now been remedied, and 
instead of 50 per cent, of the weekly earnings, 100 per cent, 
is payable, not exceeding, however, 10s. per week. 

A further provision is made in Schedule I, Sub-Sect. 16. 
Where the disablement lasts for a period exceeding twelve 
months the injured person may lodge an application for an 
increase of the weekly compensation to an amount equal to 
half the weekly wages he would probably have been earning 
at the date of the review if he had remained uninjured, but 
not in any case exceeding one pound. 

Partial Incapacity. — Sub-Sect. 3. In the case of partial 
incapacity (temporary or otherwise) the weekly payment 
shall in no case exceed the difference between the amount of 
the average weekly earnings of the workman before the 
accident, and the average weekly amount he is able to earn 
after the accident. 

It will be seen by this that the question is in the discretion 
of the Arbitrator to award the injured workman either the 
whole of the difference, or any sum not exceeding the actual 
difference, but the common practice, especially lately, has 
been for the Arbitrator to apply the principle of the division 
of the loss of earnings between the employer and the employee ; 
as recently as April, 1909, the Court of Appeal in the case 
of Rothwell V. Davis confirmed the County Court Judge of 
Birkenhead in having adopted the principle of dividing the 
loss. This, in the opinion of the writer, is perfectly consistent 
with the spirit of the Act, which only provides half the loss 
in the event of total disablement. 

Example : — A workman earning 30s. per week previous to 
his meeting with an accident, and subsequently only able to 
earn 20s. per week, would be entitled to claim as compensation 
an amount up to but not exceeding 10s. per week. 


Total Incapacity. — Sub-Sect. 17. Where the injury results 
in permanent total disablement compensation would be 
payable for life. In such cases where the weekly payments 
have been continued for six months the Act provides that an 
employer, if he so desires, can make application to redeem 
the payment by a lump sum. 

The sum so payable must be equal to an amount which 
would, if invested, purchase a life annuity through the Post 
Office Savings Bank equal to 75 per cent, of the annual value 
of the weekly payments. 

Average Weekly Earnings. — Although special rules have 
been laid down for computing the earnings of an injured 
workman, questions of some difficulty have arisen in cases 
where the employment has only lasted for a few hours or a 
day or two, and also where there have been breaks in the 
employment due to slackness of work, holidays, etc. 

The rules define that the earnings shall be computed in the 
manner best calculated to give the rate per week at which the 
workman was being remunerated, and this, perhaps, is best 
explained by reference to the cases of Anslow v, Cannock Chase, 
and the noted case in the '' Scottish Courts *' of Carter v. 
John Laing. 

Any workman receiving weekly payments under the Act 
must submit himself, from time to time, for medical examina- 
tion, if so required by the employer, the cost of the examination 
to be borne by the latter. 

Arbitration. — Schedule 2. This section deals with the 
modus operandi in arbitration cases, and general rules to be 
observed by the Courts. 

Industrial Diseases. — Schedule 3. The application of this 
section has already been discussed under Sect. 1. 



Insurances under this heading deal with the Common Law 
liability of persons to third parties {i.e., persons not in their 
employ) in respect of personal injury and damage to property 
for which an Action for Tort may be instituted. 


Not only is the employer responsible for his own negligent 
acts, but he is also liable for the wrongful acts of his employees 
in the course of their employment. 

Such insurances as the writer proposes treating with are 
generally designated in companies' prospectuses as follows — 

Third Party (Drivers') Risks, i.e., Accidents caused by 
horsed vehicles. 

Motor Car Risks, i.e., Accidents caused by mechanically- 
driven vehicles. 

General Third Party Premises Risks, i.e.. Accidents to 
the public through the negligence of the employer's 
workmen or through defect in the premises, ways, plant, 
or machinery. 

Lifts, Cranes, and Hoists Indemnity, i.e., Accidents 
caused to persons through the negligence of attendants 
in charge, or through defect in the mechanism. 

The laws of England from time immemorial have made it 
incumbent on individuals to exercise due and reasonable 
precaution so as not to cause harm or hurt to their fellow- 
creatures. If through the omission to do something which 
under the circumstances should reasonably have been done, 
or the doing of something which an ordinary person using care 
and intelligence would not have done, injury results, then 
an action for damages will lie. 


Negligence is the dominating factor in all Common Law 
claims. In all references to a person's civil liability the 
word " negligence " figures prominently. 

Generally speaking, a cl^im at Common Law cannot be 
founded unless the plaintiff {i.e., the person bringing the 
action) can substantiate it by bringing evidence to prove that 
the defendant {i.e., the person sued) has either himself, or by 
proxy been guilty of negligence. 

I use the word ''generally " in a special sense, for there are, 
as we shall see later, instances where negligence cannot be 
definitely proved, yet, notwithstanding, the plaintiff may be 
successful in an action. I refer to what is termed prima facie 
negligence, expressed by the Latin maxim res ipsa loquitur. 


Negligence has been defined by one writer as : '* The absence 
of care according to circumstances." 

The word when apphed to actions of tort has a very wide 

In order to illustrate the principle involved, and to make 
the matter clearer to the minds of the student, let us consider 
a few cases that have been adjudicated upon by the Courts. 

Justice Wills, in the case of Vaughan v. Taff Vale Railway 
Company, defines the word in a very lucid manner. He says : 
*' The ideas of negligence and duty are strictly correlative, and 
there is no such thing as negligence in the abstract. Negligence 
is simply_neglect of some care which we are bound by law to 
exercise towards somebody." 

' Tt is a rule that damage to be actionable must be the 
ordinary and probable consequence of the act complained of ; 
in other words, the act must be '' the proximate cause " of the 

For example, Justice Bramwell, in the case of Holmes v. 
Mather, which was an action brought to recover compensation 
for an injury caused through being knocked down by a horse 
which had been startled by the barking of a dog, says : '' For 
the convenience of mankind in carrying on the affairs of life, 
people as they go along roads must expect or put up with 
such mishaps as reasonable care on the part of others cannot 

In another case, Hammock v. White, a man was riding a 
horse to try it. The animal became restless and lashed out 
and injured a man. The rider was taking every precaution 
to avoid an accident. The Court held the rider was not liable. 

It will be seen from this and the preceding case of Holmes v. 
Mather that a person exercising reasonable care is not respon- 
sible at law for damage, if he can prove that the act complained 
of arose out of circumstances over which he had no control. 
It may so happen, however, that {res ipsa loquitur) the 
mere happening of a disaster may be sufiicient to raise a 
presumption of negligence. In a case of this kind the onus is 
thrown upon the defendant to show that there was no 
negligence on his part. 

Example : A gentleman was walking down a street when 
a barrel of flour fell on his head from out of a window in 
premises belonging to a flour merchant. In an action 


brought by the injured man it was held '' that the unexplained 
fact of the accident happening at all was, prima facie, evidence 
of negligence " {Byrne v. Boadle). 

In cases where the evidence brought by the plaintiff is 
consistent with either negligence or no negligence the Plaintiff 
fails in establishing his case. 

Example : A woman endeavoured to cross a thoroughfare. 
She had passed in front of an omnibus, and, becoming fright- 
ened at the near approach of another vehicle, stepped back 
and was knocked down. These facts fail to reveal any 
evidence of negligence on the defendant's part. (Cotton v. 

Before leaving this part of our subject it is desirable to 
refer briefly to the doctrine of contributory negligence, which 
is based on the maxim, volenti non fit injuria, i.e., " the man 
who is the cause of his own hurt merits nobody's sympathy." 
If, says Domat, '' One goes across a public cricket-ground 
whilst play is going on and is struck by a ball and hurt, the 
person to blame is not the innocent striker of the ball, but he 
who imprudently sought out the danger." 

On the other hand, if in spite of the negligence of the 
injured person, the person causing the injury would by 
ordinary care have averted the consequences of the plaintiff's 
negligence, then the plaintiff is entitled to recover compensa- 
tion notwithstanding his own negligence contributed towards 
the accident. 

The reader should also refer to the definition of Common 
Law given in the Workmen's Compensation section (page 3). 

With this brief reference to the civil liability of an individual 
to the public we will consider in detail the various insurances 
before mentioned. For the purpose of convenience we will 
take them in the order in which they appear. 


The necessity for insurance to cover the liability for injury 
to the public by horse-drawn vehicles will be appreciated 
when we take into consideration the number of accidents 
arising from this cause. 

The official return for England and Wales from 1st May 
to 31st Dec, 1998, gives the number of personal accidents, 
fatal and non-fatal, caused by horse-drawn vehicles as 9,440. 


Out of this number the injuries in 429 cases proved fatal. 
The remarkable feature is that the City of London and the 
Metropolitan Police District account for no less than 4,813, 
or more than one-half of the total for England and 

In this connection it is interesting to recall a statement 
made by Dr. Farr on the mortality from violent causes, 
which appears in the Registrar General's report for the year 
1856. He says— 

" The progress of science has created new forces often fatal, and has 
produced new substances, of which our forefathers had no knowledge. 
Machinery is organised on a large scale, so that the lives of numbers of 
men are liable to be destroyed, not by malicious intent, but by the 
negligence of other men who have their lives in charge." 

He goes on to add that 1,107 persons are killed annually by 
horses and horsed conveyances, more than double the number 
killed on railways. 

It was about the year 1880 that a scheme of indemnity 
against this risk was introduced to the public. In that year 
there was offered an insurance '' indemnifying the owners 
of horses and vehicles against their Common Law liability 
for accidents arising through the negligence of their drivers." 
The scheme, we are told, readily found favour. Since that 
period most companies have added this class of insurance 
to the list of risks undertaken by them, and there are now 
very few companies transacting accident insurance that do 
not '' write " the business. 

We will now consider — 

{a) The form of application for an insurance. 

(b) The method of calculating the premium. 

(c) The liability covered. 

(d) Special Act of Parliament relating to the rules of the road. 

In considering whether or not a risk is one which can be 
accepted at normal rates, or only on special terms, if at all, 
particular attention should be paid to the answers given in 
the proposal form, especially those having reference to the 
past claims experience. Usually companies insist on a report, 
either from the agent or their inspector dealing with the case, 
on the morale of the risk, as this is always an important factor 
in deciding whether or not the insurance is one the company 
can underwrite. 

3— (1508) 



Proposal Form. 

I. Full Name of Proposer. 

2. Address. 

3 Occ upation . 

4. State maximum number of Drivers in your employ. 

5. State Total Number of your Vehicles and Horses. No. of Vehicles. 

. No. of Horses . . 

6. Do you requir e Accidents to be co ered when you are driving ? 

7. Have you any Drivers in your employ under i8 years of age ? 

8. Description of each 
Vehicle to be insured. 

Date of 



Description of each 
Horse to be insured. 
(Name, Colour & Sex) 





Are the above-mentioned vehicles in a perfect 
state of repair, and where can they be 
inspected ? . . 

Have you any other Vehicles or horses ? If 
so, give full details and state why they are 
not to be insured 

Are any of your Animals vicious, or liable to 
bolt, or have they ever to your knowledge 
bitten or kicked any one " 

(a) Have any claims been made upon you or 
by you in connection with the risks you are 
now insuring:, or {b) have any of your 
horses met with an accident ? If so, give 
full particulars, with dates. . . . 


If the risk has been previously Insured state \ 
with what Company or Companies, and ' 
whether renewal has been declined or an f 
increased rate required 


Any further information which may tend to \ 
vary the risk . . 


Amount of 

..,_,., ^ , . £ one accident 

(A) Third Party Indemnity ^ ^^^^^ Indemnity for year @ . . p. driver. 
*(B) Accidental Damage to own Vehicles @ . . „ 
*(C) Accidental Fatal Injury to own Horses . . . . . . @ . . „ 

Risks " B " and " C " cannot be separately 

insured but must be combined with " A." Extra for 

Less for 

* Strike out if not required. £ 

-^^ the undersigned desire to effect with the an indemnity 

against Risks as set forth above, in the terms of the Policy used in this class of Insurance 
And-^ — agree to render at the end of each period of insurance a statement in the form required 

of the maximum number of drivers employed by ^^ and to pay premium on any excess of 

the number estimated. And warrant that the above statements are true and agree 

we we 

that this proposal shall be taken as the basis of the proposed contract between-^ and the 
said Company and shall be deemed to be incorporated in such contract. 

Date Signature of Proposer 

The Policy will not cover accidents to passengers while being con veyed by Proposer's vehicles. 

The Company reserves the right to decHne any proposal and no liability is undertaken 

until the Proposal has been accepted by the Company and the Premium paid. 



The premium charged is at the rate of so much per driver, 

based usually on an indemnity of — 

^100, any one accident ) ^^^ ^^^^ ^^.^^^ employed. 
£100, any one year j ^ -^ 

The rate per £100 of indemnity depends upon the nature 
of the business carried on, the locality, i.e., London, suburbs, 
or provinces, and the claims experience during the past three 

It is now the practice of a number of companies to pay law 
costs incurred in contesting a claim, in addition to the fixed 
amount of the indemnity specified in the policy. 

Liability Covered. 

The ordinary drivers' policies issued by most companies 
indemnify the insured against his legal liability to pay com- 
pensation for injury to the person or property of third parties 
caused through his negligence or that of his drivers, or from 
kicks and bites of horses, or goods falling off vehicles, or from 
loading and unloading of vehicles. 

If desired, damage to the insured's own vehicles and harness 
and fatal accidents to his horses may be included for an 
additional premium. 

It is important to note that the policies are yearly contracts, 
and the company is not bound to send out a notice inviting 
the renewal at the expiration of any year of insurance. Further, 
there is generally a clause inserted in the policy, called the 
cancellation clause, whereby the company can cancel the 
contract at any time on giving fourteen days' notice. In this 
event the company agrees to return a pro rata portion of the 
premium for the unexpired time. Some companies give to 
the insured the same right to cancel the policy, but in these 
circumstances he has to pay the company premium for the 
time on risk according to the rates in force for short-term 

Our final point for consideration is the rules and regulations 
governing the use of vehicles on a public highway. These 
have been very briefly summarised, but should the reader 
care to study them further the full text is to be found in 
''The Highways Act," 1835, 5 & 6 Wilham 4th, c. 50, 
Sect. 78— 


" If any driver shall ride upon any vehicle upon a highway without 
having the horse under control, or if he shall leave his vehicle on a 
highway so as to cause obstruction, or if the driver shall not keep 
to his left or near side of the road, or if he shall drive furiously so as to 
endanger the life or limb of any pedestrian or passenger ; then every 
person so offending shall be liable, in addition to any civil action to 
which he may make himself liable, to a fine not exceeding Five Pounds 
if he be the Driver only, or Ten Pounds if the offender be the owner 
of the vehicle, or in default of payment of the fine, he may be kept to 
hard labour for any time not exceeding six weeks." 


The motor car industry is of comparatively recent 
development in this country. 

Previous to the passing of the Light Locomotives Act, 1896, 
the sight of a motor car on the highway was unusual, largely 
owing to the fact that the law with regard to the use of loco- 
motives on the highway prior to the above date was very 

Looking back at the conditions prevailing at that period, 
we are inclined to think that they were not merely stringent 
but ludicrous ; by reason of them the development of the 
motor car industry in this country was retarded. 

Prior to the passing of the before-mentioned Act a locomo- 
tive might not pass along a public highway at a greater speed 
than four miles per hour, and then only if accompanied by 
an attendant who had to walk in front of the vehicle with a 
red flag. 

The paragraph referring to this in the Highways & 
Locomotives (Amendment) Act, 1878, reads as follows : 

" Secondly, one of such persons while the locomotive is in motion 
shall precede by at least twenty yards the locomotive on foot, and shall 
in case of need assist horses, and carriages drawn by horses, passing 
the same." 

With the passing of the 1896 Act and the subsequent Act 
of 1903 a great change has come over the motor car industry, 
and with it an obvious need for insurance. 

Apart from the risk of accidents, which are inseparable 
from such a mode of locomotion, however much care is 
exercised by either the owner or the driver, the necessity for 
protection by insurance is increased in consequence of the 
prejudice against motor cars, which happily is not so great 
now that the public generally are getting more used to this 



mode of travelling. According to official returns the numbers 
of accidents caused by mechanically-propelled vehicles in the 
City and Metropolitan Police District from the 1st May to 
31st December, 1908, were — 

Fatal accidents 
Non-fatal accidents 


Insurance facilities have been extended so that practically 
all needs are met by the present-day composite policies. 
These contracts are termed in insurance parlance *' blanket " 
policies, and cover the following benefits — 

(1) Claims by the public (without limit as to amount) for personal 

injury and for damage to property. 

(2) Accidental damage to the car up to full value of car. 

(3) Fire, Explosion, and Self-ignition ,, ,, „ ,, 

(4) Burglary and Theft ,, ,, ,, ,, 

(5) Damage in Transit ,, ,, ,, ,, 

The comprehensive policy is usually issued in connection 
with the insurance of cars used for private or professional 
purposes, as distinct from vehicles used for trade purposes. 

Proposal Form. 

The following questions are to be found in most forms 
of proposal — 

I. Name and address and occupation of Proposer. 

2. Type of Car and date of make. 

3. The horse-power, and 

4. Value of Car. 

5. Will the Car be used solely for Private 
Purposes ? 

6. What is the Motive Power ? 

7. Is the Car in a perfect state of repair ? 

8. Will the Car be driven by the Owner or by 
his paid Driver or both ? 

9. Give details of — 

(a) Accidents to any Car owned by you 
lb) Claims made by you on this or any other 
Company, in respect of any Car owned by 


10. Have you been or are you now insured in 
respect of a Motor Car ? If so, please state 
name of Company. 

II. Has any Company — 

(a) Declined your Proposal ? 
(6) Refused to renew your Policy ? 
(c) Required an increased Premium on 
Renewal ? 


12. Have you any Insurances with this Company ? 
If so, give particulars. 




In assessing the premium for composite policies, some 
companies have regard both to the horse-power of the car, 
as well as the cost price, others base their rates on the horse- 
power alone. The premiums vary according to the company, 
but for the benefits already referred to, the following premiums 
may be taken to approximate to the present-day rates of 
most first-class offices — 

-Full indemnit}^ £S per ann. 
;£12 „ 

If the insured agrees to bear the first £5, ;f 10, or ;^25 of each 
claim under each section, then the above premiums are reduced 
as follows — 

6 horse power cars- 

Where Owner 
bears first £5. 

Where Owner 
bears first jf 10. 

Where Owner 
bears first ^^25. 

6 horse power cars 
12 ,, 
20 „ 
30 „ 

;i7 ;^6 ;^4 

11 50 10 00 700 

16 10 15 10 11 10 

21 5 19 10 15 10 

Where the Third Party or Public Liability risk only is 
covered the rates would be approximately — 

6 horse power car — ;£ 1,000 indemnity, £5 per ann. 
12 „ „ „ £6 ,. 

20 „ ,. „ ;^8 „ 

30 „ „ „ £S 10s. „ 

A reduction in the renewal premium to non-claimants of 
10 per cent, is usually allowed, as is also a special reduction 
of 5 per cent, if the car is driven only by the owner. 

Policy Conditions and Limitations — ^Third Party Risk. 

The liability of the insured for claims by the public is 
covered by most companies irrespective of the amount, as are 
also the legal costs incurred by the company, or with its 
consent, in contesting actions brought against the insured. 
The company is only responsible in respect of accidents 
arising whilst the insured or his duly authorised and paid 
driver is in charge of the car. 

Accidental Damage to Car. 

The liability of the company is limited only by the value 
of the car in case of total destruction. In cases of damage 


they may either re-instate or settle in money for the cost 
of repairs. 

Under most pohcies the insured is allowed up to a certain 
specified amount to have urgent repairs done to his damaged 
car, without waiting for permission from the company. 

It is a condition precedent to the right to claim that the 
insured shall keep the car in good condition ; damage due to 
wear and tear and damage to tyres (unless it arises as a result 
of and is part of general damage to the car itself) are not 
usually covered. 

Some companies undertake to pay for mechanical break- 
downs (with certain reservations), and also the cost incurred 
in getting a damaged car to the repairers. 


Claims for total loss by Burglary, Housebreaking, or Larceny 
only are recognised. Accessories, unless stolen with the car, 
are not generally covered in the event of loss. 


Accidental damage to car sustained during transit by Road, 
Rail, Sea, or inland Waterway up to full value at time of 
damage, is covered by the policy. 

Fire and Explosion. 

Compensation payable up to full value of the car (including 
accessories thereon) when caused by Fire, Explosion, 
Self-Ignition, or Lightning. 

Notice of Claim. 

All policies contain a clause as to giving notice of an 
accident, the conditions varying with each company. Some 
require notice to be sent within a certain specified time, others 
immediately the accident comes to the knowledge of the 
insured, or as soon afterwards as practicable. 

Trade Risks. 

The rates for Trade Vehicles vary considerably according 
to the purpose for which the motor is used ; an extra premium 
is generally charged when a trailer is employed. 

The conditions of these policies are much the same as those 
of private risk policies. 


Continental Risks. 

It is customary for the Companies to indorse these poHcies 
to apply to the Continent of Europe, provided the insured 
is responsible for the first ten pounds of every claim under 
each section, and that the Company's total liability under all 
sections does not exceed one thousand pounds in respect of 
any one accident. 

Subrogation Clause. 

All companies hold to themselves the right to take proceed- 
ings, in the name of the insured, against any third party to 
recover any amount paid by them under the policy for personal 
injury or damage. 

The insurance is granted for one year only, and therefore 
there is no obligation upon the company to renew it. 

The policy does not extend to cover damage to bridges, 
roads, or structures beneath roads, caused by the weight of 
any vehicle. 


The term General Third Party comprises all risks of 
accidental injury to, or damage to the property of, the public 
arising out of the business of the insured or caused by his 
workmen in the performance of their duties (except Drivers, 
Motor Cars, Lifts, Cranes, and Hoists), which risks are generally 
provided for by separate insurance, although for convenience 
the two last named are often covered in conjunction with the 
General Third Party risk. 

Most companies are prepared to issue policies for the 
following risks — 

Builders and Contractors, i.e., Risks incidental to their 
building operations. 

Premises' Risks, i.e., Accidents caused to the public on, 
in, or about a shop or factory. 

Liabilities of Public Authorities, i.e., Accidents 
happening through defect in the ways, works, or plant. 

Liability Covered. 

The indemnity granted generally takes the following form — 

Indemnity I. — Against any claim for accidental bodily injury to 

persons not in the service of or acting on behalf of the Proposer or 


other employer engaged on the same contract as the Proposer, 

caused by workmen in his service in any of the occupations and 

at any of the places mentioned in the schedule, or by any defect 

in the ways, works, machinery, or plant connected with, or used 

in, the business at any of the places mentioned in the said schedule. 

Indemnity II. — Against any claim for accidental damage to property 

other than property actually the Proposer's own, or held in trust 

by the Proposer or m his custody or control caused in manner and 

place as aforesaid. 

The above indemnities do not include injuries or damage caused by 

lifts for goods or passengers, nor by horses or vehicles, nor by fire (which 

risks are insurable under special policies), nor by explosion nor damage 

to any building or land caused through any sewerage, building, or other 



The rate depends so much upon the circumstances of each 
individual case, and the amount of the indemnity required, 
that it is impossible to give more than a very rough idea as 
to the premiums charged. There are two methods of rating 
factory and shop risks. 

(a) A charge on the wages paid, a charge on the indemnity, 

a charge for each crane or hoist. 
(h) A charge per shop. 
Retail Shops. 

For ordinary retail shops, where not more than five or six 
hands are employed, in which the following businesses aie 
carried on, the rate charged ranges from 15s. to £\ for each 
shop for an indemnity of £100 for any one accident, and £2S0 
for any one year, i.e. — 

Grocers, Drapers, Cheesemongers, Oil and Colourmen, 
Butchers and Greengrocers, according to locality, are '' rated 
up,'' on account of the extra risk of injury and damage from 
persons slipping over pieces of fat and green-stuff which are 
often carelessly allowed to lie about. 


In Builders' and Contractors' risks the premium is based 
on the wages expended during any given year of insurance, 
and in normal hazards rates are from 5s. per cent, to 7s. 6d. 
per cent, on the wage-roll. The indemnity granted for such 
premium is approximately £100 for any one accident, and 
£250 during any one year of insurance. 


For larger indemnities an extra charge of 20s. per cent, on 
the indemnity for any one year is usually made. It is general 
for the indemnity for any one accident not to exceed half that 
for the year. 

Municipal Authorities. 

The risks in connection with public authorities are of a much 
more complicated nature and require to be very carefully gone 
into by the company before the insurance is granted. This 
will be patent to the most casual observer. 

The law in regard to Municipal Authorities is different from 
that in respect of individuals. The latter are responsible 
for sins of omission as well as of commission, whereas Municipal 
Authorities are only responsible for injury or damage arising 
out of a ** misfeasance," i.e., the negligent performance of 
a duty, as distinct from an act of '' nonfeasance," i.e., the 
non-p3rtormance of a duty. For instance, if a roadway is 
relaid or repaired by a public authority in a negligent manner 
and an accident results in consequence, this would amount to 
'' misfeasance," and an action would lie against it. On the 
other hand, if the public authority merely neglected to repair 
a defect, such as where the crown of the road becomes worn 
so as to leave a hole, it could not be sued for damages. 

Again, if a public body, for the purpose of or in the actual 
execution of any repairs to the roadway, leaves any materials 
on the highway, or an open trench without proper protection, 
then it is a misfeasance, and there is a liability for damages. 

An important fact to be borne in mind in bringing an 
action against a local authority is that the action must be 
commenced within six months from the time of the accident 
causing the injury or damage, otherwise the plaintiff is 
non-suited. Cases have come under the personal notice of 
the author where this has happened owing to those in charge 
of the case overlooking the time limit. 


The term *' lift," and I am using the word in a very com- 
prehensive sense, so as to include within its scope Passenger 
and Goods Lifts, Elevators, Cranes, and Hoists, plays a very 
important part in our daily life, both private and commercial. 

No modern hotel or business premises is regarded complete 
unless it possesses a passenger lift. 


Undoubtedly the advent of the American " sky-scraper '* 
into Enghsh building construction has created an imperative 
need for the services of the lift, and indeed it is difficult to see 
how business could proceed at the pace whicn it does to-day 
without this convenience. Especially is this so when the 
ever-increasing cost of rent compels the average merchant 
to *' soar to lofty heights " in order to get a suite of rooms 
suitable both to his business and his pocket. 

Risks coming under this heading may be enumerated as 
follows — 

Hydraulic (Goods and Passenger) Lifts. 

Electric do. do. 

Cranes (stationary and movable), Hydraulic and Steam. 

Hoists (inside and outside). 

Proposal Forms. 

In making application for insurance of a lift full particulars 
as to the class of lift, the motive power used, how the shaft 
and approaches are protected, the carrying capacity, etc., 
have to be given. In regard to cranes and hoists, information 
as to the location of the building, the position of the crane, 
the number of floors served, and its lifting capacity must be 

Liability Covered. 

Proposers for this class of insurance have the option of two 
kinds of policies — 

(1) Indemnity against the insured's liability to pay damages for 

accidental injury to persons (not in his employ) whilst in, 
or entering, or alighting from the car of the passenger lift or 
caused by any crane or hoist. LiabiHty for damage to 
property caused by cranes or hoists is also covered. 

(2) The above insurance, together with monthly or quarterly 

inspection of the lift or crane, and, if desired by the proposer, 
provision for the oiling, cleaning, and repacking of glands 
necessary in connection with the machinery. 

In all cases where the Third Party risk only is insured 
the company require the insured, under the terms and con- 
ditions of the policy, to produce at stated periods an engineer's 
report that the lift or crane, as the case may be, has been 
overhauled and that it is in good condition. This is a 
reasonable and very necessary precaution on the part of the 


Where the Inspection Risk is covered by a pohcy, the 
company report from time to time to the insured on the 
condition of the machinery, and advise him as to the necessary 
repairs required to be done. 


The indemnity granted under Passenger Lift pohcies is 
generally — 

;^ 1,000 any one person ; 

;^2,000 any one accident ; 

Unlimited in respect of any one year. 

The rates vary with the companies, but the following may 
be taken as a fair average — 

For lifts in private houses from ;^2 10 

Do. offices and flats ,. 3 10 

Do. hotels and public buildings ,, 5 10 


In addition to the above rates, a further charge per annum 
is made for inspection, etc., as follows — 

Monthly Quarterly 
service, service. 

(1) Inspection only of Uft from ;/;2 10 1 

(2) Inspection, cleaning and repacking 

glands, or new motor brushes ,, 4 10 2 

The premium for outside cranes and hoists depends much 
upon the merits of the individual risk, and as the circum- 
stances of each case vary considerably' it is not possible for a 
company to give a rate without first of all obtaining full 
particulars on a proposal form ; even then it is found expedient 
in some cases to have the machinery inspected by an expert. 



Personal Accident Insurance is the oldest of the casualty, 
insurances. The first successful attempt to popularise it was 
made in the year 1849. The preceding year, 1848, was memor- 
able in the history of railway travelling for the introduction 
of express trains ; to this accident insurance undoubtedly 
owed much. 


The idea, however, had its inception in the mind of man 
at a much eadier period, for we read that a reference is made 
in the sea laws of Wisby, dated 1549, to the practice of 
insuring by owners of ships the lives of the masters against 
the dangers of the sea. This appears to be the earliest form 
of accident insurance on record. 

Walford's Insurance Encyclopaedia records an example of 
insurance against accidents as applied to casualties of warfare. 

It says : In 1665 England declared war against the Nether- 
lands, and the Republic issued a proclamation announcing the 
amount of compensation which would be awarded to soldiers 
wounded in the service of their country as follows — 
For loss of both eyes 1,500 livres = £62 10 

one eye 350 ,, 


14 12 

both arms 1,500 ,, 


62 10 

right „ 450 „ 


18 15 

left „ 350 „ 


14 12 

both hands 1,200 „ 


50 10 

right hand 350 „ 


14 12 

left „ 300 „ 


12 10 

both legs 700 „ 


29 4 

one leg 350 „ 


14 12 

both feet 450 „ 


18 15 

one foot 200 „ 


8 7 

In passing, it may be observed that our present system of 
basing compensation for loss of limbs under our Personal 
Accident policies conforms to the method here adopted by 
the Republic of the United Netherlands. 

The modern English form of Personal Accident Insurance 
•was limited in its scope to railway accidents. The Railway 
Passengers' Assurance Co. (still famous in the insurance world) 
has the distinction of being the first office registered to under- 
take accident insurance. The contracts at this period took 
the form of railway tickets obtainable at the booking offices 
at the principal stations.^ 

The company was registered in 1848 and obtained Parlia- 
mentary powers by Royal Assent in June, 1849. Its opera- 
tions were limited to railway accidents, fatal and non-fatal ; 
the premium for first-class risks being ^1 per annum to 
insure £1,000 at death. No fixed amount was stated as 
payable for non-fatal injury, '' but such sum, such as shall 
be deemed reasonable compensation for such injury, as well 

1 The system of issuing these tickets remains in force. 


as for the pain of mind and body, and the loss of time and 
money consequent thfereon." These words were, however, 
found by experience to allow of such a wide interpretation 
that it was deemed expedient in subsequent tickets to specify 
a definite amount for non-fatal injuries. 

Between the years 1845 and 1849 twelve companies were 
projected, two only actually commencing operations, i.e., 
The Railway Passengers' Assurance Co., already referred to, 
and The Railway Assurance Co. 

The latter company was registered on the 16th day of 
December, 1848, but did not commence business until July, 
1850. It did not limit the scope of its insurance as did the 
Railway Passengers' Assurance Co. to accidents to the train, 
but covered accidents arising out of railway travelling. This 
was a considerable advance on the previous contract, as such 
risks as slipping on the platform, stepping into the train, etc., 
were included. The premium charged for this scheme was 
£2 2s. for the whole of life. 

In 1850 the Accidental Death Assurance Co. was founded. 
This office issued a much more comprehensive form of policy, 
providing payment for non-fatal injuries from any accidental 
cause. To this company, therefore, we largely owe our 
present system of personal accident insurance. 

The first prospectus issued by it contained the following 
paragraphs — 

" The numerous casualties to which the hfe of man is Uable are 
subjects of daily occurrence and observation. There is scarcely an 
individual who cannot refer within the sphere of his own family or. 
acquaintances to instances of sudden or accidental death, and few who 
cannot look back to their own providential escapes from imminent 

"To guard against the consequences of such a calamity whilst 
happening in the pursuit of business or of pleasure is the duty of every 
one, and this company will afford to all, according to their circumstances, 
the means of obtaining so desirable an object." 

The rates charged for non-hazardous risks were — 

£\ per annum for a ;f 1,000 policy covering death from accident ; 

£3 per annum for ^1,000 a't death, and £S per week during entire 

disablement, and an allowance not exceeding ;^10 towards the 

doctor's bill. 

After an unsatisfactory experience with regard to the 
allowance towards the doctor's bill — the original idea being 
that if the insured had good medical attendance he would 


recover more quickly, although in practice the reverse proved 
to be the case — it was abandoned and the weekly allowance 
increased to £Q. Any history, however brief, of this period 
of accident insurance which omitted reference to the difficulty 
the companies had to face in regard to the stamp duty on 
policies would be incomplete. 

It is on record that the Accidental Death Insurance Co. 
before commencing business applied to the Stamp Office 
authorities for information as to the amount of the stamp that 
should be affixed to policies, and the reply was the same as 
Life policies. What this meant will be better appreciated 
by the statement that on a £lfiOO policy the stamp necessary 
according to this dictum was ^d. Naturally the public were 
not disposed to pay this amount, and the companies could not 
afford to issue a policy free of stamp duty seeing that on some 
policies the premium only amounted to 10s. The company 
therefore issued policies without any stamp, with the full 
knowledge of the authorities. (Railway journey tickets were 
exempt from stamp duty.) 

The action of the Accidental Death Co. was a bold stroke. 
It was unlikely that all offices would adopt the same course, 
and difficult for them to conduct business under conditions 
which were inequitable, and which made advance impossible. 
The obnoxious regulation was rescinded and in 1853, by special 
Act of Parliament, Vic. 16 & 17, c. 59, the following stamp 
duties were levied — 

6d. for every ;^50 not exceeding ;^500 

Is. . „ ;^100 „ ;^1,000 

In 1870 the stamp duty was reduced to Id. 

In 1851 the Maritime Passengers' Insurance Co. was formed. 
This company was brought prominently before the public 
in connection with a claim under one of its policies for sun- 
stroke. The company disputed liability and an action was 
brought, which however resulted in favour of the defendant 

It was about this period that insurance companies began 
seriously to feel the effects of the large number of claims made 
upon them, many of which savoured of dishonesty. Bad 
policy drafting no doubt provided an opportunity for many 
of them. 

In 1856 the Norwich & London Accident and Plate Glass 


Insurance Co. was established in Norwich. It has since 
changed its name to the Norwich & London Accident Insur- 
ance Association. The company has had a most honourable 
and successful career and is to-day one of the foremost of the 
Accident offices. 

From 1862 accident insurance became more lucrative. 
The offices had gained more experience in classification and 
rating ; in fact the underwriting had been so successful that 
the Norwich & London along with the Railway Passen- 
gers agreed to allow 10 per cent, off the renewal premium 
after the policy had been in force five years. 

For nearly two decades accident insurance companies 
pursued the even tenor of their way. During this period, from 
1862 to 1880, twenty new companies are reported as having 
been registered. Many, however, never actually commenced 
business, and we need only concern ourselves with two of them. 

In the year 1866 the Accident Insurance Co. first saw the 
light. This company made a new departure and issued ^n 
insurance known as the Specific Compensation Class. The 
scheme provided a definite fixed amount of compensation for 
injuries which were scheduled, and £6 per week for injuries 
not so specified. 

The company continued to transact business until 1907 
(period of amalgamations), when it was absorbed by the 
Commercial Union Assurance Co. A perusal of the form of 
policy issued by this company in 1868 is very interesting and 
instructive, in that it reveals how well our forefathers in the 
brief space of about twelve years (1856-1868) had cultivated 
the art of hedging round the contract with restrictive clauses, 
(not without some justification perhaps), a practice which has 
continued until within recent years. The majority of com- 
panies have now considerably modified the restrictions, 
although some companies still retain most of them. A further 
reference to this will be made later. It would be an injustice 
to the companies transacting business at the period under 
review to omit to emphasise that they were, and had been 
exposed to a good deal of imposition and fraud, and it was 
undoubtedly due to the fact that the companies had suffered 
largely from the dishonesty of some and the cupidity of others 
that precautions were taken to protect themselves. 

The early history of accident insurance companies wovild be 


incomplete without reference to the '* Ocean/' which is now 
the premier accident company. This office was founded in 
1871 under the title of The Ocean, Railway, & General 
Travellers' Insurance Co., but is now known as The Ocean 
Accident & Guarantee Corporation, Ltd. Simultaneously 
with the coming into force of the 1880 Act, which had the 
effect of bringing a large number of companies into being, the 
Employers' Liability Assurance Corporation, Ltd., commenced 
business, mainly in the first instance for the purpose of trans- 
acting Workmen's Insurance. It afterwards undertook 
Personal Accident and other kinds of Accident business. As 
its present position clearly demonstrates, the company has 
been developed on sound lines. 

Between 1880 and 1897 about one hundred insurance 
companies were registered. 

In 1892 the Law, Accident, & Contingency Society was 
formed. It was the first company to issue an Accident policy 
combined with an insurance against certain specified diseases 
(about four in number) of an infectious nature. The policy 
also included the new feature of doubling the compensation 
payable in the event of death by accident to the railway train 
in which the insured was travelling. The company has 
since changed its. title to The Law Accident Society, Ltd. 

On the principle involved in the doubling of benefits for 
railway accidents comment is made further on in this section. 

Before leaving the historical part of the subject reference 
must be made to the policies issued by the Palatine Insurance 
Co., as they have an important bearing on the form of con- 
tracts now being adopted by most offices. This was the first 
company to free its policies practically from such aggravating 
restrictions which oftentimes gave rise to controversy, as the 
following — 

" This policy does not extend to or cover loss or disablement due 
to^any injury caused by or resulting from or happening during fits, or 
insanity, or duelling, fighting, or any breach of the law on the part of 
the assured, or caused by or resulting from war, civil commotion, 
popular riot or military or usurped power, or happening to the assured 
whilst committing a breach of the bye-laws of any railway, shipping, or 
any other passenger-carrying company, or whilst ballooning, or riding 
races on wheels or horseback, or steeplechases, or otherwise wilfully, 
wantonly, or negligently exposing himself to anj^ unnecessary danger 
(except in the endeavour to save human life) ; nor does it extend 
4— 1508) 


to or cover disablement arising from anything accidently taken, 
administered, or inhaled, or arising from natural disease or weakness, or 
exhaustion consequent upon disease (except disablement from such 
diseases as are specially provided for), or any surgical operation or 
medical treatment rendered necessary thereby, or arising from such 
disease, weakness, or exhaustion or surgical operation, or medical 
treatment, although accelerated by accident." 

As intimated in the earlier portion of this chapter some 
companies still retain these restrictive clauses ; the majority 
of the offices have, however, during the last year or so emulated 
the example of the Palatine, now merged in the Commercial 
Union Assurance Co., Ltd., in eliminating them from their 

We will now consider in retrospect some of the more 
important schemes that obtain to-day. The numbers are 
legion, and their names are peculiar, such as the XXth 
Century, Home Policy, Cosmos, Utopia, Peerless, Transparent, 
Lighthouse, etc., etc. 

We have seen that the modern personal accident insurance 
commenced with the issue of tickets covering the risk of 
railway travelling only ; then policies extending the com- 
pensation to all accidents however caused were issued, and 
as time went on a few infectious diseases were added. Follow- 
ing on this the compensation payable was doubled when the 
insured was injured as the result of an accident to the train 
in which he was travelling. As competition became keener 
companies vied with one another in adding to the list of 
diseases covered, until to-day there are about fifty insured 
against by most of the companies' '' combination " policies ; 
and, lastly, the '' All Sickness and Accident " contract has 
appeared in the prospectuses of a large number of companies. 

Under some contracts an allowance (as per a schedule) for 
medical expenses is made. 

Kinds of Policies. 

The appended table gives the approximate rates and benefits 
covered under — 

(1) Ordinary Accident policies ; 

(2) Combined Accident and Disease policies ; 

(3) All Sickness and Accident policies. 

The Ordinary Accident policy, as its title denotes, covers 
accidents only. 









Annual Premiums. 

Class I 

Class 2 

Class 3 . . . . . . 

£ s. d. 

£ s. d. 

£ s. d. 




Accident Benefits. 
Death, two limbs or eyes, | 

or one limb and eye . . / 
One limb or eye . . 
Permanent Total Dis-\ 

ablement, per annum / 
Temporary Total Dis- > 

ablement, per week . . j 
Temporary Partial Dis- | 

ablement, per week . . ) 
Disease Benefits. 
Temporary Total Disable- ] 

ment, all sickness, per r 

week ' 

Do. as {a) per week 

Do. do. as (&) per week V 

Total Blindness or Per- \ 
manent Paralysis . . / 




26 wks. 
I 10 
•126 wks. 

• nil 






52 wks. 
*i 10 
52 wks. 



• 6 

52 wks. 







26 wks. 
I 10 
26 wks. 


26 wks. 



* Double Benefits for Railway and Xramcar Accidents. 

(a) Typhoid, Typhus, or Scarlet Fevers, Smallpox, Measles, Diphtheria, Asiatic Cholera, 
Tetanus, Pneumonia, Pleurisy, Erysipelas, or Carbuncle (Anthrax). 

• (6) Aneurism, Angina Pectoris, Anthrax (Malignant Pustule), Apoplexy, Appendicitis, 
Asiatic Cholera, Bubonic Plague, Bursitis, Cancer, Carbuncle, Chicken Pox, Diabetes, Diph- 
theria, Dysentery, Epilepsy, Erysipelas, Facial Paralysis, Fistula, Glanders, Hemiplegia, 
Hydrocephalus, Hydrophobia, Landry's Paralysis, Acute Laryngitis (non- tubercular), 
Locomotor Ataxia, Malaria, Measles, Meningitis, Mumps, Myxoedemea, Acute Nephritis, 
Otitis, Suppurative Pericarditis, Acute Peritonitis, Perityphlitis, Pleurisy (non- tubercular), 
Acute Pneumonia (non- tubercular). Ptomaine Poisoning, Pyaemia, Quinsy (Suppurative), 
Scarlet Fever (Scarlatina), Septicaemia, Shingles, Small Pox, Sunstroke, Tetanus, Tetany, 
Typhoid Fever, (Enteric), Typhus Fever, or Whooping Cough. 

Under the combined policies it will be noticed that the 
practice to which reference has been already made of giving 
double benefit for accidents arising from railway and other 
specified contingencies is elaborated. The practice, it is 
submitted, is wrong in principle. 

At bottom the fundamental principle underlying Personal 
Accident Insurance, and indeed all insurances except Life, 
is virtually one of indemnity, notwithstanding the contracts 
as usually drawn up are not indemnities in the true sense of 
the word, inasmuch as the company agrees to pay a definite 
fixed amount of compensation in the event of injury for a 
given premium. 

In Theobald v. Railway Passenger, Baron Alderson, speaking 
of Personal Accident contracts, said : *' These are not 


contracts of indemnity, because a person cannot be indemnified 
for the loss of life as he can in the case of a house or shop.'' 

Legally this is correct. Nevertheless, in actual practice, 
immediately the principle of indemnity is overlooked by a 
company, and a person is permitted to insure against accidents 
for any amount he likes, not only are the fundamentals of 
insurance (Life Insurance excepted) infringed, but conditions 
are created under which fraud is easy. 

In support of this contention the following extract from a 
well-known writer is worthy of consideration — 

" It is not meant that the mere fact of receiving injury should entitle 
the insured to compensation. To pretend to pay for pain of mind or 
body would be absurd. The allowance for injury is intended to be 
paid when it is sufficiently serious to prevent the assured from following 
his usual occupation or pursuits and to serve as an indemnity for the 
loss thereby incurred." 

If we analyse the matter (and it may help the reader to 
appreciate the argument better to do so) it amounts to this. 
A person insures under a policy giving £6 per week for ordinary 
accidents and double for special risks. If he breaks his arm 
by falling down his own stairs he receives £6 per week, an 
amount which perhaps equals his actual monetary loss 
consequent upon the accident. If, however, he has his arm 
broken as the result of an accident to a tram in which he is 
travelling, he is entitled to £12 ; but this is not all. The 
Tramway Company may be to blame, in which event the 
injured person has a claim against it at Common Law, so that 
he actually receives £12 as well as damages from the Tramway 
Company ; clearly the man has made a profit out of the 

It may be stated, by way of parenthesis, that the system 
of double benefits is also inconsistent with and contrary to 
the general custom of officers not to issue a policy giving 
compensation for ordinary accidents in excess of the insured's 
earnings. Excessive competition is, of course, responsible 
for the inconsistency. 

To return from this digression to the Combination Policy. 
The benefits conferred by the inclusion of additional diseases 
in the present day prospectuses are often more apparent than 
real. A number of the diseases are almost unknown, at any 
rate in this country, and others fortunately are of rare 


The '' All Sickness Policy " next demands our consideration! 

This is a distinct advance on the Combined Policy with its 
schedule of diseases, but the present contracts are by no means 
perfect. The contracts issued by all companies are, with 
perhaps one exception, annual ones, and in this respect very 
unsatisfactory, for it is quite within the rights of an office to 
refuse to renew a policy should a person be unfortunate enough 
to suffer from a recurrent complaint. 

The non-forfeitable contract is undoubtedly the only one 
that can give entire satisfaction to the insured, and we can 
only hope the time is not far distant when insurance companies 
will see their way to issue such policies. Thus, the professional 
man and the tradesman will be enabled to make provision 
against the ills that generally beset_old_age. ^ In short, will be"* 
able to do for themselves in an adequate manner what is already 
possible to the working man through the medium of sick 
benefit societies. 


The premiums are charged in accordance with the nature of 
the proposer's occupation. Most companies have three 
classes, i,e., Ordinary, Medium, and Hazardous, and, generally 
speaking, the majority of insurable risks would fall within 
one of these — 

The Ordinary or 1st Class comprises professional and mercantile men 

i.e., bankers, solicitors, merchants, and the like. 
The Medium or 2nd Class comprises master tradesmen who 

superintend and direct their workmen. 
The Hazardous or 3rd Class comprises master tradesmen working, 

i.e., builders, butchers, licensed victuallers, and the like. 

An age limit is inserted in most prospectuses. Companies 
are usually prepared to accept proposals for Accident and 
Disease insurance froni healthy lives between the ages of 
sixteen and sixty. In Sickness and Accident insurance the 
limits are sixteen to fifty-five. 

Form of Proposal. 

The proposal being the basis of the contract between the 
person proposing and the company, it is of the utmost import- 
ance that all questions should be carefully read before being 
answered. Any concealment of material fact or mis-state- 
ment vitiates the contract and relieves the company of all 


The form in use by most companies approximates to 
the following — 

Name in full 

Occupation Age last Birthday Height Weight 

(// more than one state all.) 

(a Proprietor or Master superintending only. \ 

State whether - a Master superintending and occasionally working. L 

i a Working Master or Workman. j 

The Proposer must strike out the descriptions that do not apply to his case, or write 
particulars in the above space. 

Residing at 

1. Have you ever made a proposal for Insurances 

against Accidents or Sickness ? If so, to I 
what Company or Companies, and with j " 
what result ? J 

2. Have you ever been declined, or accepted on \ 

special terms for Life, Accident or Sickness 
Insurance, or has any Company cancelled I _ 
or declined to renew your Accident and [ " 
Sickness PoHcy ? If so, state by what 
Office or Offices, and when. / 

3. Have you ever suffered any Sickness or-\ 

Accident which confined you to the house I 
more than one week during the past ten j ' 
years ? If so, state particulars, and when.^ 

4. Have you received Compensation for Sick- ) 

ness or for Accidental Injuries ? If so, r - 
state particulars, with date or dates. -' 

5. Are you now to the best of your belief) 

perfectly well and in sound health ? j 

6. Has any near relative suffered from Con- 

sumption or Tubercular Disease ? If sOj 
give particulars. 

7. Have you ever suffered from " Fits," Paraly- 

sis, Gout, Hernia (rupture), Erysipelas, 
Pneumonia, Varicose Veins, Rheumatism, 
Lumbago, Pleurisy, Asthma, Bronchitis, 
Blood Spitting, Consumption or other Chest 
Disease, Diabetes, Heart Disease, or from 
any Nervous or Recurring Disease ? If so, 
state full particulars. 
/8. Have you ever suffered from Appendicitis- 
(Perityphlitis, Typhlitis), Peritor " ' "^ 
phoid (Enteric) Fever, Ulcer 
Stomach or Intestines, or Gall S 
9. Have you any Physical Infirmity, as, for- 
instance, Defective Eyesight, Lameness, 
Hardness of Hearing, etc. ? If so, give 

10. Do you engage in either Hunting, Steeple- ^ 

chasing, Polo, Football Playing, Cycle V - 
Rachig, Motor Cycling or Mountaineering ? ) 
{Ordinary Cycling is Allowed.) 

11. Have you any intention of going beyond the-\ 

limits of Europe ? If so, state to what I 
part of the World, for what period, and for J ' 
what purpose. J 

12. Are you a Total Abstainer from Intoxicating \ 

Liquors ? / ' 

13. Have you been exposed within the past six\ 

weeks to any infectious disease ? / ' 

iritonitis, Ty- 1 
Fleer of the j " 
all Stones ? J 


(ia) State Kind of Policy required, TABLE (c) Class 

{b) Sum to be Insured in case of) id) Annual 

Fatal Accidents with Corre- \ £ : : Premium £ : : 

sponding Benefits ' 


I, ^warrant that the above statements and 

particulars are true, that I am now in good health, and that I am, and have always been, 
of temperate habits. I declare that I have not withheld any information which is calculated 
to influence the decision of the Directors as to my eligibility for Insurance ; and further, there 
are no circumstances connected with my occupation, health, or habits of life, which render 
me peculiarly liable to injury from Accidents or Sickness, and I hereby agree that this 

DECLARATION shall form the basis of the Contract between me and the 

COMPANY, and I am willing to accept a policy subject to the Conditions 

prescribed by the Company therein. 

Dated at this ^day of , 19 

/ recommend acceptance of the above, having known the proposer years. 

• Agent. Proposer's Signature V 

Selection of Risks. 

A good deal of care is required by the company in the 
selection of proposals submitted to them. Answers to each 
question on the proposal should be insisted on and in language 
admitting of only one interpretation. 

The chief points to note in a proposal are — 

(1) Physical defects ; 

(2) The family history ; 

(3) Whether previously declined by any office for Life or Accident ; 

(4) Nature of any previous illness or accident, if any ; 

(5) The weight of the applicant. 

The question as to whether a proposer is suffering from any 
physical defect, such as defective eyesight or hearing, is an 
important one. A person suffering in this way is naturally 
more susceptible to accidents and therefore the extent of such 
defects should be carefully enquired into. 

It is also necessary, especially where disease or sickness 
benefits are covered under a policy, to investigate the family 
history of the proposer in order to ascertain whether any 
member of the family has suffered or is suffering from 
consumption or a tubercular disease. 

Where an applicant has already been refused by a first-class 
Life or Accident company it may be taken as a general rule 
that he or she is practically uninsurable, at least for diseases 
or sickness. 

The previous illness of a proposer must receive careful 
attention. For instance, if he has had pneumonia within a 
year it is generally wise to exclude that and kindred diseases, 


such as pleurisy, from the contract for at least twelve months. 
Discretion is also required in accepting proposals for sickness 
from applicants suffering from rheumatism and kindred com- 
plaints. Usually questions of this sort are submitted to the 
medical officer of the company for his opinion on the merits 
of the individual case. 

The weight of an applicant is an important matter for 
consideration, as in the event of the proposer being undersized 
or of excessive weight he is not a good risk. For instance, 
a man, say, forty years of age, 5 ft. 4 in. in height, and 17 stone 
in weight, would be viewed as a bad client for Accident 
insurance, inasmuch as his weight is much beyond the normal 
for a man of his height. 

Form of Policies. 

There is no set form of policies in use amongst the offices, 
but, speaking broadly, whilst they differ in detail the main 
principles are virtually the same. The company agrees to 
pay to the insured in the event of his sustaining any bodily 
injury caused by violent, accidental, external or visible means, 
certain capital amounts for death, loss of limbs or eyes, and 
a stated sum per week for a limited period during such time 
as the insurer is either wholly or partially disabled. Most 
policies provide for an annuity in the event of the insured 
being disabled for life by accident, other than loss of eyesight 
or limbs for which capital sums are provided. The policies 
are usually annual contracts, and the company is not bound 
to invite the renewal of the insurance. In this connection 
it has been held (Stockell v. Hey wood) that where a policy 
against accidents is for one year, renewable from time to time 
by consent, each renewal is a new contract, and not a renewal 
of the original contract. 

Definition of Policy Terms. 

Certain terms in connection with Personal Accident Insur- 
ance have by common usage acquired definite meanings, for 
instance — 

Accident as defined by most companies involves *' bodily 
injury caused by violent, accidental, external, and visible 

Death. The injury must be the proximate, sole and direct 


cause of death, which must take place within three calendar 
months after the accident. 

Permanent Total Disablement, Loss by physical separation 
of two Hmbs, or the complete and irrecoverable loss of sight 
of both eyes within three calendar months. 

Permanent Partial Disablement, Loss by physical separation 
of one limb, or complete and irrecoverable loss of sight of one 
eye, within three calendar months. 

Permanent Total Disablement (other than loss of eyes or 
limbs) to entitle to annuity means total disability and absolute 
incapacity for work for the remainder of life. 

Temporary Total Disablement means inability to attend 
to business of any kind. 

Temporary Partial Disablement arises when the injury 
sustained does not wholly and entirely prevent attention to 

Railway and Tramcar Accidents mean accidents to a train 
or tramcar by which the insured is travelling as a passenger. 

In concluding this chapter it will be interesting to refer 
briefly to one or two cases in which decisions have been given 
in law in regard to the interpretation of certain words and 
clauses in Personal Accident policies. 

The courts, as we have already seen, have placed a very 
wide interpretation upon the word '' accident " in connection 
with the Workmen's Compensation Act, but in connection with 
Personal Accident Insurance where the word is defined by the 
policy itself the decisions range round the qualifying words 
themselves. For instance, in the following cases quoted from 
Porter's Laws of Insurance, injury was held to be due to an 
accident within the scope of an Accident policy seeing that the 
injury was the result of violent, accidental, external, and 
visible means. 

Trew V. Railway Passengers ; Reynolds v, A ccidental. In 
both cases death resulted from drowning. 

Hamlyn v. Crown Accident Insurance Co,, 1893. An 
insured in the act of stooping broke a ligament in his knee. 

In contradistinction to the latter case is that of Clideys v. 
Scottish A ccident. A person was pulling on his stockings when 
he felt something give way in his inside ; death ensued ; the 
accident was decided not to be within the terms of the policy. 

Death from drowning has also been held to satisfy such 


words in a policy as : " In case the injury shall be the proxi- 
mate, sole, and direct cause of death or disablement." 
{Manufacturers' Accident Indemnity Co. v. D organ.) 

In the case of Isitt v. Railway Passengers and Umsdorf 
V. Accident Insurance Company, it was held that death 
resulting from pneumonia immediately following upon and 
resulting from exposure due to an accident came within the 
scope of an accident policy. When a disease resulting in a 
death is the eff act of an accident, so as to be a mere link in the 
chain of causation between the accident and the death, the 
death is considered to be attributable not to the disease but 
to the accident alone. 



The term Guarantee Insurance is inseparably connected 
in the minds of most people with that form of suretyship 
known as Fidelity Guarantee. This is, of course, the most 
popular and most useful form. 

The first attempt at Guarantee Insurance followed along 
this line. 

It is recorded in history that a form of Fidelity Guarantee 
Insurance was projected as far back as 1720 (a period ever to 
be remembered by the South Sea Scheme or, as it is 
commonly known, the South Sea Bubble). The scheme 
had for its object the insuring of loss sustained by masters and 
mistresses as a result of thefts by their servants. The project 
was made known through the press, and the public were 
invited to take up shares in the concern on the following 
conditions : Each ^f 1,000 share to be subject to a payment 
on application equal to 6d. per cent. ; calls made should not 
in all exceed 10s. per cent, during the first year. No one 
person was permitted to subscribe for more than 3,000 shares. 

The first serious attempt to popularise Fidelity Gua- 
rantee Insurance on modern lines, however, was made in 
1840. In this year The Guarantee Society, of 19 Birchin 
Lane, London, E.G., was founded. 

Its proprietors set forth the objects of the Society to be — 

" To obviate the defects of the system of suretyship by private 
bondsmen, which is universally acknowledged to be attended with 


various inconveniences and objections, instances have constantly- 
occurred in which persons of the highest respectabiUty have been 
obUged to forego valuable appointments, from either the great difficulty 
of obtaining security, or a repugnance to place their relations or friends 
and themselves under obligations involved therein. 

" The Society undertakes on the payment of a small premium per 
cent, per annum to make good in case of default by fraud or dishonesty 
any losses which may be sustained to an amount specifically named 
and agreed upon in their policy, and by such means obviate the necessity 
for private sureties as well as the obligations arising therefrom which 
often proves as prejudicial to the best interests of the employers, as 
to the party seeking guarantee." 

In 1842 a special Act of Parliament was passed, confirming 
the Act of 50 George III, c. 85, which made it incumbent upon 
holders of Government offices to find sureties, and making it 
lawful for the Lord High Treasurer and Commissioners of the 
Treasury to accept the bonds granted by the Guarantee 
Society in lieu of personal sureties previously in vogue. 

Undoubtedly such recognition by Parliament of an Insur- 
ance Bond greatly enhanced the value set upon it by the 
commercial community and acted as a stimulus to the business. 

During the next thirty years a score or more companies 
were founded, some of which only transacted business for 
a brief space ; several of the later ofiices combined Life 
Assurance with the Guarantee for Fidelity. 

The necessity for an insurance of this kind as a protection 
to an employer is unfortunately only too often demonstrated 
by cases, which must have come under the notice of most of 
us, of persons of previous good character who have been 
tempted to misappropriate the money of their employers. 

The term Guarantee is of wide application inasmuch 
as all insurances are guarantees in one form or another, but 
the term is here used to designate in particular those insurances 
which have to do with the due performance of duties pertaining 
to positions of trust. 

Up to recent years it was the practice of persons taking 
up positions of trust to furnish their intended employers with 
sureties (oftentimes friends and relatives) as a guarantee of 
their integrity and the faithful performance of their duties. 

This method was not only unpleasant and embarrassing 
from the point of view of the person called upon to provide 
the sureties, but at the same time unsatisfactory from the 
employer's standpoint, the obvious reason being that the 


surety of a private individual is uncertain owing to his 
possible decease or bankruptcy. 

The object of Fidelity Guarantee Insurance as transacted 
by insurance companies is to remove the unsatisfactory 
features attaching to private suretyship, and in place thereof 
to furnish absolute protection for the employer, and relief 
to the person requiring the insurance from the necessity of 
placing himself under an obligation to his friends or relatives, 
which is often repugnant ; besides which a Guarantee Bond 
is the means of placing an employee on a much better footing 
with his employer. 

The argument in favour of an Insurance Bond as 
against a Private Surety is well put in the following extract 
from a pamphlet written in 1843 by the late Mr. C. Saunderson, 
for some years Deputy Chairman of the Guarantee Society. 

" In the discharge of trusts between parties united by daily friendly 
intercourse there is a natural repugnance to allude to a deed providing 
security for their faithful performance and proceeding on the assump- 
tion of the possibility of dishonesty in a friend in whatever station of 
life he may be placed. The instrument, therefore, loses much of its 
controlling power, and is less likely to prevent fraud than if the existence 
of the Bond was periodically impressed upon the minds of all parties. 
The annual notice which the Society issues to the Parties Guaranteed 
and to their Principal supplies this defect. It reminds the one that 
holding the security of a Bond it is his duty to examine and balance 
periodically the accounts of the Party Guaranteed, and to the other 
it recalls every year the remembrance of the obligation under which 
he is bound to a faithful discharge of the Trust he has undertaken to 
perform. It imposes no burthen upon the Principal unless an ordinary 
attention to his own interests can be so regarded, and it requires from 
the servant nothing more than strict integrity of conduct. 

" Not only therefore is a more complete security provided for the 
Principal, but the Society encourages the growth of a high moral 
feeling in one of the most useful classes of the community — those 
entrusted with pecuniary transactions on account of others ; and 
watches with vigilance any sign of the deficiency of such principles, 
or the existence of pernicious habits. 

" So convinced have many principals of well-established firms become 
of the great practical value of the position taken by the Guarantee 
Society, that they pay as a voluntary gift'to the individual the amount 
of premium required by the Society from the person who is the subject 
of the Guarantee." 

The Forms of Policies. 

There are three classes of Fidelity Bonds issued by most 
first-class offices-— 


(1) Commercial Bonds, for the guaranteeing of the fideUty of 
clerks, cashiers, travellers, managers, secretaries, and the like, 
engaged in industrial undertakings. 

(2) Government Bonds, for the guaranteeing of the fidelity of 
servants holding appointments under the Crown, i.e., Board of 
Trade, Local Government, and Post Office officials ; Customs 
House, Inland Revenue, and Excise officers ; officials of 
County Courts, and the National Debt Office, and the like. 

(3) Legal Bonds, for guaranteeing the fidelity of administrators 
in connection with Probate Court, receivers and auctioneers 
appointed by the Chancery Courts, and the like. 

Collective or Schedule Policies. 

In large firms where there are a number of employees to be 
guaranteed, a form of policy known as a Collective Policy 
is adopted. Such a policy contains a schedule in which the 
name of each employee is entered, and alterations can be 
made as employees leave and others enter the service, thus 
obviating the necessity for a number of individual policies. 
Under this system the premium paid for an employee who 
leaves the service before the end of the year of insurance can 
be applied to the insurance of his successor. Moreover, the 
premium charged is usually at a lower rate per cent, than on 
individual insurances. 


These vary according to the circumstances of each case, 
and as there are many questions which influence the rate it 
is only possible to give an approximate idea of the cost. 

Commercial Bonds. 

Bank and Railway Clerks . . . . . .from 6s. Od. per cent. 

Building Society Secretaries 

Commercial Clerks and Cashiers 

Secretaries and Managers of Public Companies 

Commercial Collectors 

Commercial Travellers (on salary and expenses) 
except those in connection with Wine and 
Spirits or similar trades, which are accepted 
at special rates of premium . . . . ,, 20s. Od. ,, 

Government Bonds. 

Official Receivers, Trustees, etc. (under Bankruptcy Act) from 2s. 6d. 
Bonded Warehousemen . . .... . . . . ,, 5s. Od. 

Collectors of Income and Assessed Taxes . . . . ,, 10s. Od. 

from 6s. 


„ 7s. 


„ 6s. 


ss „ 6s. 


„ 12s. 



Guardians andJBorough Councils when whole of staff is 

insured ". from 5s. Od. 

Rate. Collectors .. .. .. .. .. ,, 10s. Od. 

Special Contingency Guarantee Insurances. 

Besides the foregoing, which deal exclusively with the 
phase of Guarantee Insurance known as Fidelity Guarantee, 
the following are some of the special contingency risks in 
respect of which Bonds are issued by many of the leading 
offices — 

{a) Guaranteeing the repayment of Loans. 

(b) ,, ,, ,, Mortgages. 

(c) ,, due performance of Contracts. 
{d) Insurance of Titles (Leases, etc.). 

[e) Bad Debt (Commercial Credit) Insurance. This has been 

treated under the heading of Excess Bad Debt Insurance. 
(/) Issue Insurance. 
{g) Forged Transfers. 

Form of Proposal, etc. 

The questions asked by most companies on their proposal 
forms are substantially the same, and the form of policy 
adopted differs very little. 

It is important to note, however, that there is a great differ- 
ence between the proposal forms and the forms of policies in 
use in connection with Commercial Insurances and Government 

In regard to the latter, special proposal and policy forms 
approved by the heads of various Government departments 
have to be used by the offices whose bonds are accepted by 
the Government. 

It is, of course, impossible in a limited work of this kind 
to set forth all the forms in use. The proposal used for 
commercial risks mostly takes the form shown on page 57. 

The course adopted by the companies on receipt of a 
proposal for insurance, should the risk appear to the company 
to be a desirable one, is for special forms of inquiry as to the 
standing, both moral and financial, of the proposer, to be 
despatched to each referee mentioned thereon. 

The proposer's previous employers are also communicated 
with, and questions with regard to the length of time the 
applicant has been in their service, why he was leaving, or 
had left their service, and whether during his career with them 



I. STATE AT FULL LENGTH your Christian 
and Surname, and Place of Residence. 

•2. Age and Place of Birth. 

3. Whether Single, Married, or a Widower, 

4. Whether a Householder. 

5. Whether any Family ; if so (a) what number 
of Children ? {b) How many are wholly 

• • • dependent upon you ; if partially dependent, 

• • • how many and to what extent ? 

6. What is the amount of security required ? 

7. The nature of employment. 

8. What will be largest amount of " Cash in 
hand " at any one time ? 

9. (a) What amount of salary you receive in 
respect of this appointment ? 
(b) What other remuneration will you receive 
in respect of this appointment ? If travel- 
ling expenses allowed, state particulars. 

10. Whether you have any other business or 
calling, and the amount of income you 
derive from same. 

If so, give name and address of other 

II. Whether you are security for any person. 

12. (a) Were you ever bankrupt or insolvent, or 
did you ever arrange with your creditors ? 
If so, when ? 
(6) Are you now discharged, and in what 
manner ? 

13. (a) The amount of your private debts. 

(6) The amount of your trade debts, and all 
your other liabiUties. 

14. How and by whom have you been engaged 
during the last Ten Years ? 


From I to i with 
From I to i with 
From I to 19 with 
State why you left your last situation. 
Please Answer this Question Fully. 


15. The particulars of your Private Property, real, 
personal, or otherwise, whether in your 
possession, in reversion, or in expectancy. 

16. If you have applied to any other Guarantee 
Company ; the date, the name of the Com- 
pany, and the situation you then held. Also 
how your Proposal was disposed of ; and, if 
accepted, the Premium you were required to 

17. If you have previously applied to this Com- 
pany, state the like particulars. 

18. State full Name, Address, and Business of 
Employer for whom the Guarantee is required. 


they had found him to be of sober habits, or had suspected 
him of dishonesty or improper conduct. 

The intended employers are also asked to give full details 
of the duties involved in the position to be taken up by the 
applicant, the remuneration to be paid, the intended steps 
to be taken to check him in order to detect any irregularity. 

In view of the nature of Fidelity Guarantee Insurance the 
stringency of the inquiries that are made by the companies 
before accepting a risk is not surprising. 

Contract Guarantee Insurance. 

Walford in his Insurance Encyclopcedia, records the fact 
that the first company formed to write Contract Guarantee 
business was the Contract Guarantee Company projected in 
1852, and in commenting on the objects of the Company he 
says : — 

" The notion of providing for the due performance oi contracts by 
means of insurance may seem at first sight feasible, at least, to persons 
not practically conversant with the operation of finance. To those 
conversant with contracts and contracting it must seem impossible 
that such an idea could ever have been seriously entertained." 

It is true that the proposed scope of the operations of the 
Contract Guarantee Company covered a wider field than 
is thought desirable by the companies at present under- 
writing Contract Guarantee inasmuch as its proposal was to 
guarantee the due performance of contracts for goods, 
works, labour, etc. 

In passing, it may be recorded that the Contract Guarantee 
Co. never actually commenced business. 

The modern practice in connection with nearly all large 
works, especially in Government and Municipal undertakings, 
is to require a guarantee from the contractor for the due 
performance of the work, either in the shape of a Guarantee 
Bond from an insurance company, or the security of two 
private persons. 

The former method of furnishing the necessary guarantee 
is now largely resorted to for several reasons. 

Dismissing for a moment the insurance company, there are 
two ways open to a contractor for obtaining the required 
security : firstly, by approaching his friends ; secondly, by 
getting his merchants to stand as surety for him. 


The first is oftentimes an objectionable task. The second 
considerably curtails the freedom of the contractor in seeking 
an open market for the purchase of his goods, inasmuch 
as it is practically an understood thing where a merchant 
stands surety that the contractor is to obtain his materials 
from him, as a sort of quid pro quo ; being under an obligation 
he must submit to the merchant's charges although they may 
be in excess of the market prices. 

Having considered the question from the contractor's point 
of view, let us look at the position from the standpoint of the 
individuals placing the contract. An insurance company's 
bond is to them distinctly preferable, inasmuch as the risk 
of the private surety becoming bankrupt is always possible. 

The remarks of Mr. Walford, previously referred to, amount 
almost to prophecy, for the experience of most of the com- 
panies who have underwritten this insurance has been un- 
satisfactory, and so far as the writer has been able to ascertain, 
only a very few companies, some half-dozen or so, now 
transact the business. 

There are doubtless several reasons for the apparent failure 
of insurance companies to make this branch of insurance a 
success. The writer ventures the opinion that the two 
following reasons have played an important part in bringing 
about the unfortunate experiences which most of them 
have had. 

(1) The absence of an expert at the head of the department to 

whom all risks could be submitted and who by his practical 
knowledge would be in a position to appreciate the intricacies 
connected with all large undertakings. 

(2) The lack of enterprise on the part of the companies in creating 

a market for the better class of business ; as a consequence 
business with a distinct hazard has been attracted, and a 
selection against the company has resulted. 

The element of uncertainty which characterises all con- 
tingency risks is perhaps present in Contract Guarantee to a 
much larger degree than in any other class. The utmost 
care is required in the selection of the business and only a 
practical man is in a position to appreciate the many difficul- 
ties which can and do arise in connection with large 
engineering undertakings or the building of sea walls, piers, 
and harbours. 

5— (1508] 


The chief points which require the careful consideration of 
the guarantors before granting the indemnity are — 

(1) Is the financial position of the individual or firm to be 

guaranteed of a satisfactory nature ? 

(2) Does the contract to be signed by the contractor contain any 

clause which would militate against the contractor, and thus 
enhance the risk to be run by the Guarantor. 

(3) Are the prices charged in the Bill of Quantities such as will 

insure the contractors being able to carry out the work under 
normal conditions without risk of loss. 

This from the companies' point of view. What of the 
contractor ? 

Those who have had anything to do with the contracts 
required by local Authorities, etc., know how often there are 
clauses and conditions binding upon the contractor which are 
a positive hardship. It is here that an insurance company 
can be of considerable assistance to a contractor, as before 
agreeing to indemnify him, the contract is carefully gone 
into, and his attention drawn to any clause which might 
operate unfairly against him ; advice is given him in the matter 
of taking the question up with the Authority or firm for whom 
he is undertaking the work, often with the result that the 
clause is either waived or modified ; but where an amicable 
arrangement cannot be arrived at, and the point in dis- 
pute is of serious moment, the contractor is advised by the 
insurance company that they cannot grant a bond. Under 
these circumstances the contractor has to consider whether it 
will be to his advantage to undertake the work. 


It is impossible to give more than an approximate idea of 
the premium charged, as so much depends upon the merits 
of each individual case. 

There are two methods of basing the rate, i.e., on the 
amount of the bond required, which is generally 25 per cent. 
of the contract price, or on the full contract price. 

The rate per cent, charged under the former method is 
between £2 and £A ; but rates are now freely quoted on the 
full contract price and vary from 10s. per cent, to 20s. per cent, 
according to the class of work to be undertaken and the 
financial position of the firm, requiring the guarantee. 




This is one of the most useful and perhaps most popular of 
the contingency insurances. The thousand and one risks 
of damage to shop windows were realised by shopkeepers 
comparatively early in the history of casualty insurance, for 
we find that as far back as 1852 a company named the Plate 
Glass Insurance Co. was formed solely to transact this class 
of risk, which company commenced business in Lime Street, 
Cheapside, and, strange to say, notwithstanding the keenness 
of competition which has brought home to most companies 
the necessity for transacting all classes of insurance in order to 
conserve their connections, this company has continued the 
even tenor of its way and has contented itself with making a 
speciality of plate-glass insurance. It has so far justified 
the optimistic faith of those responsible for its welfare. What 
is perhaps still more strange in these days when offices rival 
one another in the building of palatial edifices and the promi- 
nence of their situations, the Plate-Glass Insurance Co. has 
remained at its original address in Lime Street. 

Up to 1875 about a score of companies were registered to 
transact this insurance. 

Most companies now include it among their contingency 

It is, perhaps, not altogether unnatural or surprising in an 
insurance of this kind where there cannot be, except in the 
event of a catastrophe such as an earthquake, any very great 
loss involving a large liability, that there should be formed 
among tradesmen Mutual Protection Societies. 

These exist in very large numbers in villages and small 
country towns, and the rate at which the insurance can be 
undertaken in these conditions is generally much lower than 
that at which a proprietary office can aftord to accept the 
risk, and consequently a large amount of good business is 
thereby prevented from finding its way on to the books of 
the latter institution. The objection generally raised to 
the small mutual insurance offices or Protection Societies can 
scarcely apply in regard to Plate -Glass insurance, for the 
reason previously mentioned, in that the risk of any very 
great loss is remote. 


That shopkeepers should readily avail themselves of this 
class of insurance is not to be wondered at when it is con- 
sidered how cheaply the cover may be effected, in proportion 
to the risk run by the insured. It will not need a very 
imaginative mind to realise the many and varied dangers to 
which shop windows are exposed, e.g., stone throwing by boys, 
the vagaries of drunken men, the falling of ladders used by 
shop assistants in dressing or cleaning windows, burglarious 
entries, motor cars and other vehicles getting beyond control, 
are a few of the causes of loss. 

The legitimate desire of tradesmen to display their articles 
for sale to the beit advantage has created a demand for ever- 
increasing size of the '* plate." By this factor, enhancing as 
it does the liability to breakage, the need for insurance is 
appreciably increased. 

Proposal Form. 

When it is desired to effect an insurance against this risk 
the applicant is requested to complete a form of proposal. 
The office, on receipt of the proposal, should the risk to be 
covered be a large one, usually instructs an expert to measure 
up the glass, and to value any special items such as facias, 
signs, and lettering. 

Among the questions to be found on most proposal forms 
are the following — 

(1) The nature of the trade carried on upon the premises. 

(2) Whether the premises are at the corner of a street. 

(3) What breakages have occurred during last twelve months. 

(4) Has the risk been declined by any company ? 

(5) Position of any cracked squares (not 'insurable). 

Approximate Rates. 

The following rates are, of course, only approximate, 
varying largely in accordance with the class of trade carried 
on, and the position of the premises — whether in a main 
thoroughfare or a back street, in a terrace, or at the corner of 
a turning. These and a number of other considerations, such 
as the quality of the plate, whether plain, silvered, embossed, 
or bent, have to be taken into account by the office when 
rating a risk. The market prices of glass at the time of 
quoting is an important factor in determining the rate to be 











£ s. d. 

£ s. d. 

£ s. d. 

10 feet 




20 „ 


1 2 

2 6 


2 2 

2 5 

5 5 



4 6 



6 6 

7 2 

17 10 


9 4 

10 6 

1 5 8 


12 10 

14 4 

1 18 6 



19 3 

2 11 


1 2 5 

1 5 3 


1 9 6 

1 13 2 

Note. — Flat glass above 100 feet superficial and bent glass above 
80 feet, as well as glass 13 ft. 4 in. long or 8 ft. wide (the largest ordinary 
manufactured size) is charged at special rates. 

Prices are constantly fluctuating, but in order to meet this 
certain tariff rates are formulated by the manufacturers, and 
these are subject, from time to time, to discounts varying from 
15 to 40 per cent. The following table, bearing in 
mind the proviso as to discounting, will give some idea of the 
price of various kinds of glass. 

Polished Plate Glass. 

In Plates containing 

not more than 







S. d. 

S. d. 

s. d. 

10 feet superficial 

1 10 


2 4 

20 „ 

2 3 

2 6 



30 „ 

2 5 

2 9 

3 3 


60 „ 

2 6 

2 10 

3 5 

80 „ 

2 7 




iOO „ 

2 8 

3 6 

5 ) 

Plates exceeding 100 feet super of 160 inches long or 104 inches wide 
at higher prices. 

The usual thickness of polished glass is about J inch, but 
where special thicknesses are required the following additional 
prices per foot will be charged — 

|th inch . . lOd. per foot additional. 

Ath „ .. 5d. 

i ,, selected, or ^ in. bare . . 2^d. per foot additional. 

f th „ . . 4d. per foot additional. 


The Policy. 

The poUcy of most first-class offices covers breakage from 
any cause except fire or explosion. 

Several of the larger offices undertake to replace broken 
glass within twenty-four hours. It will be readily seen how 
important this is from the shopkeeper's point of view, as a 
day or two longer delay might mean a big loss in the weekly 
takings ; the insurers not being responsible for any loss arising 
out of the interruptions of business, during the time inter- 
vening between the breakage and the replacement ; nor are 
they responsible to make good damage occasioned to the 
window frame itself. 

Besides insurance of plate glass-windows, most companies 
cover damage to lamps and facias (or name plates) outside 
shops, show cases, glass shelves, enamel and painted lettering 
on doors and windows. The insurance has been, in the main, 
restricted to plate as distinct from sheet glass, but in recent 
years there has been a tendency to cover glass other than plate 
in private house risks, the premium for such risks being 
regulated by the rental of the house. 

The policy is generally a yearly contract, and in some 
cases, like Fire Insurances, runs from a quarter day. 

The insurers hold to themselves the right under the pohcy 
to proceed in the name of the insured to recover the amount 
of the damage from any other person from whom the insured 
would be legally entitled to recover. The salvage (which is 
an important item from the company's point of view) is always 
the property of the insurers. 



The insurance of Travellers' Baggage was in vogue in the 
early part of the nineteenth century. It is one of the many 
boons which the practice of insurance has given to mankind, 
and although in degree of importance a minor blessing as 
compared with some of the other branches of insurance, yet 
it is the means of adding greatly to the relief, and therefore 
to the pleasures, of those who travel. 


As travelling increased, insurance companies made a 
special branch of this class of insurance. It was undertaken, 
in the early part of the nineteenth century, by the Maritime 
Passengers Insurance Company, founded 1851, also the 
Travellers and Marine Insurance Company, established 1845. 
At the present day it is underwritten by the majority of 

Policy Conditions. 

The insurance covers the Packages and Articles specified, by sea and 
land, and in all buildings, ships, places and situations during the period 
of insurance against fire, loss (including theft or pilfering), and damage 
caused by sea water. But the company will not be liable for deprecia- 
tion of, or damage to, any package or its contents, unless caused by 
sea water ; nor for any loss in respect of delay, confiscation, or detention 
by Custom House or other officials or authorities ; nor for any cash, 
bank notes, bonds, negociable instruments, title deeds, travelling 
tickets, coupons, or securities of any kind ; nor for sticks or umbrellas ; 
nor for jewellery, trinkets, watches, gold or silver articles, field or 
other glasses, unless the same shall have been separately specified 
and separately valued (the total value not to exceed ^40) ; nor for any 
claim whatsoever in respect of jewellery, and the articles above named, 
lost from, or in any registered baggage, nor for loose articles which did 
not at the commencement of the journey form part of the contents 
of any of the packages insured. 

It is an essential condition of the insurance that the whole of the 
Passenger' s baggage be insured, and for the full value. 

In the event of the loss of any package or part of its contents, the 
same will be paid for in proportion to the total amount insured. 

Bicycles or tricycles and their detachable parts will not be covered 
unless separately insured. 

Notice of any loss must be given as soon as possible to the Head 
Office of the company, or to the Agents through whom the policy is 
issued, or to the nearest of their representatives if the assured is 

In the event of claim the insured will be required to give reasonable 
proof of ownership of baggage and of loss sustained, and shall, if 
required, make an affidavit or statutory declaration in substantiation 
of any claim as provided in the policy or policies. 

It will be noticed that each package, trunk, or bag must be 
described in the proposal, and the approximate value of each 
stated ; jewellery, and such like articles, must be separcitely 
mentioned and specially valued ; and that it is an essential 
condition of the insurance that the whole of the baggage be 
insured and for the full value. 



Approximate Rates. 

14 dayb 

21 days 

30 days' 

45 days' 

60 days' 

75 days' 

90 days' ( Not 









pre- , exceeding 









mium ' 6 months' 

9 months' 

12 months' 







and preminm 










and duty. 

and duty. 

and duty. 

s. d. 

s. d. 

S. d. 

s. d. 

S. d. 

£■ s. d. 

£ s. d. 

i s. d. 

£ s. d. 

i s. d. 

jC20 .. 

I 9 

2 6 

3- 3 

4 3 

5 3 

o- 6 3 


12- 3 

16 6 


£30 .. 

2 6 

3 8 

4 9 

6- 3 

7- 9 

o- 9 3 

10 6 

i8- 3 

I 4- 6 

I 10 6 

£40 .. 

3 3 

4 9 

6- 3 

8 3 

10 3 

12- 3 

14- 3 

I 4- 3 

I 12 6 


£50 .. 


5 II 

7 9 

10 3 

12 9 

15- 3 

17 9 

I lo- 3 


2 10 6 

£75 .. 

5 II 

8 9 

II 6 

15 3 


I 2- 9 




3 15 6 

£100 . . 

7 9 

II 6 

15 3 

20 3 

25 3 

I lo- 3 

I 15 3 

3 o- 3 





A FORM of Bad Debt or Solvency Guarantee Insurance is 
stated to have been attempted nearly 170 years ago during 
the South Sea mania. 

The business is, however, only being written by a very few 

The excessive credit system in vogue to-day in nearly all 
branches of industrial pursuits undoubtedly makes for losses 
from bad debts. One of the greatest anxieties which a mer- 
chant has to face is that of bad debts, and an insurance 
which is the means of providing against such loss is therefore 
a boon to him, for however careful he may be, there is always 
the possibility, in times of trade depression, of his suffering 
heavily through his customers failing in business and 
consequently being unable to meet their liabilities. 

Excess Bad Debt Insurance as now practised provides 
only against abnormal debts. That is to say, the merchant 
has always to run a certain percentage of loss himself before 
he can call upon his insurers to make any payment under the 
policy. Generally speaking, he is in a position to, and does, 
if he works on proper business lines, make provision by 
creating a Reserve or Suspense Account to meet the normal 
losses which inevitably arise in all businesses, but it is when 
these losses get beyond the average that they become a matter 
of serious moment, oftentimes ending disastrously for him. 
It is then that the system of Bad Debts Insurance steps in 

accountants' indemnity 67 

and provides for the merchant a security which guarantees 
him against his capital being seriously depleted. 

The Policy. 

The insurers guarantee under the policy, subject to certain 
prescribed limits as regards the maximum of their liability 
for any one customer, to pay all losses incurred by the merchant 
in the course of his trading transactions over and above a 
certain specific figure, which, as has already been mentioned, 
he himself has to pay. 

The amount to be borne by the insured is always fixed by 
the insurers when the policy is taken out. The following 
example will illustrate the principle adopted. 

Suppose a merchant effects a policy for ^£5,000, his pro- 
portion of the losses being fixed at, say, ;£500. In the event 
of his suffering loss amounting to, say, ^3,500, the insurers 
would pay ;^3,000. 

Policies are issued for any amount up to ;f 10,000. 

The nature of the risk to be undertaken is such that it will be 
readily understood the enquiries made by the companies 
before granting a policy are of an exhaustive and stringent 
Proposal Form. 

Of the questions contained in the Proposal Form the 
following are the most important — 

(1) What are the losses, also turnover, for the past five years 

including the current year ? 

(2) Nature of trade carried on. 

(3) Names of countries where goods are sold. 

(4) The system of credit to customers. 

(5) What steps are taken to obtain references regarding new 

accounts ? 


The rate of premium charged varies according to the merits 
of the case. 


accountants' indemnity 

This class of insurance is one of the most recent to be added 
to the contingency risks undertaken by insurance companies. 
Lloyd's underwriters are credited with having first brought 


the matter before the pubHc, but no very serious attempt has 
been made to popularise the insurance. Seeing it is in an 
embryo state, it is not possible to predict with any certainty 
what developments may take place, but big things cannot be 
expected, as its boundaries are necessarily restricted. 
\ The object of the insurance, as its title implies, is to indem- 
nify auditors and accountants against their liability for loss 
/arising through any act of negligence, default, or error on the 
(part of themselves or their servants, in the conduct of their 

^ In view of the present-day condition of affairs, when a 
master is responsible at Common Law for all negligent acts 
of his employees, whereby an innocent person is made to 
suffer some loss, an insurance of this kind should appeal to 
the accountants' profession. However careful a firm of 
accountants may be in the selection of their staff, it is not 
possible to eliminate altogether the risk of a mistake occurring 
on the part of a clerk, however proficient he may be, seeing 
after all he is only human. The same remarks of course apply 
to the principals themselves, perhaps in a less degree, for 
reasons which will be obvious ; but when a mistake does arise 
the principals may find themselves involved in serious monetary 

It is submitted under conditions enumerated in the following 
instances that an action for damages would lie against an 

A firm of accountants are employed to examine periodically and to 
audit the books of a Building Society. The Secretary to the Society 
by manipulation of the books over a lengthy period misappropriates 
{5,000. Had the accountants performed their duties in a thorough 
and efficient manner it would not have been possible for so large an 
amount to have been misappropriated ; therefore lack of diligence in 
auditing the books would give cause for an action by the Society. 

Again — 

A firm intends to purchase the business of another ; an accountant 
is called in to value the business, and by negligent valuation the pur- 
chasers are led to pay more than the business is worth. The purchasers 
would seem to have a good cause of action against the accountant. 

Again — 

Accountants are instructed by a contractor to draw up a balance 
sheet. Through some carelessness on the Accountants' part the 


balance sheet shows the contractor to be in a much more substantial 
position than is actually the case. Relying on the report of the 
Accountant, the contractor enters into new contracts, which however 
he ultimately finds he cannot carry out owing to his mistaken position. 
The contractor might rightly claim to be indemnified. 

The Policy. 

The tendency of the offices at first was to hmit their habihty 
in respect of claims made or discovered during the continu- 
ance of the pohcy, or within six months of the lapsing thereof ; 
this limitation is now being gradually expunged from the 
contracts, so that insurers become responsible for any claim 
which may arise as the result of an act committed during 
the currency of the policy, irrespective of whether it is in force 
at the time the claim is made. 


As already mentioned, the insurance is in its infancy, and 
therefore it will be understood that offices have to feel their 
way carefully in the matter of rates until a sufficient amount 
of business has been written to enable an average to be 
obtained. Meantime each case has to be rated strictly on 
its merits. The approximate premium for a first-class risk 
would be from 2s. 6d. to 5s. for each person employed, 
including the members of the firm, and 10s. per cent, on the 
amount of the bond. 

The most important points which underwriters have to 
keep in view are — 

(1) The standing of the firm. 

(2) The length of time the business has been established. 

(3) The class of auditing clerks employed. 

(4) Whether any error has been made which might give rise to a 

claim or for which a claim has already arisen. 



Judging from the large number of policies written by Cattle 
Insurance Companies, this class of insurance is evidently much 
appreciated by the farming community. 

The term Live- Stock comprises within its scope, horses. 


cattle, sheep, pigs. The practice of Cattle Insurance dates 
back to antiquity. Watford's Encyclopaedia states — 

"In the insurance ordinance of Spain, promulgated 1556, there 
occurs the following — 

" ' In insurance made upon slaves or cattle it must be declared in the 
policy that it must be on them, otherwise the insurers run no risk {i.e., 
the said things are not insured), and if any beast is thrown overboard 
it shall not be brought into a gross average, but the insurers shall 
satisfy the loss.' " 

Evidently all that the insurance covered was the sea risks, 
and not a general insurance against death from disease or 

A scheme was propounded in the reign of Queen Anne 
for the insurance of horses, whether dying natural deaths 
or stolen or disabled. The headquarters of this concern 
was at a public-house in Smithfield, but the company did not 
have a long life, probably due largely, as one writer puts it, 
to the fact that its pohcies '' covered the risk of stealing," a 
risk most required to be insured against at that period. 

The following extract from a paper read at the British 
Association meeting at Norwich, 1868, by one Mr. Wm. Smith, 
entitled '' Statistics of the Progress and Extermination of the 
Cattle Plague in Norfolk," is both interesting and instructive — 

" The cattle plague has been known for more than 1,000 years to 
have periodically devastated the Continent of Europe. About 810 
it is supposed to have visited England. We have no authentic record 
of its having broken out in this Island again until 1714, when, strange 
to say, it broke out in Islington about the middle of July. It committed 
great ravages for about three months, and disappeared about Xmas in 
the same year. It re-appeared in April, 1745, being, it was supposed, 
imported into England by some calves from Holland. It lasted twelve 
months and killed many thousand head of cattle. It soon, as in the 
outbreak of 1865, found its way into Norfolk, establishing centres of 
contagion in some of the districts that have so recently suffered from 
it. In March, 1770, it was imported into Portsay in the Moray Firth, 
but was stamped out with a comparatively trifling loss ; the spread of 
the disease being prevented by the judicious and timely slaughter of the 
infected beasts and those which had been in contact with them." — 
{Statistical Journal, 1868.) 

Arising out of the severe outbreak of disease amongst cattle 
during the years 1745-6, there was in 1746 enacted the 
19 George II, c. 5, an Act the object of which was to make 
rules to prevent '' the dissemination of Distemper, which then 
raged amongst horned cattle in the Kingdom." 


Under this Act diseased beasts were ordered to be shot and 
their skins destroyed, compensation being granted to the 
owners. Needless to say, the Act has been continued and 
amended many times since that date. 

To come nearer to our own times. In 1844 the Farmers' 
and Graziers' Cattle Insurance Co. was founded. This 
company was short-lived, for in 1853 it passed into liquidation. - 

In 1845 the Agriculturist Cattle Insurance Co. was estab- 
lished to indemnify farmers against the risk of loss among 
their live stock through disease and accident. This com- 
pany had a most eventful career before going the way of its 

The Norfolk Farmers' Insurance Association was founded 
in 1849, and soon took an important place in the business 
of live stock insurance. 

From this date to the present period a large number of 
companies (both proprietary and mutual) have been projected, 
the more important and those still in existence are — 
Horse, Carriage and General. Established 1877. 
Imperial Live Stock. ,, 1878. 

Scottish Live Stock. „ 1899. 

Law, Car and General. ,, 1906. 

Workmen and General. ,, 1907. 

National Live Stock. „ 1907. 

The Policy. 

A Live- Stock Policy is a contract of indemnity whereby 
the company agrees to pay to the insured, as compensation, 
a certain sum of money in the event of any animal described ^ 
in the schedule thereto dying from accident or disease, 
occurring or contracted during the continuance of the policy. 

It is incumbent on the insured that the following conditions 
among others are observed — 

The Insured shall not introduce, or permit to be introduced, a 
diseased or infected animal among any insured stock or upon any 
part of his premises or allow the insured stock to mix with infected 
or diseased animals. Any animal attacked by contagion must be 
immediately isolated, and all necessary precautions taken to protect 
the other animals from infection. All animals shall be provided with 
sufficient and proper food, water, and shelter, and in the event of illness 
or accident the insured must obtain, at his own expense, the services 
of a qualified Veterinary Surgeon, and proper precautions taken to 
prevent any loss or danger of loss for which a claim could be made 
under the policy. 



All stock of a class on a farm or premises, whether in actual 
possession at the time of the original proposal or bought at 
a subsequent date, must be insured. 

No animal must be used for any other purpose than that 
specified in the proposal. 

The term '' Live Stock '' from the insurance point of view 
is limited to two important classes, i.e., oxen and horses. 
Occasionally when the whole stock on a farm is insured some 
companies are prepared to extend the cover of their policy 
to sheep and pigs. Sometimes an insurance is even granted 
on valuable dogs, but such risks are not sought or desired " 
by the companies. 

Prospectuses in connection with the following risks are 
issued by most Live -Stock companies — 

(1) General horse. 

(2) Foaling. 

(3) Stallion. 

(4) Castration. 

(5) Yeomanry horse. 

(6) Cattle. 


• The approximate rates obtaining for the general insurance 
of horses against death from accident or disease together 
with the classification of the risks are as under — 


Premiums. — 

Horses over 2 

and under lo years of age. 


Class I. 

Class 2. 

Class 3. 

Class 4. 

Class 5. 

Class 6. 


£ s. d. 

£ s. d. 

£ s. d. 

£ s. d. 

£ s. d. 

£ s. d. 


17 6 

1 1 

1 6 

1 11 

1 16 



1 1 

1 6 

1 J2 6 

1 18 6 

2 5 

2 10 


1 4 

1 10 

1 17 6 

2 5 

2 12 6 



1 8 


2 3 9 

2 12 6 


3 10 


1 12 


2 10 


3 7 6 


The rates for risks numbered 2, 3, 4 and 5 vary according to 

Classification under General Horse. 

Class 1. Private Carriage and Saddle Horses. 

,, 2. Light Trade Horses used in 2-wheeled vehicles, i.e., 

Grocers, Bakers, Butchers, Doctors, and the like. 
,, 3. Light Trade Horses used in four-wheeled vehicles : 
Brewers, Commercial Travellers, Corn Merchants, etc. 


Class 4. Light Draught and Job Horses. Horses for posting, or 
let for hire. Mineral Water manufacturers. Colts 
and fillies over 1 month and under 12 months of age. 

,, 5. Heavy Draught Horses, except those specified in Class 6. 

,, 6. Horses used for Carts, Omnibuses, Tram Cars, Railways 
and Canals, etc. 

Horses over ten years of age, but not exceeding twelve, are 
specially rated. Proposals for horses over twelve are not 
generally accepted. 

The approximate rates for the insurance of cattle against 
death from accident or disease are — 

Class 1. stall-feeding and Grazing Bullocks ^ 9^. in the ;£ on 
Cows and Heifers (if more than 20 Amount insured, 
head are insured.) ' 

„ 1a, Do. do. do. (where less than 20 ] ^^ 
head are insured) . . . . . . f ' 

„ 2. Pasture-fed Dairy Cows, Breeding Cows Is. 6d. 
,, 3. Cows kept for Exhibition purposes ..2s. 
,, 4. Bulls up to ;^250 in value (6 months to \ ^ ^j, 
5 years of age) . . . . . . ] ' 

It is stipulated by some companies that the cattle insured 
must be over eighteen months and under seven years old, 
except under Class 4. 

Note. — ^The insurance is usually limited to two- thirds of the 
fair market value, and the contracts usually exclude the risk 
of death from poisoning, fire, lightning, operation, or malicious 

Usually a deposit is insisted on with all proposals sufficient 
to cover the company's veterinary surgeon's fees for inspection, 
which sum is refunded if the insurance is completed. 

Live-Stock Insurance is not one of the most lucrative of 
insurance risks, as evidenced by the comparatively small 
margin of profit made by even those companies who make 
it a special feature. 



The insurance of Carriages against damage was practically 
unknown in England until 1876, although it was practised 
in Fraace at an earlier period, probably about 1840, It is 


recorded that the law in France at this period was very 
severe in regard to persons causing damage to others, and it 
was undoubtedly this fact that led the owners of vehicles 
in France to seek the protection of insurance. 

The premier English office was founded in 1870, and traded 
until 1872 under the name of the Carriage Accident Insur- 
ance Co., when it was reconstituted and named the Carriage 
Insurance Co., Ltd. This company ultimately amalgamated 
with another firm, the joint companies being thereafter 
known as the Horse Carriage and General Insurance Co. 

All the Accident companies now cater for this class of 

The following extracts from a prospectus issued by the 
original undertaking are of particular interest, inasmuch as 
they set forth very clearly the object and principles of Car- 
riage Insurance as practised to-day. The term Carriage 
Insurance covers all kinds of horse-drawn vehicles. 

" The experience of several years has proved that a very large 
number of vehicles of all descriptions, both private and commercial, 
annually receive damage through accidental causes, involving in the 
aggregate a very considerable outlay of money for the necessary 
repairs, and entailing as a consequence a proportionate loss on those 
persons, who for the purpose of business or pleasure are compelled 
to make use of vehicles. It is for the protection of such that the 
company has been established, and it has been proved by actual ex- 
perience that by a properly arranged system of average and classification 
of risks, this kind of insurance can be made as sound and secure as any 

" It especially falls within the scope of this company to save all 
owners of vehicles the trouble, expense, and annoyance of suing the 
wrong-doer in case of accident ; it further indemnifies the person 
sustaining the injury ; undertakes the supervision of all the requisite 
repairs ; and by the aid of its Inspectors guarantees that such repairs 
shall be thoroughly, promptly, and efficiently executed. 

" The company insures against accidental injury to carriages of every 
description, and whether the property of private owners, or of livery 
stable keepers, including dogcarts, waggonettes, gigs, cars, buggys, 
etc., and also light carts, and the various vans used for trade purposes. 
Also in provincial towns and in the country generally cabs, fiys, and 
omnibuses, but such risks are not undertaken in London and some of 
the large towns in the provinces. 

" All vehicles must be insured to their full value, otherwise in the 
event of damage the company is liable for such proportion only of the 
claim as the amount insured bears to the actual value." — (Walford's 
Encyclopaedia, ) 


As will be observed, " Carriage Insurance " is antecedent 
to Third Party (Drivers') insurance, which was instituted about 
1880, and must not be confused with it. 

•It is now not usual to cover the risk of damage to vehicles 
alone, but to include it along with the Third Party risk, 
the joint insurance being known by the title of Double Risk 
Indemnity, although there are still some companies which 
issue separate policies for the insurance of damage to private 


•The premiums vary considerably, according to the class 
of vehicle, the purpose for which it is used, whether private 
or trade ; if the latter, the nature of the business carried on. 

The approximate rates for trade vehicles, such as vans, 
carts, traps, and trollies are — ■ 

London, 15s. each vehicle 
Provinces, 10s. „ „ 

These rates only apply when the double risk is covered. 
For private landaus, carriages, and such like vehicles of an 
expensive character, the following rates would apply — 

Two-wheeled Vehicle used in Town, cost of Carriage ;£100 — £3 Os. 

Country, „ „ -^£2 10s. 

Four „ „ Town, „ „ —£2 Os. 

,, „ Country, „ ,, — £1 15s. 

When more than two carriages are insured a reduction of 
25 per cent, is allowed in respect of the third and others. 

The Policy. 

Policies generally cover all accidental damage done to 
the insured vehicles whilst on the road. The risk of damage 
arising from wear and tear, fire or explosion, defect or flaw 
in the materials or make are, however, barred. 



The introduction of Burglary Insurance in a really practical 
form into the arena of Casualty Insurance is of comparatively 
recent date. There is on record, however, reference to two 



companies, i,e., the Property Protection Insurance Co., which 
commenced business in 1846, and the General Indemnity 
Insurance Co., 1853, of Cannon Street West, E.C., which, 
among other insurances, undertook to give protection from 
robberies and thefts. 

No very serious attempt seems to have been made to push 
the insurance until about the year 1889. Up to the present 
time about sixty-five offices have underwritten the risk. 

There is no need to try and make out a case for insurance 
against the two-fold possibility of loss through the depredations 
of thieves and robbers, i,e, — 

(1) Loss of articles actually taken. 

(2) Damage occasioned to the premises, household effects, or 


The string of convictions to be found in the daily press affords 
sufficient evidence of the necessity for some such protection. 
The number of burglars (petty and otherwise) are legion. 
It is deputed that there are about 70,000 thieves at work in 
London and the suburbs alone. 

Burglary Insurance as practised to-day is divided into two 
divisions, i.e, — 

(1) Trade Risks ; 

(2) Private House Risks. 

Before proceeding to deal specifically with these headings, 
it is as well that we should have some idea at least of the 
definition of the terms — Burglary, Housebreaking, Larceny — 
as applied to insurance contracts. 

So far there has been no attempt by statute to define the 
term Burglary. In cases that have been brought before the 
courts decisions have followed what is known legally as " case 

The generally accepted definitions of these words by 
insurance companies are — 

(a) Burglary : forcible entry during the night {i.e., between 
9 p.m. and 6 a.m.) into a dwelling-house and / or busirifess 
premises with intent to commit felony, or being in such 
premises and breaking out. 

ib) House-breaking : forcible entry of premises with intent to 
commit felony, during the day [i.e., between 6 a.m. and 
9 p.m.). 

(c) Larceny : theft not preceded by forcible entry. This may 
be committed by — 


(a) Persons lawfully on the premises : servants, tradesmen 

and the like. 

[b) Persons unlawfully on the premises who have gained 

access without using force. 

Trade Risks. 

Policies can be effected on business premises to cover 
Burglary and Housebreaking only. In view of the definition 
previously given of the word '' Larceny," it will be apparent 
that any serious attempt on the part of companies to cover 
this risk in connection with trade premises would involve 
them in a far-reaching liability, since the insured might look 
to the company to make good any loss from any cause, 
which stocktaking might reveal. These and other reasons 
which could be advanced against covering Larceny in 
connection with insurance on business premises, make the 
risk uninsurable from the companies' point of view. 

Trade risks are usually divided for rating purposes into 
four classes — Ordinary, Medium, Hazardous, and Special. 
The following table is representative of the classes — 

Class I Risks. — Grocers, chemists, bakers, booksellers, china and 
glass merchants, confectioners, ironmongers, photographers, furniture 
dealers, hatters, and the hke. 

Class II Risks. — Clothiers, boot and shoe manufacturers, fancy goods 
dealers, fancy stationers, dressmakers (including silk), silk merchants, 
umbrella stick manufacturers, upholsterers, cutlers, and the like. 

Class III Risks. — Cigar merchants, cycle dealers, picture dealers, 
licensed victuallers, sub post offices, and the like. 

Special Risks. — Jewellers and silversmiths, pawnbrokers, furriers, 
and the like. 

The rates of different companies, at least for Classes HI and 
Special, vary in proportion to their respective experiences. 
Many of the offices regard some of the risks enumerated 
in both these classes, in fact it may safely be said all those 
mentioned in the " special " class, as uninsurable. 

Approximate Rates. 

occupied St. If unoccupied. 

Class I Risks .... 2s. per cent. 3s. per cent. 

„ II „ .... 2s. 6d. „ 3s. 6d. „ 

„ III „ 5s. „ 10s. 

Special ,, .... Rated strictly on merits 


Note. — ^The rates apply conditionally upon the total 
stock being insured. 

It need hardly be stated that it is the custom of companies 
to have all business premises surveyed before accepting a 
risk. The careful underwriter should pay particular atten- 
tion to the morale of the risk, which must be regarded of 
equal if not of more importance than the question as to 
whether the premises are burglar-proof. 

Proposal Form. 

The principal questions, and those which determine whether 
a risk is insurable or not, are — 

(1) (a) How are the outer doors secured ? 

(b) How are windows (front and back) on ground floor 
protected ? 

(c) How are skylights (if any) protected ? 

{d) How is the trap-door (if any) in roof protected ? 

(2) Are the premises left unoccupied at night ? 

(3) Have the premises ever been entered by thieves. If so, how 
I is their means of access now protected ? 

(4) Have you previously proposed for Burglary insurance ? 

The Policy. 

The company agrees to cover the insured against loss or 
damage, to the property described in the schedule attached 
to the Policy, by burglary or housebreaking on the said 
premises, also damage to the premises, excepting damage 
to plate glass, or loss or damage occasioned by any person 
lawfully in the said premises, or where loss or damage has been 
expedited by a member of the insured's household or business 

The company also stipulates that no claim shall be allowed 
for loss of or damage to deeds, promissory notes, business 
books, or money, unless the same are specifically included 
in the proposal. 

Private House Insurance. 

The modus operandi in connection with Private House 
insurance is much simpler than in Trade Risks. 

A proposal form containing, among others, the following 
questions, must be completed by the proposer and sent to 
the company, accompanied by a recommendation from the 
agent introducing the business; and on the information 


contained in these documents, the companies are usually 
prepared to grant an insurance. 

Proposal Form. 

The questions asked by most offices are — 

(1) Name and occupation of proposer. 

(2) Describe the premises in which property situated (whether 

private house, flat or apartments). 

(3) Has the risk been previously insured ? 

(4) Has any office decHned to accept or renew the insurance ? 

(5) Have you ever sustained any loss by burglary, housebreaking, 

larceny, or theft ? 

(6) Value of contents to be divided according to the following 

classifications — 

(a) Household goods and personal effects (ex articles 

enumerated under item B). 

(b) Gold and silver plate, jewellery, watches, and trinkets. 

(c) On contents of stables. (The rate for this item is 7s. 6d. 

per cent, on full value of contents.) 
No one articles (except pianos and organs) to be deemed 
of greater value than 5 per cent, of the total sum 
insured unless specifically mentioned. 

Policies and Rates. 

Up to a comparatively recent date it was the practice of 
most offices to issue three kinds of policies — 

Section I. — Burglary and Housebreaking only Is. 6d. per cent. 
,, II. — Burglary, Housebreaking, and Lar- 
ceny, excluding theft (but includ- 
ing collusion) by servants, work- 
people, or others lawfully on the 
premises . . . . . . . . 2s. Od. ,, 

III. — Burglary, Housebreaking, and Lar- 
ceny, without restrictions, as per 
Section II 2s. 6d. 

It has, however, been found from experience that to issue 
a comprehensive cover as per Section III is much more 
satisfactory from the company's as well as the insured's 
point of view, and a large number of offices have accordingly 
adopted this form of policy. 

The rate has also been modified and it is now possible to 
obtain the insurance at 2s- per cent, when the whole contents 
are insured for full value. The minimum premium, however, 
is 5s. 

When the value of the plate and jewellery exceed 50 per 


cent, of item (a) in proposal form, an extra premium is charged 
on the excess. 

The policy indemnifies the insured against loss from Bur- 
glary, Housebreaking, and Larceny, in respect of the contents 
of the house, i,e., household goods, personal effects, and 
jewellery ; damage to the property or premises mentioned 
in the schedule attached to the policy is also covered. Further, 
the policies of most companies extend to cover loss or damage 
to the property insured, during any period or periods not 
exceeding two calendar months in any one year, whilst in 
any private house or hotel in which the insured may be 
temporarily residing. 

Loss in which members of the insured's family are concerned 
in the actual theft of the insured property is excluded. 

Burglary policies being contracts of indemnity, the company 
are responsible only for the intrinsic value of the articles lost or 
damaged. Moreover, the company holds to itself the right 
to become entitled to any property recovered to the extent 
to which it has made payment in respect of any loss. 

In Private House risks, as in Trade risks, the moral hazard 
is held to be of the greatest importance, as after all the question 
that must decide whether a risk is insurable or not is not so 
much whether there are two bolts and a lock to the front door 
and a patent fastener and a thumb-screw to the windows, as 
whether the proposer is a person of integrity. It must not, 
of course, be presumed from this that the insurance company 
does not attach importance to the structure being in sound 



Marine insurance is referred to in the Act of Parliament 
of 1601 (43 Elizabeth, c. 12)— 

" As an usage among merchants time out of mind by means whereof 
it Cometh to pass that upon the loss or perishing of any ship there 
followeth not the undoing of any man, but the lossjighteth rather 
easily upon many than heavy upon few, and rather upon them that 
adventure not than upon those who do venture ; whereby all merchants, 
especially those of the younger sort, are allured to venture more willing 
and more freely." 


It is quite possible that a form of marine insurance was 
practised by the ancients, although there is no direct evidence 
of it before 1300 a.d, There is no doubt, however, that its 
initiation, or perhaps, to be more correct, its rediscovery, was 
by the Italians in the beginning of the thirteenth century. 
The Lombard merchants are credited with having first intro- 
duced marine insurance into England about 1508. The 
Lombards were German people who about the year 568 
invaded Italy, subsequently accepting the Roman Catholic 
form of the Christian faith. In 774 Charlemagne reduced the 
Lombard kingdom to a province of his own empire, the 
Lombards subsequently becoming merged in the Italian 
population. Ultimately they spread all over the middle of 
Europe ; their chief occupation being that of bankers and 
money-lenders. Indeed, in the thirteenth and fourteenth 
centuries they were virtually the financiers of England — 
practically all the banking and oversea trade of Europe being 
in their hands. 

The business of marine insurance gradually became centred 
in what is known as Lloyd's. 

•The name Lloyd's is familiarly used to designate that great 
association of underwriters in London. The term is derived 
from a coffee-house kept by Mr. Edward Lloyd in Tower 
Street in the latter half of the seventeenth century. Being 
situated as it was in the very heart of the shipping industry, 
it became the resort of seafaring persons. In 1692 Lloyd 
removed his business to the corner of Abchurch Lane and 
Lombard Street, and here, largely owing to his enterprise 
in maritime matters, shippers and underwriters were attracted 
in large numbers, and the sales of ships, cargoes, and other 
miscellaneous matters frequently took place on his premises. 
In the year 1696 he started a newspaper, known by the name 
of Lloyd's News, which gave the latest information then 
available of the movement of ships. This newspaper was the 
forerunner of the present Lloyd's List, which, with the 
exception of the London Gazette, is the oldest newspaper 
now existing. In 1774 Lloyd's moved into the Royal 
Exchange, where they have remained ever since. 

The incorporation of Lloyd's by Act of Parliament did not 
take place until the year 1871. The institution is composed 
of individual underwriters, but Lloyd's as a corporation does 


not undertake insurance, the individual underwriters being 
personally responsible ; each member has to satisfy the 
committee upon his financial status by depositing not less 
than ;f 5,000 with the committee. Not only is Lloyd's a body 
of underwriters for insurance purposes, but it is an im.mense 
organisation for the collection and distribution of marine 
intelligence. Lloyd's agents are to be found in all parts of 
the globe, their duty being to advise the committee of the 
arrival and departure of vessels, and to report all accidents 
and all information likely to be of use to the under- 

At first the monopoly rights of marine insurance were 
vested in two companies and Lloyd's, but by an Act of 
George IV it became possible for any body of men to form 
joint stock companies to transact the business. From this 
time forward many companies sprang into being. 

Contract of Indemnity. 

A policy of marine insurance, or as it is more commonly 
termed a marine insurance contract, is any insurance made 
upon a ship or vessel or upon any other interest relating to 
any vessel which may be legally insured^within the meaning 
of the Stamp Act, 1891. 

The contract is one of indemnity, whereby the underwriters / 
undertake for a certain consideration known as the premium,! 
to make good to a shipowner or merchant certain losses! ' 
sustained by a ship, cargo, or freight by the perils of the sea. J 

Stamp Duty. 

All policies must be stamped. The duty is Id. if the rate 
of premium does not exceed 2s. 6d. per cent. When the rate 
is above 2s. 6d. per cent, the stamp duty is Id. for every 
;^100, or part thereof, insured. For every policy for Time, 
for every ;£100 and any fractional part of ;£ 100 thereby insured 
for any time not exceeding 6 months 3d., not exceeding 12 
months 6d. 

The Slip. 

The business at Lloyd's is effected through a marine insur- 
ance broker who has expert knowledge of the business. It 
is his duty to see that the usual and necessary clauses are 


inserted in the policy and generally to obtain for his client 
the best terms that are obtainable. The intending insurer 
having expressed the nature and extent of his requirements 
in writing, or orally, to his broker, the particulars thereof 
are set forth by the latter in a highly abbreviated degree 
on a form known as a '^ slip *' f\ the irisk is then submitted 
to the underwriters, when, if the negotiations are satisfactory, 
the amount each underwriter is prepared to accept as his 
portion of the risk (or '' line/' as it is called) is entered on 
the " slip '* and initialled by him. The broker then sends 
his client a covering-note, and on receiving instructions 
to close the risk, he prepares the policy and submits it to the 
underwriters for signature. 

In the case of joint stock companies it is open for the 
intended insurer to approach them direct — particulars of the 
risk being set forth on a special form provided, and, on 
acceptance, the policy is prepared by the company. 

•At Lloyd^s the risk is underwritten by syndicates which 
are composed of groups of underwriters from two to 
twenty-one, the average being eight to ten. 

A contract of marine insurance is deemed to be concluded 
when the proposal of the insured is accepted by the insurer, 
whether the policy is then issued or not, but the " slip '* is 
not an instrument which can be sued upon, although it is 
admitted as evidence of the date of acceptance of risk. 

The Policy. 

Seeing that the common form of Lloyd's policy is the basis 
upon which all British marine insurance contracts are founded, 
we shall by the consideration of its contents obtain a knowledge 
of the conditions of the majority of policies issued by British 

The present form of policy has been in existence, with but 
slight alterations, since 1779, and although it has been subject 
to much criticism, owing to the laxity with which it is drawn, 
any attempts to modify or alter it radically have not been 
favourably received, owing doubtless to the fact that the 
old form has the advantage of having been explained by legal 
decisions ; and" where any point has been in dispute as to the 
meaning of the contract provision has been made to meet the 
difficulty by special clauses attached to the policy. If a new 


form was drawn it would in all probability lead to much 
litigation as to the meaning of the fresh wording. 

The law has now been codified in the Marine Insurance Act 
(19D6), which is based on legal decisions and customs of 

In a limited work of this kind it is necessary to confine our 
attention to the broad principles of the insurance, and there- 
fore the writer has purposely selected what is known as the 
'' CLEAN " form of policy — that is, one without any additional 
clauses or deletions. It is customary in actual practice to 
extend or to restrict the cover granted by the '' clean '' policy 
we are about to consider, and this is effected by means of 
printed clauses attached to the policy. 

For instance, it is the common practice to include the risk 
of craft or lighter to and from the vessel at the port of ship- 
ment, and the risk by land or water conveyances from the 
interior to port of shipment, and from port of discharge to 
destination ; furthermore, to include all risks incidental to 
steam navigation arising from accidents to boilers and 

The following is a specimen form of a Lloyd's " CLEAN " 
policy — 


Be it known that 

as well in own Name, as for and in the Name 

and Names of all and every other Person or Persons 

to whom the same doth, may, or shall appertain, in 

S.G. part or in all, doth make assurance and cause 

7 and them and every of them to be 

^ insured, lost, or not lost at and from 

upon any kind of Goods and Merchandises, and also 
upon the Body, Tackle, Apparel, Ordnance, Muni- 
tion, Artillery, Boat and other Furniture, of and in 
the good Ship or Vessel called the 
whereof is Master, under God, for this present 
Voyage or whosoever else shall 

go for Master in the said Ship, or by whatsoever 
other Name or Names the same Ship, or the Master 
thereof, is or shall be named or called, beginning the 
Adventure upon the said Goods and Merchandises 
from the loading thereof aboard the said Ship 
upon the said Ship, &c., 

and shall so 
continue and endure, during her Abode there, upon 
the said Ship, &c. ; and further, until the said Ship, 


with all her Ordnance, Tackle, Apparel, &c., 
and Goods and Merchandises whatsoever, shall be 
arrived at 
(No. ) upon the said Ship, &c., until she hath moored at 

Anchor Twenty-four Hours in good Safety, and 
upon the Goods and Merchandises until the same be 
there discharged and safely landed ; and it shall be 
lawful for the said Ship, &c., in this Voyage to 
proceed and sail to and touch and stay at any Ports 
or Places whatsoever 

without Prejudice to this Insurance. The said Ship, 
&c., Goods and Merchandises, &c., for so much as 
concerns the Assured by Agreement between the 
Assured and Assurers in this Policy, are and shall 
be valued at 
Touching the Adventures and Perils which we the Assurers are con- 
tented to bear and do take upon us in this Voyage, they are, of the Seas, 
Men-of-War, Fire, Enemies, Pirates, Rovers, Thieves, Jettisons, Letters 
of Mart and Countermart, Surprisals, Takings at Sea, Arrests, Restraints 
and Detainments of all Kings, Princes, and People, of what Nation, 
•Condition or Quality soever. Barratry of the Master and Mariners, and 
of all other Perils, Losses, and Misfortunes that have or shall come to 
the Hurt, Detriment, or Damage of the said Goods and Merchandises 
and Ship, &c., or any Part thereof ; and in case of any Loss or Mis- 
fortune, it shall be lawful to the Assured, their Factors, Servants, and 
Assigns, to sue, labour, and travel for, in and about the Defence, 
Safeguard and Recovery of the said Goods and Merchandises and Ship, 
Sec, or any Part thereof, without Prejudice to this Insurance ; to the 
Charges whereof we, the Assurers, will contribute, each one according 
to the Rate and Quantity of his sum herein assured. And it is especially 
declared and agreed that no acts of the Insurer or Insured in recovering, 
saving, or preserving the property insured, shall be considered as a 
waiver or acceptance of abandonment. And it is agreed by us, the 
Insurers, that this Writing or Policy of Assurance shall be of as much 
Force and Effect as the surest Writing or Policy of Assurance heretofore 
made in Lombard Street, or in the Royal Exchange, or elsewhere in 

And so we the Assurers are contented and do hereby promise and 
bind ourselves, each one for his own Part, our Heirs, Executors, and 
Goods, to the Assured, their Executors, Administrators, and Assigns, 
for the true Performance of the Premises, confessing ourselves paid the 
Consideration due unto us for this Assurance by the Assured 

at and after the Rate of 

IN WITNESS whereof, we the Assurers have Subscribed our Names and Sums assured 

N.B. — Com, Fish, Salt, Fruit, Flour, and Seed are warranted free from Average, unless 
general, or the Ship be stranded ; Sugar, Tobacco, Hemp, Flax, Hides, and Skins are war- 
ranted free from Average under Five Pounds per Cent. ; and all other Goods, also the Ship 
and Freight, are warranted free from Average under Three Poimds per Cent., unless general, 
or the Ship be stranded. 

In the event of accident whereby loss or damage may result in a claim under this policy, the 
settlement will be much facilitated if immediate Notice be given to the nearest Lloyd's Agent.) 


Let US now consider the policy in detail ; it commences : 

" Be it known that.'* — Prior to 1850 the pious phrase used 
in place of the above formula was : ''In the name of God, 
Amen.'* Presumably it was regarded by some as irreverent 
and accordingly deleted. Then follows the name of the 
insured or his agent or agents, the places of starting and 
destination, the description of the risk to be covered, and the 
name of the vessel. 

** Lost or Not Lost. * * — ^These words are first met with in the 
form of policy under date 1613. 

They indicate that the underwriter agrees to indemnify the 
insured in the event of the vessel being lost, even if later it 
should transpire the vessel was lost prior to the insurance 
being effected, provided the insured was not then aware of 
the loss. 

Naturally there must be complete confidence and good faith 
between the underwriter and the insured ; and the fact of the 
loss being known to the latter, but not disclosed by him to the 
underwriter at the time of placing the risk, would nullify 
the contract, provided the underwriter was ignorant of the loss. 

" At and From. * ' — It will be noticed that these words are 
followed by a blank space in the policy form ; here words are 
inserted which determine whether the contract is one of Time 
or Voyage. If the former, the days which are to limit the 
duration of the risk are inserted ; if the latter, ports or places 
of departure and destination. 

Time Policies are made for fixed periods not exceeding one 
year, and any loss which may happen during that time is 
covered irrespective of the voyages undertaken. Such policies 
are chiefly effected on vessels as being a more convenient 
way of insuring them. The obvious objection to a voyage 
policy where short and quick voyages are made is the constant 
necessity for renewing the contract. • 

Voyage Policies, — In a voyage policy the risk undertaken 
is confined to the voyage named in the policy : the manner 
of describing the voyage naturally differs according to cir- 
cumstances, but where the route intended to be taken follows 
well-known custom the ports of departure and destination 
need only be expressed. When the ports of call are specified 
on the policy the order of calling must conform to the order 


mentioned, otherwise, with certain exceptions, the contract 
is nulhiied. 

Where there is any inland '' water " transit it should be 
stated in the policy as, if nothing is said about it, underwriters 
are likely to assume (and entitled to do so) that the inland 
transit is by '' rail/' 

Subjects Insured. — It will be seen from the words ''upon 
any kind of Goods and Merchandises and also upon the body,'' 
etc., etc., that the contracts are so drawn as to be applicable 
to the insurance of the goods carried, the ship, and freight ; 
whatever risk is to be covered being specifically set forth in 
writing in the blank space provided. A Policy on mer- 
chandise only covers such merchandise as is carried in the 
proper place, i.e,, below decks, and therefore the under- 
writers are not responsible for goods carried on deck, except 
where it is the custom of the trade so to do, or where leave 
is granted by a specific clause written in the policy in some 
such words as '* on and/or under deck," '' in and over all.'' 

Deckload is only insured free of particular average, but 
including jettison and washing overboard. As a rule a double 
rate of premium or more is charged for deckloads. 

Commencement of Risk. — Our next point is the commence- 
ment, or as the policy has it, '' beginning the Adventure upon 
the said Goods,'' etc., etc. 

The beginning and ending of the underwriter's liability 
under the policy depends partly on the words of the above 
clause taken in conjunction with what follows after the words 
'* at and from." Keeping, however, to the words of the 
*' clean " policy, we find that where goods are insured from 
the loading thereof the risk does not attach until they are 
'' on board " ; consequently, where a vessel is loaded in the 
river the risk of carrying the goods in lighters from the shore 
would not be covered. Such cover, however, is invariably 
given by a clause attached to the policy. 

The insurance continues upon the said goods until *' dis- 
charged and safely landed." It is a proposition that they 
must be landed in a customary manner and within a reason- 
able time after arrival at the port of discharge. -Where it is 
the custom to discharge into common public lighters the words 
'' safely landed " are sufficient to cover the goods whilst being 
conveyed by the lighters and until placed on the shore. 


The risk on the ship depends whether the pohcy is one of 
time or voyage ; if the former, the contract runs for twelve 
months from the time the insurance is effected, if the latter, 
the risk starts at the port of departure, and ends when '' she 
hath moored at anchor 24 hours in good safety/' 

Permission to Touch and Stay. — ^The option granted by the 
words '' and it shall he lawful for the said Ship, etc, in this 
voyage to proceed and sail to and touch and stay,'' is limited by 
the words '' in this voyage," which qualify the whole of the 
clause. In the absence of any further license or usage, the 
clause does not permit a deviation of the ship from the course 
of navigation prescribed by custom between the places men- 
tioned in the policy, except in cases of emergency such as 
where the vessel is in danger of capture, or in the endeavour 
to save human life, or to assist another ship. 

Valuation. — ^After the words '' and shall be valued at'' is 
mentioned the amount of the insurance arranged. 

It is usual for the insurable value to be specifically stated, 
but in the absence thereof the value of the subject matter of 
insurance must be ascertained in the manner set forth in 
Chapter 41, par. 16, of the Marine Insurance Act, 1906. 

The Perils Insured Against. — Continuing to deal with the 
clauses in the policy in the order in which they appear, we 
have now to consider the risks against which the insured is 
indemnified. This part of the policy commences : '' Touching 
the adventures and perils which we the Assured are contented to 
bear and to take upon us in this voyage, they are " — then follows 
the list of perils undertaken, the first and most natural being 
'* perils of the sea.'' 

Lord HerschelFs definition of these words as expressed in 
the case of the Xantho, 1887, is worthy of our notice. He 
says — 

" I think it is clear that the term * peril of the sea ' does not cover 
every accident or casualty which may happen to the subject-matter of 
the insurance on the sea. It must be a peril of the sea. 

"Again, it is well settled that it is not every loss or damage of which 
the sea is the immediate cause that is covered by these words. They 
do not protect, for example, against that natural and inevitable action 
which results in what may be described as wear and tear. There must 
be some casualty, something which could not be foreseen as one of the 
necessary incidents of the adventure. The purpose of the policy is 
to secure an indemnity against accidents which may happen, not against 
events which must happen." 


The term is defined in the Marine Insurance Act, 1906, as 
follows — 

" The term ' perils of the sea ' refers only to fortuitous accidents or 
casualties of the sea. It does not include the ordinary action of the 
winds and waves." 

Some of the perils comprised within the term are foundering, 
stranding, loss by collision with another vessel, and fire. 

In the case of Hamilton v. Pandorf, House of Lords, 1887, 
*' where damage was caused to goods by sea-water which had 
forced its way into the ship through holes made by rats," it 
was held that the loss arose through a " peril of the sea," and 
the underwriters were liable under the policy. This case, 
however, must be distinguished from one where damage is 
done by rats to the ship or cargo — such risk is not a peril of the 
sea ; nor would an underwriter be responsible where damage 
results through what is known as vice propre or inherent 
defects in the article insured. 

" Jettison ' ' is the throwing of cargo or of the ship's 
effects overboard — in order to lighten the ship when in a 
tempest for her preservation. 

When an act of Jettison takes place for the common safety, 
the owners of the ship as well as the owners of the cargo and 
freight have to contribute towards replacing the loss by what 
is known as " general average." For such losses the under- 
writer insuring the goods jettisoned is directly responsible in 
the first place ; he is then entitled to receive his share of the 
indemnity furnished by the general contribution. (See 
General Average, infra.) 

** Barratry/' This is a wilful act amounting to criminal 
negligence committed by the master and/or crew of a vessel 
through which the owners or the freighters suffer injury. 

Examples — 
(fl) If a master of a vessel deviates from the course usual to a 
particular voyage for his own private interests whereby the 
vessel is damaged — this would amount to a barratrous act. 
(h) If a captain intentionally runs his ship on to a rock and it 

is damaged or lost, 
(c) Illegal trafficking or trading, smuggling, and the like are also 
acts of barratry, provided always the shipowner has not in any 
way connived at them. 

A mere error of judgment does not constitute a barratrous 
act ; the element of fraud or criminal misdemeanour must be 


" All other Perils, Losses, and Misfortunes. ' ' — ^These words, 
following as they do upon definite and specific instances of 
perils that are covered, tend to widen the scope of the policy, 
but it must not be taken that every peril of the sea is 
indiscriminately included. 

" In the case of Cullen v. Butler (1816) Lord Ellenborough said that 
the words * all other Perils ' were entitled to be considered as material 
and operative, to have due effect assigned to them in the construction 
of the instrument, and which will be done by allowing them to compre- 
hend and cover other cases of marine damage of the like kind with those 
specially enumerated and occasioned by similar causes. 

The following examples illustrate the principle of ejusdem 
generis (of like kind) here laid down — 

In the case of Montague v. London Assurance Co., where some tobacco 
was damaged through the fumes of hides which had previously been 
damaged by sea-water. 

In Butler v. Wildman (1820), where a large quantity of money was 
thrown overboard by the captain to prevent it getting into the hands 
of an enemy, Chief Justice Abbott said " If not strictly speaking ' jetti- 
son ' it is ejusdem generis, and therefore falls within the general words." 

The Sue and Labour Clause. — ^The policy reads, '' and in the 
case of any Loss or Misfortune, it shall he lawful to the Assured , 
their Factors, Servants, and Assigns, to sue, labour, and travel 
for, in and about the Defence, Safeguard and Recovery of the 
said Goods and Merchandises and Ship, etc, or any part thereof 
without prejudice to this Insurance,'' etc., etc. 

The engagement hereby entered into is presumed to be 
supplementary to the contract of insurance. Under it the 
insured may recover from the insurer any expenses properly 
incurred in taking such steps as the exigencies of the case 
requires to safeguard and recover property covered by the 
policy. Even should the efforts taken to minimise a loss 
prove abortive, the underwriters are still liable for the 
expenses incurred. 

Richard Lowndes, in his Law of Marine Insurance, lays 
down two conditions precedent to the right to claim under the 
sue and labour clause, i,e, — 

(a) " The apprehended mischief must be something for which the 

underwriters would have been liable. 
{b) " The measure which gives rise to the expense claimed must 
be the act of the assured or his agent or servant." 

Total Loss of Ship or Cargo. — There are two kinds of total 
loss acknowledged in Marine Insurance, i.e., '' Actual Total 


Loss/' " Constructive Total Loss/' '' Actual Total Loss " 
is where the subject matter insured is destroyed or so badly 
damaged as to cease to be a thing of the kind insured, or where 
the assured is irretrievably deprived thereof. A ** Con- 
structive Total Loss " attaches when the assured is deprived 
of the possession of his ship or goods by a peril insured against, 
and it is unlikely he can recover or repair either of them, or 
the cost of recovering or repairing would exceed their value 
when recovered. When it is the intention of the assured to 
claim under '' Constructive Total Loss," he must despatch to 
his underwriters a *' notice of abandonment." In such cases 
where the underwriters pay the full value of the thing insured 
they are entitled to all the salvage ; and any legal rights the 
insured may have had, in virtue of his prior ownership, to 
recover from any Third Party also pass to them. This right 
is called the " right of subrogation." 

Force and Effect of Policies. — ''And it is agreed by us, the 
Insurers, that this Writing or Policy of Assurance shall be of 
as much Force and Effect as the surest Writing or Policy of 
Assurance heretofore made in Lombard Street, or in the Royal 
Exchange, or elsewhere in London.'' 

This clause was very common to the early English form 
of policy, but it is now seldom met with in companies' policies. 
Whilst it is interesting from a historical point of view its effect 
would seem to be simply that in the absence of anything in 
the contract to the contrary the insured is entitled to be 
indemnified by the underwriters for whatever it has been the 
custom of an insured to recover from London underwriters. 

The Premium. — " And so we the Assurers are contented and 
do hereby promise and bind ourselves, each one for his own 
Part, our Heirs, Executors, and Goods, to the Assured, their 
Executors, Administrators, and Assigns, for the true Performance 
of the Premises, confessing ourselves paid the Consideration 
due unto us for this Assurance by the Assured 

at and after the Rate of 
" IN WITNESS whereof, we the Assurers have Subscribed our 
Names and Sums assured in 

This, the last clause in the policy (since what follows is called 
the memorandum), deals with the undertaking on the part 
of the underwriter duly to fulfil the terms of the contragt 


for a consideration known as the premium. In English law 
the consideration is one of the essentials necessary to a 
binding contract ; in other words, the premium is the return 
or equivalent for the promise made. 

Unless otherwise agreed, the broker is directly responsible 
to the underwriter for the premium, but the underwriter is 
directly responsible to the insured for any sums payable in 
respect of losses or returnable premiums. 

The Memorandum. — '' Corn, Fish, Salt, Fruit, Flour, and 
Seed are warranted free from Average, unless general, or the 
Ship he stranded ; Sugar Tobacco, Hemp, Flax, Hides, and 
Skins are warranted free from Average under Five Pounds per 
Cent. ; and all other Goods, also the Ship and Freight, are 
warranted free from Average under Three Pounds per Cent., 
unless general, or the Ship he stranded.'' 

The postscript attached to the policy is known as the 
" Memorandum." As will be observed, the subject-matter 
of the memorandum is arranged into three groups. 

The term '' average unless general " means a partial loss 
other than a general average loss {i.e., a loss shared by all). 
The effect of the clause in so far as the first group is concerned 
is to free the underwriters from any claim for Particular 
Average, however great. 

In the second and third groups no claim for damage or 
deterioration by perils insured against can be substantiated 
unless the loss amounts to a specified percentage (called 
franchise), except only when the loss is caused by a general 
average accident or by the ship being stranded, etc. 
General Average. 

General Average is an extraordinary expenditure or sacrifice 
reasonably and judiciously made or incurred in an emergency 
for the benefit of the whole of the property imperilled ; ship, 
cargo, and freight. 

In Pirie v. Middle Dock Co. Mr. Justice Watkins Williams 
mentions five essentials necessary to bring into operation the 
General Average clause — 

{a) There must be a common danger, 
(6) There must be a necessity for the sacrifice. 
{c) The sacrifice must be voluntary. 

[d) There must be a real sacrifice and not a mere destruction or 
casting off of that whiqh has become already lost and 
' i , consequently of no value. 


(e) There must be a saving of the imperilled property through 
the sacrifice. 

Where there is a General Average loss the party on whom 
it falls is entitled, subject to conditions imposed by maritime 
law, to a rateable contribution from the other parties inter- 
ested. In the event ot such loss, before allowing them to have 
possession of their goods, it is incumbent on the master of the 
vessel on arriving in port to appoint '' Average Adjusters," 
whose duty it is to draw up the statement of " General 
Average." The loss is apportioned pro rata as between ship, 
freight, and cargo, and it is customary for the master to 
require a guarantee from each consignee for their respective 
contributions either in the form of a cash deposit or bond. 

Particular Average. 

A Particular Average is a partial loss of the subject-matter 
insured caused by a peril insured against, and the loss thus 
sustained is borne solely by the owner of the particular goods, 
or in the case of damage to the ship by the shipowner alone, 
or their underwriters. The difference between Particular 
Average and General Average is that whereas the former 
is a loss arising from an accidental cause, the latter is a loss 
voluntarily incurred for the good of all. 

The following examples illustrate a Particular Average loss — 

( 1 ) A vessel springs a leak and goods are damaged by sea- water ; 

the owner or owners of the goods so damaged would alone 
bear the loss. 

(2) Loss of masts or tackle through bad weather. 

(3) The straining of a vessel due to heavy seas. 


Freight is the payment made for carrying goods. In English 
law freight cannot be claimed from the merchants unless the 
contract to carry the goods has been duly completed. 


When a ship is in difficulty a captain has an implied au- 
thority to borrow money on bottomry in order to complete 
the voyage. The loan is raised on the security of the ship — 
i.e,, the ship's bottom — whence the term. The repayment of 
the loan is conditional on the ship reaching its destination. 
' -When more than one Bottomry Bond is given the later 
bonds rank for payment before the earlier, the reason for this 


being that without these the voyage could not be completed. 
This method is now, however, rarely resorted to for raising 



In dealing with so highly technical a subject as Fire Insur- 
ance in the limited space of a work of this kind it is impossible 
to do more than merely touch upon the main principles 
governing this branch of insurance. 

First of all let us take a glance in retrospect and endeavour 
to trace very briefly the history of Fire Insurance from its 
earliest known inception. 

The history of Fire Insurance prior to 1666, the year of 
the Great Fire of London, is somewhat obscure. History, 
however, points to the fact that at a much earlier period the 
practice of individual underwriting was in vogue among the 
Lombards in Italy. 

It is on record that proposals for a scheme of Fire Insurance 
were submitted by certain citizens of London in the year 1660 
to King Charles II, and duly considered by the Common 
Council. The idea, however, did not receive favour, as it was 
thought to be irrational that private persons should undertake 
such a risk. A further reason appears to have been that the 
Common Council considered the City should reap any profits 
that might accrue from an enterprise of this kind. 

The honour of starting the first insurance office falls to 
a Dr. Barbous. Haydn, in his Dictionary of Dates, mentions 
that this person undertook the insurance of houses and 
buildings in the City of London. 

Proposals were made in the year 1669 by two citizens of 
the City of London (Mr. B. Deloune and Mr. Deputy Newbold) 
that the City should undertake the insurance of Buildings, 
but beyond being considered by a committee, the propositions 
took no definite shape. 

In 1675, however, Mr. Deputy Newbold's scheme was 
again brought before the Common Council, but still the 
matter was shelved, and it was not until October of the year 


1681 that the Council decided to proceed to undertake Fire 
Insurance. In the interim, however (1680), an office de- 
signated The Fire Office, which is presumed to have been 
practically a remodelling on Joint Stock lines of Dr. Barbous' 
original venture, was set on foot, with offices at the back of the 
Royal Exchange. 

Needless to say, a great deal of friction took place between 
The Fire Office and the Common Council, potent arguments 
being put forward on both sides why the public should 
insure with each respectively; and, according to records, the 
controversy was conducted in a spirit which was by no means 
dignifying to an important authority such as the City of 
London. Ultimately, it was resolved by the Council on 
general grounds on the 13th Nov., 1682, just thirteen months 
after the inception, to relinquish its undertaking. The 
pamphlets issued by the Common Council and also The Fire 
Office are most interesting and well worth reading. Extracts 
of a number of them are in Vol. Ill of Walford's Encyclopcedia 
under '' Fire Insurance — History of.'' 

The Fire Office was now the only Fire office in existence. 
Its name was changed to the Phoenix, and its offices • were 
moved to The Rainbow in Fleet Street. This office has no 
connection with the existing Phoenix Assurance Company. 

In 1696The Amicable Contributors for Insurance from Loss 
by Fire was started at Tom's Coffee House, St. Martin's Lane. 
Its trade-mark was two clasped hands, and this resulted in 
its being re-christened the Hand-in-Hand. This venerable 
office has only recently ceased to exist as a separate company, 
and is now merged in the Commercial Union Assurance Co., 

The Amicable, as its name implied, was intended to be 
an association of individuals for mutual protection of each 
other's property, and there was no original capital invested on 
which dividends would have to be paid. This company was 
the forerunner of the many insurance offices which started in 
later years on the mutual principle, as distinguished from the 
Proprietary or Joint Stock companies. 

The year 1710 marks a new epoch in the history of Fire 
Insurance, as the nov^^ well-known company, The Sun Fire 
Office, came into being. The company can claim for itself 
the honour of being the first to combine Fire Insurance for 


goods, merchandise, furniture, and other effects, with the 
insurance of buildings. The company's habihty was hmited 
to £500 on any single risk. 

The premium charged was 2s. 6d. per quarter ; the insured 
to pay for the stamp on the pohcy, which was Is. 

The original pohcy gave no guarantee that claims would be 
paid in full, '' unless there was money enough in the bank to 
meet all losses for that particular quarter." 

Such articles as jewellery, pictures, chinaware, and money 
were excluded from the benefits of the policy. 

The rates were the same for hazardous and non-hazardous 
business ; in other words, there was no classification of risks. 

The London Assurance Corporation and the Royal Exchange 
Assurance Corporation were founded in the year 1721. 

The system of calculating the premiums according to the 
hazard was adopted by both companies. 

The classification was — 
Common Assurances. 
Hazardous do. 
Double do. do. 

One of the conditions in the original policy of the Royal 
Exchange is interesting and reads thus — 

" All persons insured by this Corporation are upon any loss or 
damage being sustained by Fire forthwith to give notice thereof by 
letter or otherwise to the Directors or Secretary at their public office 
in order for a view thereof, and such assured upon making out their 
loss by the oath or solemn affirmation of themselves, their domesticks, 
servants, or by their books or other proper vouchers and certificates 
of the Minister, Churchwardens, Constable or other reputable inhabitants 
of the Parish not concerned in such loss or by such other methods as 
may be reasonable." 

In the year 1763 the Act of 4 George III was passed, giving 
insurance companies the power under their policies, where 
there was any evidence of fraud by a policyholder, to " rein- 
state " the damaged property as an alternative to paying over 
the insurance money. 

The powers granted under this Act have been extended by 
two subsequent Acts, 14 George III, cap. 78, and 28 & 29 
Vict. cap. 90. 

The year 1782 will be memorable by the imposition of the 
percentage duty on Fire Insurance policies written in Great 
Britain. This Act was effected under the authority of 


22 Geo. III. c. 48 : '' An Act for charging duty on persons 
whose property shall be insured against loss by Fire." 

Hospitals were exempt from this impost. 

The duty was at first Is. 6d. on every £100 insured, 
increasing to 3s. in 1815. It was abolished in 1869. 

This duty must not be confused with the ordinary stamp 
duty, which was quite a separate and distinct charge, but 
this duty also passed through varying stages, until to-day 
a Fire policy only requires a Id. stamp. 

Between the years 1721 and 1858 a great many offices were 
established, some of which are still transacting business. 

It was in 1858 that the leading British offices combined 
and instituted what is known as the Fire Offices Committee, 
with the object of bringing about a uniformity in the rates, 
and to enable a more satisfactory classification of risks, 
obtainable, only by the pooling of the experiences of a large 
number of offices. 

In 1866 an event of great importance to Fire Insurance 
companies took place. It was in this year that the Metro- 
politan Board of Works took over the duties of " The London 
Fire Engine Establishment." This was a great relief to the 
companies, who up to this time had to meet the heavy financial 
burden involved in the up- keep of a private Fire Brigade. 

With this brief reference to the early history of Fire Insur- 
ance we will proceed to consider the contract of fire insurance 
in detail. 

Contract of Indemnity. 

The policy is essentially one of indemnity. Bunyon, in his 
Law of Fire Insurance, says — 

" Fire insurance is a contract wherein one party undertakes to pay 
or make good to the other any loss or damage by Fire which may 
happen during a particular period to specified property, not exceeding 
the sum named as the limit of insurance, or of each item thereof, in 
consideration of an immediate fixed payment." 

The liability of the insurers under an ordinary Fire policy 
is limited to the market value of the property at the time of its 
being destroyed, and does not extend to cover consequential 
loss, such as rent, loss of profits, interest on debentures, and 
dividends on preference shares. Provision, however, is now 
made by many companies whereby this loss may be insured 


against under policies known as '' Insurances of Net Profits 
and Standing Charges/' 

Having grasped the fact that the fundamental principle of 
Fire Insurance is one of indemnity only, it will be patent that 
proof of the loss sustained, as represented by the claim put 
forward, must be given. The actual cost of a particular article 
is not necessarily a measure of the liability of a company under 
its policy. In practice the cost price is regarded as a basis 
or medium only for arriving at the value at the time of 
destruction, due allowance having to be made for depreciation 
through wear and tear. 

Under '' valued policies," which are occasionally issued 
(following on the system practised in connection with marine 
insurance), the question of the actual worth of the articles 
at the time of a fire does not arise, as a stated value for each 
article is agreed to when the policy is effected. 

The essential difference between a Fire policy and a Marine 
policy is that under the former contract the company agrees 
to indemnify the person insured against actual loss (it is not 
an undertaking on the part of the company necessarily to pay 
the sum mentioned in the policy, even though there is a total 
loss) ; whereas a Marine Insurance policy, on the other hand, 
as we have already seen, though theoretically one of indemnity, 
is not so in actual practice ; inasmuch as in case of total loss 
the underwriter has to pay the actual amount specified on 
the policy. 

In the one case the value of the property insured is calculated 
in conjunction with all the circumstances at the time of loss, 
and in the other the value is conceded when effecting the 

Policies and Conditions. 

We have already seen that a Fire policy is essentially a 
contract of indemnity, whereby the company, for a considera- 
tion called the premium, undertakes a certain defined liability. 
Broadly speaking, there are two policies in use by the 
companies, i.e., Private House and Business. 

The conditions and clauses in connection with the policy 
in use for Private House risks have of late been very consider- 
ably modified, but seeing that those which remain are also 
incorporated in the form of policy used for trade risks, it is 


the intention of the writer to confine himself to the study 
of the latter policy. 

The following conditions are general to most policies issued 
in connection with trade risks, and for convenience we will 
consider them in the order in which they appear. 


1. Any material mis-description of the Property purported to beinsiired, or of any part 
thereof, or of any Building or Place in which Property insured is contained, or any mis- 
statement of or omission to give any information material to be known for estimating the risk 
renders this Policy void as to the Property affected by such mis-description, mis-statement, or 
omission respectviely. 

2. If after the risk has been undertaken by the Company, anything whereby the risk is 
increased is done to Property hereby insured, or to, upon, or in, any Building hereby insured, 
or any Building or Place in which Property hereby insured is contained, or if any Property 
hereby insured is removed from the Building or Place in which it is herein described as being 
contained, without, in each and every of such cases, the previous assent or sanction of the 
Company signified by indorsement hereon, the insurance as to the Property affected by any 
such causes ceases to attach. 

3. This Policy does not cover Property held in Trust, or on Commission, unless expressly 
described as such, nor China, Glass, Looking Glasses, Jewels, Clocks, Watches, Trinkets, 
Medals, Curiosities, Manuscripts, Prints, Paintings, Drawings, Sculptures, Musical, Mathe- 
matical, or Philosophical Instruments, Patterns, Models or Moulds, unless specially mentioned 
in the Policy ; nor Deeds, Bonds, Bills of Exchange, Promissory Notes, Money, Securities for 
Money, Government or other Stamps or Books of Account ; nor Gunpowder ; nor Loss or 
Damage occasioned by, or happening through, subterranean fire, earthquake, hurricane, volcanic 
eruption, or other convulsion of nature. Invasion, Foreign Enemy, Insurrection, Civil Commo- 
tion, Riot, or any Military, or Usurped Power whatever ; nor by the act of any person or persons 
engaged or concerned in notorious resistance to the authority of Magistrates, or any other 
lawful authority ; nor Loss or Damage to any Goods which may be destroyed or damaged 
whilst undergoing any process in or by which the application of fire-heat is necessary ; nor 
Loss or Damage arising from, or through. Fermentation, or Heating, or Spontaneous Com- 
bustion, of the subject insured ; nor Loss or Damage caused by Explosion, other than Explo- 
sion of Coal Gas in a Building not being part of any Gas Works ; nor Loss or Damage to 
Property which at the time of the happening of such Loss or Damage, is insured by, or would 
but for the existence of this Policy be insured by any Marine Policy or Policies, except in 
respect of any excess beyond the amount which would have been payable under the Marine 
Policy or Policies had this Insurance not been effected. Loss or Damage caused by Lightning, 
whether the Property insured be actually set on fire thereby or not, will be deemed to be Loss 
or Damage within the meaning of this Policy. 

4. This Policy will not be in force as to any Property hereby insured the right or title to 
which, or the right to possession of which, shall have passed or shall pass from the Insured 
to any other person, otherwise than by Will or operation of law, unless and until notice of 
such change shall have been given to the Company and the continuance of the insurance in 
favour of such other person shall have been declared by a Memorandum indorsed hereon by 
or on behalf of the Company. 

5. On the happening of any Loss or Damage to any Property hereby insured, the Insured 
is forthwith to give notice in writing thereof to the Company ; and, within fifteen days at 
latest, to dehver to the Company as particular and detailed an accoimt, in writing, as reason- 
ably practicable of such Loss or Damage, and of the estimated amount thereof, having regard 
to the value, at the time of the fire, and of the several articles or matters to which the Loss 
or Damage applies, and in support thereof to give to the Company all such vouchers, proofs, 
and explanations as may be reasonably required, together with, if required, a statutory 
declaration of the truth of such particulars and estimate ; and the Insured shall produce to 
the Company, or their Agents in that behalf, his books of account, and such other documents" 
as may be reasonably required ; and, in default thereof, no claim in respect of such Loss or 
Damage shall be payable until such notice, accounts, proofs and explanations respectively 
shall have been given, and such documents as aforesaid produced. 

6. If the claim be in any respect fraudiilent, or if any untrue statement or representation 
be made in support thereof, or if the fire was occasioned by, or through the wilful act or the 
procurement or connivance of the Insured, or any claimant under the Policy, all benefit under 
this Policy will be forfeited, and no claim will be recoverable by action, arbitration, or 


7. The Company may, if they think fit, wholly or in part rebuild, reinstate or replace, 
buildings, goods, merchandise, and other the property damaged or destroyed, or any part or 
parts thereof respectively, and if any such property, or any part thereof respectively, shall, 
at the time of the damage or destruction, be to any extent insured by any other Policy, this 
Company may join or concur with any other Company or insurers, in wholly, or in part, 
rebuilding, reinstating, or replacing, the same respectively or any part thereof respectively. 
If this Company elect so to rebuild, reinstate or replace, or to join with any other Company 
or insurers in rebuilding, reinstating, or replacing, no money shall be payable to the Insured 
under this Policy, except in respect of such part (if any) of the property hereby insured as 
shall not be so rebuilt, reinstated, or replaced, and under no circumstances shall this Company 
be liable, or be called upon, to pay or expend in respect of, or in relation to, any such rebuild- 
ing, reinstatement or replacement, or any expense, or outlay, incidental thereto, more in the 
aggregate than the sum for which the property damaged, or destroyed, and which the Com- 
pany shall have elected to rebuild, reinstate, or replace, is hereby insured, or a proportionate 
part thereof in case of any such other insurance as aforesaid. No acts done, or caused to 
be done by this Company with respect to property damaged, or destroyed, or the salvage 
thereof for the purpose of ascertaining the extent of Loss, or Damage, or the cost of rebuilding, 
reinstating, or replacing, shall be deemed an election by this Company to rebuild, reinstate, 
or replace, or to concur therein, and this Company shall not be called upon so to elect, unless 
and until this Company shall have obtained all such information and all such plans and 
estimates as may be deemed necessary or expedient for the purpose of such election or 

8. Upon the happening of any Loss, or Damage, to any property in respect of which 
a claim shall have arisen, or may be alleged to have arisen, under this Policy, this Company 
may, without being deemed wrong-doers, by their authorised officers and servants, or others, 
enter into possession of the building or place in which such Loss or Damage has happened, 
and of any property contained therein and of any premises connected therewith, then in 
the occupation of the Insured, and may examine, sort, sift, arrange, remove, or otherwise deal 
with, the contents thereof, and the building, property, and effects, in respect of which a claim 
may be alleged to have arisen, and may keep possession of such building and premises and 
other property and effects, until the claim is adjusted or settled, and this Policy shall be proof 
of leave and license for that purpose. 

9. If at the time of Loss, or Damage, happening to any property insured by this Policy, 
there shall be any other subsisting insurance, or insurances, whether effected by the Insured, 
or by any other person, covering the same property, or any part thereof, this Company shall 
not be liable to pay, or contribute, in respect of such Loss or Damage, more than its rateable 
proportion of the aggregate liability under all the insurances covering such property, and on 
the happening of any Loss or Damage, the Insured shall forthwith give notice in writing to 
the Company of all other insurances covering any property hereby insured, and no claim 
under this Policy shall be payable until such notice has been given. 

10. In all cases where any other subsisting insurance, or insurances, whether effected by 
the Insured, or by any other person, covering any property hereby insured, either exclusively, 
or together with any other property, shall be subject to average, the insurance on such 
property under this Policy shall be subject to average in like manner, and in ascertaining 
the separate liability of this Company as provided in the last preceding condition, this 
condition as to average shall be taken into account. 

11. If any difference shall arise between this Company and the Insured, or any Claimant 
under this Policy, as to the amount, or adjustment, of any Loss or Damage, or as to the 
fulfilment or non-fulfilment of any of the conditions of this Policy, or as to any question, 
matter, or thing concerning or arising out of this insurance, and no imputation of fraud is 
made by the Company, every such difference, as and when the same arises, shall be referred 
to Arbitration, in accordance with the provisions of the Arbitration Act, 1889, and this 
Policy shall be deemed to be a submission to Arbitration accordingly. 

12.- In all cases where this Policy is void or has ceased to be in force under any of the 
foregoing conditions all moneys paid to the Company in respect thereof for Premium or 
otherwise will be forfeited to, and retained by the Company. 

13. No Insurance will be in force until the Premium, or a deposit on account thereof, 
shall have been actually paid, and a receipt for the same on the printed form issued by the 
Company shall have been signed by an authorised Officer, or Agent of the Company, and 
delivered or sent to the Insured or his Agent. No receipt for renewal of any Premium, or 
any other payments to the Company in respect of this Policy, will be recognised unless on 
the printed form issued by the Company and signed by a duly authorised Officer or Agent of 
the Company. 

14. Any Warranties to which the Property insured or any item thereof is, or may at 
any time be made subject, shall attach and continue to be in force during the whole of the 
currency of the Policy ; and, notwithstanding the Second Condition, non-compliance at any 
time with any of the Warranties shall be a bar to any claim in respect of such Property 
or item. 

FIRE INSURANCE'.' . /: \' V, / '// i^i J01, 

Misdescription or Omission. Condition 1. — In all insurances 
the proposal is the basis of the contract. The essential feature 
of all contracts is that there must be good faith between the 
contracting parties, otherwise the contract is nullified ; 
particularly has this been held in regard to insurance contracts ; 
concealment of material facts which tend to create an addi- 
tional liability on the insurers amounts to fraud, and therefore 
vitiates the contract. 

Removal of Goods without Sanction. Condition 2. — This 
clause is inserted in order that the insurers may have the 
right to revise or cancel their contract in the event of circum- 
stances being so altered as to make their original rate of 
premium inadequate. The onus is thrown on the owner of 
the building or property in order to protect the company 
against fraud, but the literal terms of the clauses would never 
be enforced, except in an extreme case. 

In private house policies the restrictions as to removal 
of goods is found in a modified form inasmuch as most com- 
panies' policies cover the insured's property up to 10 per cent, 
of its value whilst temporarily away from the house, unless 
the removal is for the purpose of sale or exhibition. 

Exceptions. Condition 3. — ^This clause in its present form 
is only found in policies issued on trade risks. The first 
portion of it makes reference to articles or goods that are not 
generally regarded as coming within the purview of a trade 
risk and consequently (unless they be expressly mentioned 
on the policy) they would not be covered. The latter part 
enumerates exceptions. 

Amongst these may be mentioned especially, money and 
paper securities representing money, stamps and books of 

The reason for these exceptions is that in the form of 
specie the loss of money would be practically impossible to 
prove, and that paper securities are not in themselves of 
intrinsic value. 

Also an exception is made where loss or damage occurs as 
a result of conditions which are quite beyond the power of 
human control. 

In regard to the section which excludes loss arising from 
fermentations or spontaneous combustion, it should be 

ife: :«* I .•': '•;*' *: tEiieifiNx^ of insurance 

explained that the exception only applies to the property 
itself so damaged. 

Example : Hay stacks owing to certain chemical changes, 
following on bad farming are very subject to catch fire through 
spontaneous combustion. If a stack catches fire from this 
cause, the insurers would not be responsible for damage to 
that particular stack, but they would be responsible, if 
a conflagration ensued, for any other damage resulting 
therefrom, to adjacent property which their policy covered. 

Transference of Interest. Condition 4. — A clause of this 
kind is very necessary in all classes of insurances ; the 
** morale " of the risk is an important factor, particularly so 
in fire insurance, and it is therefore essential that the company 
should know something of the character of the person they 
are insuring. 

Before an assignment of interest takes place,- the company 
usually requires satisfactory evidence that the purchaser is 
in every respect a trustworthy and desirable connection. 

Under this clause the insurers cease to become responsible 
(in the event of a property being sold) to the person originally 
insured, and do not become liable to the purchaser, unless a 
transfer of interest by endorsement has taken place, and the 
transfer has been approved by the insurers. 

Notice of Loss by Fire. Condition 5. — This clause gives 
direction to the insured as to the manner in which a claim 
is to be made, and also sets forth the conditions of proof 
required by the company. The clause cannot be regarded 
as other than fair, and most companies are satisfied with 
'' such reasonable proof as the circumstances of the case 
admit." It is interesting to compare this with the condition 
in the original policy issued by the Royal Exchange, to 
which reference has already been made. 

Fraudulent Claims. Condition 6. — A clause of this kind, 
or one similarly worded, is necessary as a safeguard against 
the making of bogus claims. 

The words '' no claim will be recoverable by action, arbitra- 
tion or otherwise " are important, inasmuch as they prevent 
a person, who has put forward a fraudulent claim, from 
recovering any real loss which he may have sustained. 

A distinction must be drawn between a claim in which 


the value of destroyed articles is merely exaggerated, and 
one where a claim is made for the loss of something which 
has never really existed. 

In the former instance, the Courts would undoubtedly hold 
that the person is entitled to recover a sum representing his 
real loss, whereas in the latter he would be non-suited. 

The condition really only strengthens the company's right 
at Common Law. 

In the case of Goulstone v. The Royal Insurance Co, the 
principle here enunciated was confirmed by the Courts. 

Reinstatement of Property. Condition 7. — All companies 
claim for themselves the right either to pay the insured in 
the event of a fire a sum of money in settlement of the claim, 
or to re-instate the damaged property. 

I have mentioned in the historical part of this chapter 
that this right is statutory, granted by the Acts of Geo. Ill 
and Victoria. 

It is a clause which could be used in a very arbitrary 
manner. It must be remembered, however, that where a 
company undertakes to reinstate a property, they are respon- 
sible for bad workmanship on the part of the builders, and 
also for any fault of the architect employed by them. 

The before-mentioned statutes give the companies power 
to reinstate buildings only, whereas it will be noticed the 
clause extends the company's rights to replace goods damaged 
by fire. 

Company's Right of Possession. Condition 8. — The right 
vested in the insurers by virtue of this clause is an important 

The clause undoubtedly acts as a deterrent to fraudulent 
claims being made upon the companies, and from this point of 
view is a valuable stipulation. 

Apportionment of Losses. Conditions 9-10. — ^The object of 
these clauses is also to prevent fraud. It is, of course, unlikely 
that an individual will insure the same property twice over, 
unless it is his intention to endeavour to recover from both 

•Occasionally, however, it is possible that there are two 
parties interested in certain property, or that an existing 
policy has not been cancelled when property has been trans- 
ferred to a new owner, and the new owner has protected 


himself without knowing that an insurance was already in 

When a claim occurs the company therefore insist that 
the claimant shall state if any other parties are interested, 
and if such shall prove to be the case, the various parties will 
apportion the loss between themselves. 

The second clause provides that in such an event occurring 
as that just mentioned, similar conditions shall be deemed 
to apply to all the insurers. 

The average clause referred to is a condition which will be 
discussed later on. 

Arbitration Clause. Condition 11. — In the fire-insurance 
contracts issued by the majority of companies there is what 
is termed an arbitration clause. The object of the clause is 
twofold — in the first place it benefits the company, in that it 
prevents the insured running up very excessive law costs, 
which the company may ultimately have to pay ; and, 
secondly, it benefits the insured in that any dispute he may 
have will be settled by reference to an expert in Fire Insurance 
matters, who will take note of points bearing on the particular 
case where the law may have given no actual expression of 

Forfeiture and Payment of Premium. Conditions 12 and 13. 

The purport of these conditions is apparent and calls for no 
explanatory comment. 

Warranties. Condition 14. — ^This is a convenient method 
adopted by Fire Insurance companies to limit the hazard 
which they are undertaking, and to prevent the insured from 
obtaining protection on the understanding that certain 
methods of manufacture or heating and other matters are not 
carried oiit, and subsequently introducing these methods. 
For instance, there are many trades where the necessary work 
can be done either by hand or by the use of power machinery, 
and if an insured has stated that no power machinery is used, 
he will get the benefit of a low rate of premium, and his policy 
will contain a clause to the effect that it is warranted that 
there be *' no power machinery used on the premises." 
•The clause may suitably be compared with Clause 2. 

Proposal Form. 

In all insurances the proposal is the basis of the contract, 


and therefore it is necessary that the proposer should state in 
language free from ambiguity the risk he desires the company 
to undertake. 

As, however, it is customary in all cases, except small 
private houses, for the company to make their own survey 
of the risk, the proposal form is not of so much importance as 
in other classes of insurances. 

It is most important that the insured should very carefully 
study his policy to see that he has protected himself as fully 
as he requires. 

For instance, even in the simplest form of Fire Insurance, 
that of the contents of a private house, the insured may have 
property of value in an outhouse, but unless he has specifically 
mentioned this the company will not include it in the risk 
they undertake. 

In making a proposal for a trade risk, separate amounts 
must be placed upon the building, fixtures and fittings, stock- 
in-trade, utensils, and in cases where a manufacturing process 
is carried on, also on the machinery and plant. 

It is very important to note that tenant's fixtures and 
fittings, i.e., partitions, gas brackets, facias, and the like, i 
must be specifically mentioned, otherwise they would not be | 
insured by a policy issued to cover**' contents," nor are goods 
in trust and on commission covered unless specially provided for. 

Fire Insurance being a business under which an insured 
pays a comparatively low premium for a very high protection, / 
it is necessary that the insurer should take care that the\ 
proposed client is a desirable one : what is known as the ! 
*' moral hazard " is really the greatest risk that an insurance 
company has to run. 

Where a proposed client is unknown to the office, it is usual 
for him to be asked to furnish some reasonable evidence of 
respectability, either from a person who is known to the 
company, or in the form of trade references. 


It has already been incidentally mentioned that the assess- 
ment of the premium for a risk depends upon many elements, 
such as the construction of the building, the nature of the 
trade carried on7~the method of heating and lighting, and the 
means used for minimising the danger of fire. 


In business risks, both in regard to the insurance of the 
buildings as well as the contents, it is necessary (owing to the 
manifold conditions existing, such as, for instance, the nature 
of the trades carried on by other tenants in the same building, 
and in the ^surrounding jpr^^ for a survey to be made 

by the company's surveyor before a rate is quoted. In fact, 
it is quite impossible for a company to fix a rate for a trade 
risk, for the reasons mentioned, without first having the 
premises inspected. 

Private House Risks. 

The rates in operation amongst most of the Fire offices for 
private house risks are — 

Oh Buildings, Is. 6d. per cent. 
On Contents, 2s. ,, 

Business Risks. 

A retail shop of any kind where no work is done is obviously 
a light risk, and the rate will be in accordance with the nature 
of the goods sold ; obviously a jeweller's risk is not so great 
as that of an oil and colourman. The one would cost possibly 
25. 6d. per cent, and the other perhaps 15s. per cent. 

In the manufacturing trades rates vary very considerably, 
as processes which are carried on may give rise to inflammable 
vapours, or the method adopted of drying and heating the 
various goods may be a serious source of danger. 3s. per 
cent, may be considered as a minimum charge for any 
manufacturing trade. 

The nature of the goods must also be considered from the 
point of view of salvage. Lace would be of little use after 
a fire, as it is not only combustible, but would also be badly 
damaged by water, and would be practically worthless. 

Paper or books, on the other hand, would, except where 
they actually came into contact with the flames, be still 
saleable, and would form a set-off against the loss. 

Where a large number of persons are employed on the 
premises, it is usual to consider the risk slightly increased on 
this account. This is partly due to carelessness in their 
handling of goods or appliances, and also to the fact that 
malice or spite may be shown by wilful damage of the 
employer's property. 
/ The rate for the building generally follows the rate for the 


particular trade carried on, and where the building is occupied ^ 
by a number of tenants carrying on different trades, then the 
rate charged for the highest-rated trade carried on therein 
is applicable to the whole of the tenants, as well as to the 
building itself. The same remark applies when two or more 
buildings communicate, i.e., are not divided from each other 
by some fireproof method of construction. 


With a view to lessening the danger from fire, the legislature 
have passed, from time to time, certain Acts laying down rules 
to be observed in the construction of buildings. The earliest 
Building Act was passed in 1666, but has long since been 

The Acts now in force are the London Building Acts, 1894 
and 1905, the provisions of which are of the greatest import- 
ance to insurance companies. Part 6 (Sees. 53 to 81), which ^ 
refers to the construction of buildings, contains amongst other 
provisions the following — 

(S. 53) Rules as to the thickness of external walls. 

(S. 55) ,, timber in 

(S. 61) ,, construction of roof. 

(S. 67) ,, close fires and pipes. 

(S. 68) ,, accesses and stairs. 

For rating purposes buildings are divided into three broad 
divisions, viz. : — 

{a) Brick and stone ) Those in which the party and external walls ^. 

buildings. ) are built of these materials alone. 

(6) Brick and timber, \ 

stone and tim- 1 Those where any timber, lath and plaster, 

ber, or Iron and f is used in the external or party walls. ^ 

timber buildings J 
(c) Timber buildings Those entirely built of this material. 

The Internal Hazard. 

Plurality of Tenure. — Where a building is in the occu- 
pation of two or more tenants, this materially increases the 
company's risk, and when the trades carried on are of a diverse 
character, then, as we have already seen, the highest rate for 
any particular trade is charged to all tenants. 

Heating Apparatus. — Particular attention should be paid 
by the insuring company to the heating of the buildingi 

8— (1508) 


All chimneys, stoves, and other heating apparatus should be 
fitted so that there is no exposure to woodwork. 

Where a flue passes through a wall not built entirely of 
brick or stone the aperture should be protected by an iron 
plate inserted in it. 

The floor space around fire-places should be constructed of 
stone or an incombustible material. Fenders, either iron or 
stone, are a further necessary protection. 

Mode of Lighting. — Gas brackets should be placed at a 
reasonable distance from any woodwork or inflammable 
material, and as far as possible be made fixtures. In certain 
trades lights should be protected by wire globes. 

External Hazard. 

The external hazard is an important factor from the point 
of view of rating, indeed the surrounding or adjacent buildings 
may be of such a character as to make the particular risk 
uninsurable, although in itself a desirable risk. Where a build- 
ing is in close proximity to another, one of the chief points to 
consider is whether there are any openings, doors or windows, 
opposite to each other, as where this is so the risk from 
exposure is much greater. 


Prudent underwriters will necessarily avoid holding too 
large a risk on one class of trade, or on one particular set of 
premises. Fire insurance, being simply a question of average, 
is no exception to this rule, and it is the practice of all com- 
panies to limit the amount at stake on a given risk to what 
they consider may be safely carried. Where a case occurs 
of a manufacturer, or the owner of a large country mansion, 
offering a company more than the limit they have fixed as 
their maximum, it is usual to hand over the balance to one 
<or more other companies, who are then known as re-insurers. 
The re-insuring companies undertake to follow the company 
who have the business direct from the insured in all matters 
which may arise. To such an extent has this system grown, 
that there are a number of companies who do business by 
way of re-insurance only. 

This arrangement has, of course, nothing to do with the 
insured, who will deal directly with the company whose policy 
he holds. 


Insurable Interest. 

A person's interest in any particular property, to be 
insurable, must be such as to be enforceable in law. 
• In the absence of such interest there can be no legal 

It is an insurance axiom " that a person cannot insure unless 
he runs the risk of losing.'* 

Average Conditions. 

The rates charged by companies for Fire Insurance are based 
on the assumption that the proposer is asking the company 
to protect him to the full value of his stock or goods, and it 
would obviously be unfair on the company if he only insured 
a portion of his goods at that rate. For instance : If a 
merchant has stock to the value of ;f 1,000 in his warehouse, 
and only insures for £250, any loss which he may sustain up to 
£250 would have to be borne by the company, so that in effect 
they are insuring against everything except the more remote 
chance of an exceedingly heavy loss. 

•The average clause is intended to protect the company 
against this. 

There are three conditions of average in use amongst British 
offices — 

(1) The pro rata average. 
^, (2) The second condition of average. 

(3) The three-fourths condition of average. 

Pro-rata Average. 

The pro rata average clause means a sharing of the loss 
between the insured and the insurers ; it is usually expressed 
in the following terms — 

" Whenever a sum insured is declared to be subject to Average, if 
the property covered thereby shall at the breaking out of any fire be 
collectively of greater value than such sum insured, then the insured 
shall be considered as being his own insurer for the difference, and shall 
bear a rateable share of the loss accordingly." 

The function of this clause is ably expressed by Mr. Pipkin 
in his pamphlet on '* Average Conditions " thus — 

" The company says to the insured : If you do not insure to the full 
value, you shall bear a share of any loss that may occur, in the 
proportion that under-insiurance bears to the value." 

In the example of the merchant before mentioned, the 
effect of the pro-rata average clause would be to make the 


company and himself share all losses in proportion to the risk 
that each of them is carrying ; seeing he has only insured for 
a quarter of the value of his stock he runs the risk himself of 
the remaining three-quarters, the company's liability being 
limited to one quarter only. 

If the merchant has insured this property for its full value, 
this clause is obviously inoperative. 

Second Condition of Average. 

** If any of the property included in such average shall at the 
breaking out of any fire be also covered by any other more specific 
insurance, i.e., by an insurance which at the time of such fire applies 
to part only of the property actually at risk and protected by this 
insurance and to no other property whatsoever, then this policy shall 
not insure the same except only as regards any excess of value beyond 
the amount of such more specific insurance or insurances, which said 
excess is declared to be under the protection of this policy and subject 
to average as aforesaid." 

This condition is applied to what are termed " Floating 
Policies," i.e., policies which cover goods in a number of places, 
as distinct from specific policies covering goods in one 
particular place. 

Floating policies are chiefly issued in connection with the 
insurance of merchandise where the value of the goods, which 
are located in several places (for instance in docks, bonded 
stores, or warehouses), fluctuate from time to time. 

To quote from Mr. Pipkin again — 

" This clause says to another policy (not to the insured, you will 
notice,) ' If you can cover only a part of that which I cover, then I do 
not insure that part which you cover ; but if of the part you cover there 
is any value left over and above your amount, then I will take that 
under my protection.' " 

The application of this condition in actual practice is by 
no means so simple as it would appear, in fact it has led to a 
good deal of trouble and annoyance owing to the faulty 
language used. 

The following example will illustrate the working of this 
condition — 

Pro-rata Average. 

Values at Time of Fire. 

Stock in Warehouse A ;i 1,000 




Insurances at Time of Fire. 
Specific Policy on A . . . . . . ;i500 

Floating Policies A and B ;£2.000 


Assuming a loss in warehouse A of £1,000, the position is 
that ;£500 of this amount will be recoverable under the Specific 
Policy. The Floating Policy covers ^^2,000 in either Ware- 
house A or B, and as at time of fire the value in A in excess 
of Specific Policy is ;^500, and there is also value in B of 
;^2,000, the owner of the property is under-insured to the 
extent of £500. The position therefore will be that the 
Floating Policy will bear four-lifths of any loss not covered 
by the Specific Policy ; i.e,, '' the proportion which the 
under- insurance bears to the value at the time of fire.*' 

It will thus be seen that the specific policy pays £500 of 
the loss and the floater pays £400, leaving a balance of £100 
to be borne by the assured. 

Three-Fourths Condition of Average. 

The third condition, known as the three-fourths condition 
of average, is used in connection with policies on agricultural 
property, generally known as Farming Stock Policies. It is 
usually worded as follows — 

" When a sum insured is declared to be subject to the special con- 
dition of average, then, if such sum shall at the breaking out of any 
fire be less than three-fourths of the value of the property insured in 
that amount, the insured shall be considered as being his own insurer 
for the difference between the sum insured and the full value of the 
property insured at the time of the fire, and shall bear a rateable share 
of the loss accordingly." 

Such a condition is very necessary, having regard to the 
fluctuation in the quantity of produce on a farm before and 
after harvest. 

Example : Assuming a policy for £900 has been effected 
on Farming Stock, and at the outbreak of a fire causing damage 
to the extent of £100 the value of the stock is £1,200, the oflice 
pays the full amount of the loss. 

If, however, the value at time of fire be £1,210, then the 
oflice would only pay such proportion of the £100 as the £900 
bears to the £1,210, i.e.— 










Difference borne by the Insured 

It is undoubtedly an equitable arrangement, provided that 
the means adopted for arriving at the value of the stock at 
the outbreak of a fire are satisfactory. 

Policies are subject to average only where specifically stated 
to be so on the policy. Private house policies are not subject 
to average, although it is difficult to see why this principle 
should not hold. 


The practical work involved in dealing with Fire Insurance 
is a subject which would be out of place here. Fire under- 
writing is by no means so simple as may appear to the casual 
observer, and the technical knowledge of all classes of trades 
and of the methods of construction is in itself a big field, and 
when this is combined with a thorough knowledge of the 
general working of the business which is necessary, it will be 
readily understood that the responsible officials of the large 
companies must be highly trained men. 



The history of Life Assurance companies in England com- 
menced in 1705. The Amicable Society, or Perpetual 
Assurance, as it was then called, was established in this year. 
The following extract shows the system adopted by its 
promoters : — 

" The membership was to be 2,000, each of whom had to pay 10s. as 
entrance fee, and an annual subscription of IQ 4s. During the first year 
one-sixth of the contribution was to be divided amongst those who died, 
one-third in the second year, and so on, until in the fifth and following 
years five-sixths were to be so divided, the remainder being allowed to 
accumulate to create a reserve fund." 

Each member contributed the same amount, no regard 
being paid to age, and the amount payable was dependent 
upon the number of deaths in any one year. 


A number of minor offices were founded between this date 
and 1720, but they are not of sufficient importance for par- 
ticular notice, and most of them became defunct during the 
period of the South Sea Bubble. 

In 1720 the Royal Exchange Assurance Corporation and the 
London Assurance Corporation sprang into being. 

These offices were the first to issue Life policies for fixed 
sums payable at death, and the premiums charged were 
considerably in excess of those obtaining at the present day. 

It was not until the year HGCf^'that any serious attempt 
was made to transact Life Assurance business on scientific 
principles by charging a fixed annual premium for a 
definite payment in the event of death. 

In this year the Equitable Society for the Assurance of 
Life and Survivorship was established. The institution 
owes its origin to a Mr. Dodson, who]|^ it is recorded 
endeavoured to get insured in the Amicable Society, but owing 
to his age being over forty-five years, was refused entrance. 
By the aid oiX^^- Halley, Dodson prepared a ''table of 
premiums graduated according to age." This table naturally 
required confirmation, and one Dr. Price, who had interested 
himself in the subject of Life Assurance, set to work to find 
data on which to base his inquiries. During his searches he 
discovered that the registers of the town of Northampton 
contained such a record of births and deaths as to be sufficient, 
so he thought, to form a fair average for the kingdom. 

From the information thus obtained he prepared the 
far-famed '' Northampton Mortality Tables." The informa- 
tion contained in these tables considerably reduced the existing 

Fortunately for the Equitable (as also the other companies) 
the mortality under the Northampton tables was overstated, 
so that instead of a deficit as might conceivably have been the 
case, the Equitable made handsome profits, and after payment 
of all claims and providing for future contingencies a surplus 
fund was created. 

The sum thus accumulated was divided from time to time 
among the policyholders, thus originating the present-day 
system of profit-sharing policies. 

Encouraged no doubt by the success of the Equitable, 
many new concerns were floated between this period and 1816, 


some of the offices, such as the Norwich Union, Union, Scottish 
Widows, Sun, and Rock, still being present with us to-day. 
A new era in the assurance world commenced in the year 
1816, when a Mr. Joshua Milne published a fresh set of tables, 
known as the Carlisle Mortality Tables, constructed from the 
observations of a Dr. Heysham upon the mortality of the 
town of Carlisle. 

Strange to say, there was a marked similarity between these 
tables and the Northampton Mortality Tables. 

The period 1816 to 1845 has been described by one writer 
as the '' Golden age of Life Assurance Companies.'' The 
success which attended the more reputable companies was 
due mainly to the more accurate data which scientific 
investigation had placed at their disposal. 

Observations in regard to mortality were no longer limited 
to the records of the towns of Northampton and Carlisle ; 
the statistics of a number of other towns being carefully 

Much thought and attention was devoted at this period 
to Life Assurance generally ; indeed it is considered by some 
questionable whether at any other period there have been 
more great minds devoted to the investigation of any particular 

We now come to a time (1845 to 1860) when a state of 
things w€ce developing that might be described as the dark 
side of Life Assurance, the period of '* bubble companies." 

It is not to be wondered at, perhaps, that the success of 
offices like the Equitable, which was being run on sound lines, 
should excite the cupidity of certain persons, and cause to 
arise a desire (legitimate or otherwise) to emulate them. 
Hence, we find during the period under review that 519 
companies were provisionally registered ; out of this number 
258 were completely registered. 

These figures give some idea of the mania for company 
promoting which then existed. 

The majority of the undertakings were no more or less 
than wild-cat schemes, for we find that only forty-four of them 
were in existence in 1866. 

So far as assurance companies were concerned, the law 
relating to joint stock enterprise during the period was in an 
unsatisfactory state, and it was not until 1862 when what is 


known as The Companies Act, 1862, was passed, that insurance 
companies became Limited Liability concerns. The import- 
ance of this from all points of view cannot be over-estimated. 
From this time onward to the present date the companies 
have been far less rapidly promoted, but they have been 
eminently more respectable and satisfactory. 

The early history of Life Assurance, however brief, would 
be incomplete without a reference to the Life Assurance Acts 
of 1870, 1871, and 1872. 

Under the first of these, all companies transacting Life 
business in this country were compelled to submit their 
annual accounts in a prescribed form to the Board of Trade, 
and no new office was allowed to issue Life policies until it 
had deposited ;£20,000 with the same authorities. 

The Act was claimed to prevent a repetition of the scandals 
caused by the wild-cat schemes already referred to ; it doubt- 
less had a salutary effect upon the business, and has helped 
to bring about the present commendable condition of offices 
transacting life assurance. 

Under an Act passed a century earlier, viz., in 1774, known 
as the Gambling Act, it was illegal to effect an assurance on 
a life unless the person effecting the assurance had a pecuniary 
interest in the life of the person insured. 

Theoretical Life Assurance. 

Life Assurance and Annuities are the converse of each 
other — in the one periodical payments during the lifetime of 
the party concerned secure a capital payment at death, in 
the other a capital payment during the lifetime secures a 
periodical payment for as long as the party concerned survives. 
In calculating the amount of the periodical payment required 
to insure the payment of a given sum of money when the party 
concerned (known as the Life assured) dies, requires the 
knowledge of certain facts. 

Expectation of Life. 

The number of years the Life assured may be expected 'to 
live is calculated from statistics which have been compiled 
from various sources, showing the deaths from time to time 
which have occurred in observing a certain number of indivi- 
duals. For instance, observation of a number of individuals 
aged 10 has shown that out of 100,000 under observation at 
that age, only 99,558 have survived to the beginning of the 


next year. At age 30 only 89,042 were still alive, and 718 
of these died during the year, leaving only 88,324 alive at age 
31. Similar figures are available for all ages from 1-100. 

From a table of this kind the mathematician can easily 
calculate the chance of survival of an individual whose age 
is stated. For instance, at the age of 10, and on the mortality 
experience given above, it is just over 50 years, at the age of 
30 it is just over 34 years. 

The application of this can best be illustrated by an example. 
Let us suppose that the 89,042 persons still living at the age 
of 30 wish to insure the sum of £100, being payable to such of 
them as do not survive to the age of 31. As our table tells 
us that 718 of them will die during the year, it is obvious that 
we must provide for the payment of £71,800. Consequently, 
if each of the 89,042 persons contribute equally to one fund, 
they will each be required to pay about 16s. 2d. At the end 
of the year the fund will be exhausted by the payment of 
718 sums of £100 each. 


The second important fact which must be considered is the 
interest-earning power of invested money. In the example 
given above it has been assumed that no interest is earned, 
but if this is allowed at 3 per cent., and the same contribution 
of 16s. 2d. per head were made, the funds available at the 
end of the year would be increased from ;f7 1,800 to ;^73,954. 
As this is more than the sum required, it is obvious that the 
individual contributions can be reduced. The amount which 
each will then have to pay can be ascertained by dividing 
the number of contributors, 89,042, into the present value of 
;^7 1,800, payable in one year, and allowing 3 per cent, interest. 
This works out at £69,646, or about 15s. 8d. per head. 

In other words, if a number of persons aged 30 wish to 
insure the payment of £100 to representatives of such of them 
as do not survive to the age of 31, a contribution of 15s. 8d. 
a head paid at the beginning of the year, will be sufficient to 
meet the liabilities that arise, if interest is earned at 3 per cent., 
the mortality is in accordance with the table given in the 
example, and no payments on account of deaths are met until 
the end of the year. 

Such a simple form of assurance as that outlined above 
would, of course, be of little practical use in a business com- 
munity of varying ages and requiring larger or smaller protec- 
tion in accordance with their incomes. Further, at the end 


of the year the survivors must enter into a new contract to 
secure further protection, and the individual contribution will, 
of course, be larger, as the age is now enhanced. If this is 
continued from year to year, the contribution will gradually 
become onerous to the survivors, and those who live to the 
Scriptural three-score years and ten will find themselves 
paying very heavily indeed. 

To overcome this difficulty recourse is had to further 
calculation (which is of too technical a character to find place 
here) based on the combination of the estimated mortality 
at ages from the required age up to total extinction of the 
original 100,000 persons in the table. From this is deduced 
the single payment required to meet the payments which may 
year by year be anticipated, or this single payment may be 
spread into a number of payments of fixed amount payable 
by each individual so long as he lives. 

In practice, fixed premiums are the most convenient, as the 
individual who enters into a contract of Life Assurance thus 
fixes the liability at the outset, and we therefore find that 
the bulk of the Life Assurance which is effected daily all over 
the world provides for a fixed periodical payment by the Life 
assured with a fixed capital sum at death guaranteed by the 

It should perhaps be mentioned that several attempts have 
been made to conduct a Life Assurance fund on the lines of 
the very simple example given above, but a little consideration 
will show the weakness of such a system. From its nature 
it is known as the assessment plan, providing, as it does, 
for an annual contribution or assessment in accordance 
with the position of the fund at the time the investigation is 
made. It is obvious that as lives grow older, or mortality 
proves unfavourable, any member of such a fund may 
find himself able to secure better benefits elsewhere for 
a lower payment, and as such a scheme can carry no sur- 
render value an individual so placed will almost certainly 
change to the office or offices giving better terms, unless 
conditions of health make this impossible. The result, there- 
fore, will be that such a fund will ultimately tend to 
contain an unfair proportion of lives which are not expected 
to survive the normal expectation, giving rise to still further 
increased assessment and possibly making these so large as 


to be prohibitive and render the fund abortive or even 

It will be stated later that a Life Assurance policy is a 
negotiable instrument, and a few words must be said here as 
to how its value as such is arrived at. A Life Assurance policy 
is a reversion, the value of which is dependent on the duration 
of the life of the person insured, and where a periodical pre- 
mium is payable it is a reversion charged with the value of 
any future periodical payments. Consequently, the value 
of such a policy is easily calculated from the mortality tables 
referred to above, and where a periodical payment has to be 
made, the present value of all such future contributions 
must be deducted. Two simple instances may be given. 
If a life is aged 30 years and a policy for £100 is to be valued, 
which has been purchased by a single payment, we hrst ascer- 
tain from our mortality table the average duration of life at the 
age of 30, i.e,, 34 years. If interest at 3 per cent, is assumed, 
we have to find the present value of £100 due 34 years hence, 
approximately £36. If, however, the policy has been pur- 
chased by annual payments of, say, £1 10s., and the purchaser 
will have these to pay, we have to find the present value of 
£100 due 34 years hence, and deduct therefrom the present 
value of £1 10s., payable annually for 34 years. Our £36 will, 
therefore, be subject to a charge of about £31 10s., leaving an 
actual value of £4 10s. 

In none of these remarks or exam.ples has any allowance 
been made for the expense entailed in the working of a Life 
Assurance fund. This, of course, must be provided by 
increasing the premium theoretically required, and is 
technically known as loading. 

Up to the present, Life Assurance has been dealt with 
as a fund which should ultimately be entirely extinguished, 
but practical considerations again become a factor in deter- 
mining the best methods to pursue. It is always a sound 
business principle to have a larger provision for eventualities 
than experience has shown to be necessary, and Life Assurance, 
exact science though it is, should be no exception to this 

It has accordingly become the practice of Life Assurance 
offices to issue a large share of their business on what are 
known as '' with profit policies," i.e., a premium is charged 


which is well above that likely to be required, and the margin 
available, as ascertained at stated periods, is returned to the 
policyholders by way of bonus. Again, at the formation of 
a company or association of individuals for the purpose of 
carrying on the business of Life Assurance, modern conditions 
of Life Assurance require the provision of certain funds in the 
shape of capital, and interest on these funds has, of course, to be 
paid to the parties who advanced them. 

Broadly, then, we may divide Life Assurance into two 
sections, " with profit assurance," under which the policy- 
holder shares in the whole or part of the ascertained profit, 
and '' without profit assurance," where the policyholder has 
no such share. The extra premium the '' with profit " policy- 
holder pays is usually in the neighbourhood of 12| per cent, 
of the " without profit " premium. 

The surplus beyond theoretical requirements which a Life 
office thus obtains is a valuable security, and forms a most 
adequate provision against the chance of mortality or other 
contingencies being unusually above the average. 

This brings us naturally to the question of the valuation or 
stocktaking which a Life Office makes at certain periods, 
usually at intervals of five years, and it is at this quinquennial 
period that bonuses are declared to the policyholders, and 
the necessary provision made for shareholders* dividends where 
the office is a proprietary one. The valuation of a Life 
Assurance fund is exactly similar to the stocktaking or 
balancing of any other business, being simply a setting forth 
of assets and liabilities and, ascertaining the surplus or deficit. 
The office has certain assurance contracts depending on lives of 
varying ages, and each of these has to be valued on the basis of 
the mortality table selected and at whatever rate of interest is 
considered sufficiently secure. The surplus is then ascertained 
by a comparison with the funds the office has in hand, and 
allowing, of course, for the value of premiums to be received 
in the future. This surplus is divided, either in whole or in 
part, amongst the policyholders, in accordance with the 
system of distribution adopted by the office. 

Under one system the bonus is granted as an addition to the 
capital sum insured, the amount of such additions being either 
proportional to the amount of the sum assured irrespective 
of the age of the Life assured, or proportional to the amount 


of the sum assured, but varying in amount with the age of 
the Hfe assured. Such a bonus can be surrendered for cash 
if desired or apphed in reduction of future premiums. 

Under another system all bonuses are applied to reduce 
the future premiums. Or the bonus may be declared as a cash 
return in the form of a percentage of premiums paid, and then 
converted into an addition to the sum assured if required. 

The first of these three methods is known as the reversionary 
bonus method, the bonus being granted as a reversionary 
addition to the sum assured. The majority of offices work 
on this plan, and many of them grant what is called a Com- 
pound Reversionary Bonus. In this case the policyholder 
receives a bonus on his policy which takes into account any 
bonuses which may already be added. This is calculated by 
estimating the value of the bonus on the ordinary reversionary 
plan, but giving the policy credit in the calculation for the 
premium reserve in hand as representing the existing bonus 

It is interesting to observe the sources from which surplus 
in a Life Assurance fund may arise — 

(1) Mortality experience being more favourable than has been 

assumed in calculating premiums, i.e., if at age 30 only 700 
persons die instead of an expected 718, a profit is obviously 

(2) Interest. It is usual to assume a rate of interest which will be 

well within what can be earned from funds suitable for invest- 
ment. If 3 per cent, is assumed in the premium calculation, 
and 4 per cent, is actually earned, there is a profit of 1 per cent, 
on the invested funds. 

(3) Expenses. In a well-conducted office these will usually prove 

less than the amount of loading, i.e., the amount which has 
been added to the premium to cover them. 

(4) Minor causes, such as lapses, profit on policies surrendered for 

cash, fees, and fines. 

One other system of bonus distribution must be mentioned, 
and that is the Deferred Bonus, or Tontine system. Under 
this system the bonus is contingent on survival of a fixed 
period of years, usually 15 or 20 ; those lives which do not 
survive the period receiving no bonus at all. Or bonus may 
be deferred until the premiums accumulated at a fixed rate 
of interest equal the sum insured. Such deferred bonus 
systems are not very popular in this country, but should, 
of course, give larger benefits to the survivors. 


The Practice of Life Assurance. 

Every business man should have some knowledge of the 
practice of Life Assurance, as its value in commercial circles 
is a very high one. 

There are a large number of first-class Life offices doing 
business in the world, and it may safely be said that all work 
on the same general lines. 

And, first, as to the classes of policies issued. 

Whole Life Assurance is the simplest and cheapest of all 
insurance policies, and simply contracts for the payment of 
a capital sum at the death of an individual. The consideration 
or premium for such a policy may be a single cash payment, 
or an annual payment for as long as the individual lives. 
It can also be arranged that only a fixed number of premiums, 
say 15 or 20, need be paid. At the death of the individual, 
the capital sum becomes payable, premiums, of course, 

Endowment Assurance is the term used for a policy which 
undertakes to pay the capital sum at the end of a stated 
number of years, say 15, 20, 25, or 30, or at the previous death 
of the individual, if he fails to survive the selected period. 
This form of policy is, therefore, a combination of assurance 
protection with provision for the future. A number of special 
policies are issued by the various offices which are really only 
variants of this form of assurance and need not be specifically 

Assurance policies can also be issued payable in the event 
of one life predeceasing another, or in the event of one life 
surviving another. These forms of assurance are known as 
Survivorship and Last Survivorship assurance respectively. 

A Pure Endowment is merely a policy returning a fixed sum 
of money if the assured survive to a given date. Under such 
a policy the premiums may or may not be returnable in the 
event of previous death. 

Term assurance considers the payment of a sum of money 
only if death occurs before a specified date. 

• Many other schemes of assurance are granted by Life offices, 
but all are variants of the above simple forms, and their 
practical value is usually dependent on the individual 
circumstances of the assurer. 

When a society or company is offered the assurance on a 


particular life, it is obviously essential that certain formalities 
should be observed. 

Firstly, it is usual to obtain from the person proposing to 
insure a statement on a form prepared by the society or 
company, and known as a '' proposal form." The proposer, 
as the applicant is called, is asked to state his full name and 
address, for purposes of identification, his mode and manner 
of life, and the exact form of insurance he requires. He has 
also to state his exact age, and to give two references, who 
will be asked to give their opinion of the proposer's mode 
and manner of life. 

Secondly, he is called upon to make a statement giving full 
details of any illness or disease he may have had, and to give 
particulars of his family history. This form is usually known 
as the personal statement. 

Thirdly, he must be examined by a medical officer appointed 
by the company or society, who will report on the present 
state of health of the applicant, and his chances of surviving 
to the average age. 

The company will then assess the risk involved, and, if the 
chances are average, will be prepared to issue a policy at the 
average rate of premium, i.e,, the rate of premium printed by 
them as applicable to average lives. 

If the chances are not average, the life is known as an 
'* invalid " one, and its value specially considered. 

The methods of dealing with invalid lives, that is, lives 
whose expectations medical opinion considers to be below the 
normal, are many and numerous. Four methods may be 
described — 

(1) Adding to the premium on the assumption that the Life in 

question equals in expectation a life 3, 5, 7, or 10 years older. 

(2) Placing a charge or debt in the policy in favour of the 

Life office. This may either stand good for a given number 
of years, and then be cancelled ; or diminished yearly until it 
reaches zero. 

(3) Lives of this nature may be placed in a special class for valua- 

tion and distribution of surplus, and treated entirely in 
accordance with the experience of their class. 

(4) They may be dealt with under special schemes expressly 

devised to give the company or society an advantage over the 
individual at the time when his life is most likely to fail. 

The Policy Contract. 

A policy of Life Assurance is a promissory note falling due 


at death of the Hfe assured, and payable to the estate of the 
deceased or to any holder for value. 

Conditions of policies vary considerably, but the whole 
contract has been very much simplified in recent years. 

A modern policy usually is a simple promise to pay when 
the event happens, and if the life is a normal one conditions 
are almost entirely absent, save and only the conditions of 
paying the premiums. 

Thirty days of grace are usually allowed from the date the 
premium falls due, and if this has been inadvertently or 
unfortunately not paid, a small fine may be incurred. It is 
usual to grant a policy without any restrictions as to travel, 
foreign residence, or occupation, if the person assured has no 
intention of proceeding abroad at the time he effects the policy, 
and if his occupation is satisfactory. It is also usual to 
guarantee a minimum rate of surrender value, and this may 
apply after the first, second, or third premium has been paid 
in accordance with the rules of the office in question. Loans 
may always be had on demand, and usually up to 95 per cent, 
of the surrender values, the rate of interest charged varying 
from 4 per cent, to 5 per cent. 

•Many policies are now known as unforfeitable, and this 
usually involves the addition of a condition, under which the 
office undertakes to maintain the policy in force, even if 
premiums are unpaid, for so long as its reserve value will 
permit, or to convert it into a paid-up policy. 

Where special circumstances of occupation, or residence 
in an unhealthy climate are concerned, arrangements are 
made to meet the actual extra risk which the office runs. 

Selection of Office. 

It is hardly within the scope of this chapter to discuss the 
relative positions of Life offices, but a few words on the subject 
will not be out of place as throwing light on the value of some 
of the points previously mentioned. 

Different offices are at their best in different forms of 
contract, and what may be an excellent office at a young age 
may be disadvantageous to an old age. Apart from the 
actual premium charged, and bonus-paying prospects, there 
are a few points which should always have weight. 

9— (1508) 


(1) The expense at j which the' business is^worked. This is com- 

monly shown as a percentage of premium income, but this 
is not always a fair test. Better is the valuation statement 
showing the amount saved or spent in excess of the rate of 
expense assumed in calculating premiums. 

(2) The rate of interest assumed and earned. The lower_^the rate 

of interest assumed, the greater the reserve the office has 
in hand, so that this is a source of important strength. 

(3) The nature of the investments of the company's funds. 

(4) The conditions of the policy contract. 

It may safely be said that no financial institution can 
ever approach a properly conducted Life office in security; 
but although an office may be absolutely safe for the face-value 
of the policy, many conditions may militate (possibly only 
temporarily) against its giving a good return to its " with 
profit'' policyholders. 


The value of Life Assurance in everyday life is enormous, 
and it is surprising how many business and private matters 
are now made possible by its means, which had otherwise 
carried too much risk of pecuniary loss. 

To the man who has dependents it has an obvious value, 
and especially to the man with a fixed income, and few oppor- 
tunities of accumulating capital. Even to the rich man it has 
a great value, in that it constitutes a cash payment at a time 
when actual cash is badly needed, and avoids the forced 
realisation of securities which may prove to be a serious 
sacrifice. The State has encouraged Life Assurance as a form 
of thrift by allowing premiums paid for this purpose to be free 
from income-tax, provided such payments do not exceed 
one-sixth of the income of the individual. Further, by one of 
the Finance Acts assurance moneys may be paid direct to the 
Inland Revenue Authorities to defray the duties payable on an 
estate before probate can be granted. 

To the banker the protection of Life Assurance is invaluable 
where advances are made against securities which may prove 
valueless if the borrower dies before the loan is repaid, or 
before a reversion falls in, and indeed in many money-lending 
transactions, added security is obtained through such means. 
Further, it must always be remembered that in itself a Life 
Assurance policy is of value, and is available at any time as a 
negotiable instrument. 


The future will probably see its value and necessity more 
widely understood, and there is little doubt that many of the 
great institutions which carry on this business so successfully 
to-day will stand in history as some of the soundest bulwarks 
of commerce. 

This chapter is necessarily very limited in its scope. Life 
assurance is a subject which, both theoretically and practi- 
cally, covers a very large area, and requires very technical 
treatment. There is valuable literature for the student who 
feels inclined to go into it further, and in its practice there is 
a field of work of the greatest interest and variety. 


The following list will be of assistance to those desirous of pursuing 
the subjects further. The list is by no means exhaustive — 

" The Insurance Cyclopaedia," 

by Cornelius Walford, F.I. A., F.S.S., Barrister-at-Law. 
(Charles & Edwin Lay ton.) 

** Employers' Liability," 

by Thomas Beven, Barrister-at-Law. (Waterlow Bros. 
& Layton, Ltd.) 

" The Workmen's Compensation Act" (1906), 

by W. Addington Willis, LL.B. (Lond.), Barrister-at-Law. 
(Butterworth & Co., and Shaw & Sons.) 

"The Workmen's Compensation Act" (1906), 

by Parsons and Allen. (Butterworth & Co.) 

" Goods Marine Insurance," 
(Macmillan & Co., Ltd.) 

" A Practical Treatise on the Law of Marine Insurance," 
by Richafd Lowndes. (Stevens & Sons.) 

" Principles and Finance of Fire Insurance " (1904), 
by F. H. Kitchin. 

" Law of Fire Insurance " (5th edition), 
by C. J. Bunyon. 

" Insurance," 

by T. E. Young,. B.A., F.R.A.S. (Sir Isaac Pitman & Sons^ 

** Life Assurance Explained'' (1897), 
by W. Schooling. 



Accident, cases on, 9-10 

due to Anthrax Germ, 9 

meaning of, under W. C. A. 

(1906), 9 

Accidents, number of, due to 
horsed conveyances, 26-7 

• due to motor vehicles, 


Accountants' Indemnity Insurance 

Object of, 68-9 

Actio personalis movitur cum 

persond, 4 
Action for Tort, 23 
Agricultural Work, 15 
Alternate remedies of injured 

workman, 16 
Any Employment, 8 
Apportionment of Fire Losses, 1 03 
Arbitration (Sched. 2), 23 
Arising out of and in the course 

of employment — effect of words, 


Cases on, 11 
Assessment Plan, 117 
Average, Condition of, 109 
Average Lives, 122 
Average Weekly Earnings, 23 

Bankruptcy of Employer, effect 

of, 16 
Barratry, Meaning of, 93 
Beginning the Adventure, 87 
Bonus, 42 
Bonuses, 119 

Bottomry, Meaning of, 93 
Burglary Insurance, 76 

Definition of terms, 76 

Trade and Private House 

Risks, 76, 77, 78 

Burial Expenses in case of 
Seamen, 16 

Cancellation Clause — 

under Motor Car policies, 34 

under Third Party (Drivers') 

policies, 29 

CarHsle Mortahty Table, 120 
Carriage Insurance explained, 74 
Casual Employment, 19 

Cases on, 20, 21 

Meaning of, 19 

Cattle Plague, 70 

Claims Experience under Third 
Party (Drivers') insurance, 27 

Alternate remedies, 12 

Time for Making, 13 

Classification of W. C. risks, 2 

of Personal Accident risks, 


Clean Polic}^ 84 

Combined Accident and Disease 

Insurance, 45 
Common Employment, 3 
Common Law defined, 3, 24 
Compensation under W. C. Act, 


amount of, 21, 22 

must be generally claimed 

within six months, 13 

payable only when disable- 
ment lasts for more than 
seven days, 11, 21 

Concealment vitiates contract, 47 
Construction of Buildings, 107 
Constructive Total Loss, 91 
Contract Guarantee Insurance, 58 

chief points in, 60 

modern practice of, 58 

Contracting out, Conditions and 

regulations as to schemes, 13 
Contractor, 14 
Contributory neghgence, 3 
County Court, 19 
Cranes, 36 




Crews of Fishing Vessels, not in 
scope of W. C. Act where 
remunerated by shares in 
profits, 17 

Death, Employer relieved of 

LiabiUty, 18 
Deckload, 87 
Defences — 

open to employer at Com- 

mon Law, 3 
under E. L. Act (1880), 

Defendants, Definition of, 18 
Diseases, description of (sched. 3), 


due to nature of employ- 
ment, 17 

Disqualification of workmen from 

claiming compensation, 12 
Double Benefits, 43 

Earnings, how computed, 23 
Electric Lifts, 37 
Employer — 

bankruptcy of, 16 

definition of, 18 

liability of at Common Law, 

under E. L. Act, 

(1880), 4, 5 
under W. C. Act, 

(1897), 6 

under W. C. Act (1906) 

Employers' Liabihty Act, (1880)— 

effect of on Common Law, 4 

kept in force by, 6 

notice of injury under, 5 

scope of, 5 

Exceptions in Fire Insurance 

Policies, 101 
Excess Bad Debt Insurance, 

Object of, 66 
Expectation of Life, 115 
Experience of Companies writing 

W. C. Act Insurance, 2 
External hazard, 108 

Family history, 49 

Fire Insurance, Principles of, 97-8 

Force and effect of Marine Policies, 

Fraudulent Claims, 102 
Freight, 93 

General Average, 92 

General Third Party Insurance, 

Meaning of, 34 
Goods and Merchandise, 87 
Guarantee Insurance — Object . 

of, 54 

classes of bonds, 55 

its advantages over private 

secretaryship, 54 

special contingencies, 57 

Highways Act, 1835, 29 
Highways and Locomotives 

(Amendment) Act, 1878, 30 
Hoists, 36 

House-breaking, definition of, 76 
Hydraulic Lifts, 37 

Indemnity, Right of principal 

to, 15, 16 
Individuals — incumbent on, to 

exercise due and reasonable 

precaution, 24 
Industrial Diseases, 17 
Inspection of Lifts, 38 
Insurers — liability of, under W.C. 

policies, 2 
Interest, 116 
Internal hazard, 107 
Invalid Lives, 122 

Larceny, Definition of, 76 
Legal Personal Representative, 18 
Life Assurance Acts, 115 

History of, 112, 113 

Practice of, 121 

Theory of, 115 

Lifts, Goods, 36 

Passenger, 36 

Light Locomotive Act, 30 [70 
Live-Stock Insurance explained, 1 



Live-Stock Companies' transac- 
tions, the business, 71 

classification of business 

risks, 72, 73 

Loading, 118 

Lost or Not Lost, 86 

Manager of ship, meaning of, 19 

Marine Insurance, explanation of 
terms in, 86-91 

Medical Examination, Workmen's, 

Memorandum, 92 

Member of Family, Definition 
of, 19 

Merchant Shipping Act, (1894), 

Minors, 21, 22 

Misdescription, 101 

Mode of Lighting, 108 

Motor Car Insurance, Develop- 
ment of, 30 

Municipal Authorities, Liability 
of, 36 

Mutual Fire Offices, 95 

Protection Societies, 61 

Negligence, cases on, 24, 25, 26 

definition of, 24 

of another workman, 6 

of master, 6 

Net Profits, etc.. Insurance of, 98 
Nonforfeitable Contract, 47 
Northampton Mortality Table, 

Notice of claim under Motor 

Car Policies, 38 

On, in, or about — meaning of, 16 
Option as to procedure, 12 
Ordinary Accident Insurance, 44 
Outworkers, Definition of, 19 

Partial Incapacity, Compensa- 
tion for, 22 
Particular Average, 93 
Percentage duty, 97 
Perils insured against, 88, 90 

Personal Accident Insurance — 

History of, 38 

Modern method, 39 

Policy Terms Defined, 50, 

51, 52 

Personal Negligence of Employer, 

Physical defects, 49 

Plate Glass Insurance, Necessity 
for, 62 

Plurality of tenure, 107 

Police Force, 19 

Policy Conditions — 

Accountants' Indemnity Insur- 
ance, 69 
Baggage Insurance, 65 
Burglary Insurance, 78 
Excess Bad Debt Insurance, 67 
Fire Insurance, 99 
General Third Party Insurance, 

34, 35 
Life Insurance, 122 
Lift Insurance, 37 
Live-Stock Insurance, 71 
Marine Insurance, 83, 84, 85 
Motor Car Insurance, 32, 33 
Personal Accident Insurance, 

43, 50 
Plate Glass Insurance, 63 
Third Party (Drivers') Insur- 
ance, 29 
W. C. Act Insurance, 1 

Possession, Right of, 103 

Premises and risks, 34 
Bad Debt Insurance, 69 
Baggage Insurance, 66 

Premium charged for Burglary 
Insurance, 77, 79 

Carriage Insurance, 75 

Contract Guarantee 

Insurance, 60 

Fire Insurance, 106 

General Third Party, 


Guarantee Insurance, 

55, 56 

Premium charged for Lift Insur- 
ance, 38 



Premium charged for Live-Stock 
Insurance, 72, 73 

Motor Car Insurance, 

Personal Accident In- 
surance, 45 
Plate Glass Insurance, 

62, 63 
Third Party (Drivers') 
Insurance, 29 
Principal, 14 
Principle in Personal Accident 

Insurance, 45 
Pro-Rata average, 109 
Proposal, basis of contract, 47 
Proposal Forms for Guarantee 
Insurance, 57 

Motor Car Insurance, 

Personal Accident In- 
surance, 48 

— Third Party (Drivers') 

Insurance, 28 

Ratings for W. C. risks, 2 

Reinstatement, powers of Fire 
Companies, 96, 103 

Re-insurance, 108 

Removal of Goods, 101 

Remuneration, how computed, 19 

Replacement of glass, 64 

Republic of United Netherlands, 

Res ipsa loquitur, 24 

Restrictions under Personal Acci- 
dent PoUcies, 43, 44 

Reversionary Bonuses, 120 

Right of Action, 4 

Rules of the Road, 30 

Seamen, Application of Act to, 16 
Second Condition of Average, 110 
Security of Company per amount 

in W. C. Act Insurance, 1 
Selection of Life Office, 124 
Serious and wilful misconduct, 

12, 13 
Ship, Meaning of, 19 

Sickness and Accident Insurance, 

Slip, 82, 83 

Spontaneous combustion, 101, 102 
Stamp Duty, 41 
Statute Law, Definition of, 3 
Subcontracting, Application of 

Act in cases of, 13, 14, 15, 16 
Sue and Labour, Meaning of, 90 
Surplus in Life Assurance Fund, 

Sources of, 120 

Three-fourths condition of in- 
terest, 102 

Time for taking proceedings, 13 

Time Policies, 86 

Total incapacity, compensation 
payable for, 23 

Total Loss, 90 

Touch and Stay, Permission to, 88 

Tontine Bonus, 120 

Transference of Interest, 102 

Transit, 33 

Undertaken, 14 

Valuation, under Life Policies, 


Marine Policies, 88 
Value of Life Policy, 118 
Volenti non fit injuria, 3 
Voyage Policies, 86 

Warranties in Fire Insurance 

contracts, 104 
With Profit Pohcies, 118 
Without Profit Policies, 119 
Workman, definition of, 18, 21 

casual workers (except for 

trade or business), 18 

members of employer's 

family dwelling with him, 1 8 

outworkers, 18 

persons earning more than 

;^250 a year, 18 

persons in Naval or MiHtary 

service, 19 
— — policemen, 18 



Workman temporarily lent or let 

on hire, 18 
Workmen's Compensation Act, 


effect of, 6 

Provisions of, 7 

Workmen's Compensation Act, 

application of to agriculture, 7 

Workmen's Compensation Act, 

Employers' liability under, 8 

Workmen's Compensation Act 


what is meant by, 1 

Yearly contracts, 29 


Printed by Sir Isaac Pitman & Sons, Ltd.yBaih. 
K— (1508) 






AN entirely new Series of Business 
Primers; each volume, though serving 
as an introduction to its subject, is com- 
plete in itself, and may be relied upon as 
an authoritative guide for those who cannot 
pursue their studies further. 

Each in croWn 8vo, cloth, oVer 120 pages 



No. 1 Amen Corner, E.C. 

The Elements of Banking 

ByJ.P. Gandy. 

The object of this book is to supply the " man in the 
street '' with a knowledge of first principles. It may be 
described as a practical commentary on the law and practice 
of banking, and includes all the information necessary to an 
ordinary business man on the subject of bills of exchange, 
promissory notes, and so forth. 

Book-keeping for Retailers 

By H. W. Porritt and W. Nicklin, A.S.A.A. 

The authors, well-known writers on Book-keeping, are 
both practising accountants. In this book, they have omitted 
all unnecessary chapters, and confined themselves to eluci- 
dating a simple and effective system by clear explanations 
and ntunerous illustrations of the various points by pro forma 
accounts and rulings. Income-tax returns, insurance, etc., 
are dealt with in a satisfactory way, and many practical 
suggestions are made which should prove useful to the owner 
of almost any kind of retail business. 

The Elements of Commercial Law 

By a. H. Douglas, LL.B. (Lond.). 

Within the compass of this book will be found set out 
whatever the business man ought to know thoroughly of the 
main legal principles which govern commercial life. The 
author is a barrister-at4aw who has attained the highest 
academic distinction both at the Inns of Court and London 

Correspondence and Composition 

By J. F. Davis, D.Litt., M.A., LL.B. (Lond.). 

The purpose of this book is, by means of a few simple rules, 
to enable a writer to express himself clearly and correctly 

in the mother tongue as it ought to be written. Numerous 
examples of bad EngUsh, faulty syntax and loose construc- 
tions are given, with explanations, which add considerably 
to the interest of the book. It is divided into two parts, one 
dealing with Grammar and the other with Composition. The 
first part contains chapters on accidence (with examples from 
Commercial Correspondence), syntax, parsing, analysis, and 
punctuation. The second part deals with the construction 
of sentences ; precision and order, and the choice of words ; 
and closes with specimens of business letters. The author 
from his experience as examiner in English to the University 
of London, is peculiarly fitted to deal with this subject. 

The Elements of Insurance 

By J. A. Eke. 

The majority of people have some elementary knowledge 
as to life, fire, and accident insurance, but there is an extra- 
ordinary amount of ignorance as to the developments which 
have been made in insurance practice and methods during the 
last few years. Indeed, it is now difficult to find any con- 
tingency which cannot be insured against. There are, it is 
true, general principles which underlie insurance, but it is 
essential that a wider and fuller acquaintance should be made 
by insurers with the law and practice of insurance in all its 
branches. A sound working basis will be obtained from this 
book, and no reader who has gained a complete mastery of 
the contents of its pages will have any difficulty in extending 
his knowledge by a study of more advanced work. This book 
will appeal to a larger class than those who are connected 
only with commerce. 

Precis Writing 

By William Jayne Weston, M.A. 

The author of Pitman's Guide to Commercial Correspondence 
has arranged this book on quite original lines. Precise 
instructions and practical examples make this work of real 
value to candidates for public examinations. 


By Arnold Hall and F. Haywood 

This book gives simple and reliable information concerning 
the Clearance Inwards and Outwards of a vessel, Customs 
and regulations, and everything connected with the Shipping 
Trade. One section of the work deals with the duties of 
exporters from the receipt of the Indent to the shipment of the 
goods. It is illustrated with documents of various kinds, and 
contains much useful instruction for the Exporter and the 
Ship Broker, the authors having for many years been 
connected with these branches of the Shipping Trade. 

The Stock and Money Markets 

By Albert Emil Davies. 

A clear and adequate knowledge of finance — ^the life blood 
of commerce — can only be obtained by easy steps, and the 
beginning cannot be made too simple. This volume gives 
in small compass the elements of the subject, and a thorough 
grasp of its pages will enable the reader to advance with 
certainty to a more extended acquaintance with the subject. 
The author's reputation as a writer on business topics, com- 
bined with his practical experience of big financial transactions, 
is a guarantee of the excellence of this Primer. 

Pitman's Practical Primers of Business 

Each Is. Net 

It is not the object of this new series to do more than serve 
the purpose of an introduction to the particular subject 
treated, but care has been taken to make each volume meet 
all the necessary requirements of those who do not desire 
to go further with the subject. Great pains have been 
taken to secure the best authors, and all the books in this 
series are written by recognized experts in the various subjects. 
Popular in style of treatment, and convenient to handle, 
this series of Primers is assured of a wide and warm welcome 
from those for whom it is intended. 

(Catalogue B) 




A Classified List of Books 

Suitable for Use in 


And for Reference in 






Business Training 

Commercial Readers 

Business Man's 

Elementary Law 






Marine Law 

and Composition 

Mercantile Law 





Commercial History 

Stock Exchange 

Commercial Law 




And at Bath and New York 


K 5. 


Advertising, Theory and Practice of 


Bills, Cheques, and Notes 


Business Man's Handbooks 

Business Training 

Company Law . 

Commercial Correspondence and Composition 

Commercial Geography 

Commercial History 

Commercial Law of England, The 

Commercial Products . 

Commercial Readers 

Conveyancing . 

Elementary Law 

Foreign Correspondent, The . 

French and Italian 

German .... 


Household Law 

How to Get a Situation Abroad 

Indexing and Precis- Writing. 



Law of Mechanical Traction 

Law of the Stock Exchange . 

Legal Terms, etc. 

Marine Law 

Mercantile Law 

Money, Exchange, and Banking 

Note-Books, etc. 

Office Desk Book 

Office Organisation and Management 




Ready Reckoner 



Spanish and Portuguese 

Stock Exchange, History, Law, and Practice of the 

Typewritinc ...... 



BUSINESS ARITHMETIC. Part I. In crown 8vo, quarter cloth, 
120 pp., IS. 

Contents. — Simple and Compound Rules, Reduction of Weights 
and Measures, Vulgar and Decimal Fractions, Proportion and 
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of the degree of approximation possible — Short methods in Multi- 
plication, Division, Prices of Articles, Practice Interest and Discount, 
Percentages and Averages, Commission and Brokerage — Areas and 
Quantities — The Metric System and Coinage of France. 


BUSINESS ARITHMETIC. Part II. In crown 8vo, quarter cloth. 
144 pp., IS. 6d. 

Contents. — Stocks and Shares — Profit and Loss — Bills Receiv- 
able and Bills Payable, Interest, True Discount and Bankers' 
Discount, The Use of Logarithms more particularly for Problems 
on Compound Interest, Insurance, and Annuities — The more im- 
portant European Weights and Measures other than the Metric — 
The Coinage of Germany and the United States — and the Weights, 
Measures and Coinage of India. 


cloth, 264 pp., 2s. 6d. 

Contains Parts I and II above mentioned. 


Whole cloth, is. 6d. 

Svo, cloth, 87 pp., net is. 

Gives the quickest methods of obtaining solutions to Arithmetical 
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METHOD IN ARITHMETIC. By G. R. Purdie, B.A. A guide to the 
teaching of Arithmetic. In crown Svo, cloth, 87 pp., is. 6d. 

METHOD ARITHMETIC. Illustrates the principles explained in 
" Method in Arithmetic." 324 pp. 3s. 


In crown 8vo, 48 pp., 6d. 
Contains 1,200 tests, and numerous e^camplei. 



PITMAN'S PRIMER OF BOOK-KEEPING. Thoroughly prepaxes the 
student for the study of more elaborate treatises. In crown 8vo, 
144 pp., quarter cloth, is. 

Principal Contents. — The entering up and posting up the Cash, 
Purchases, and Sales Books — Ledger — Making the Trial Balance 
and preparing the Balance Sheet — Explanation of Bills of Exchange 
and their Uses — The Treatment of Bad Debts, Dishonoured Bills, 
Consignments Outwards and Inwards, Partnership Accounts, etc. — 
Many fully worked Examples, carefully graduated additional 
Exercises, Facsimiles of Commercial Documents and Definitions 
of Business Terms. — The rulings and balances are shown in red 


crown 8vo, cloth, is. 


This work provides useful additional exercises for students of the 
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BOOK-KEEPING DIAGRAMS. By James McKee. These diagrams 
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should be entered in Ithe books of account, how the Ledger accounts 
are closed, and the Profit and Loss Account and Balance Sheet 
drawn out. Real, Personal, and Nominal^ Accounts are illustrated, 
and useful notes and J reference numbers Jare added, so that the 
student at'Jany stage may use the diagrams with advantage. In 
crown Svo, 36 pp., 6d. 

BOOK-KEEPING SIMPLIFIED. A text-book covering all business 
requirements and affording a thorough preparation for certificate 
and professional examinations. Special features of the book are 
the large numbers of examples worked in full, and the printing of 
rulings ^and balances in red 'Ink. New Edition, enlarged, and 
thoroughly revised. In crown Svo, cloth, 272 pp., 2s. 6d. 
' Principal" Contents. — The Ledger — Journal — Posting — ^Trial 
Balance and Balance Sheet — Closing Entries — Cash Books, various 
forms — Cheques — Purchases and" Sales Books — Bad Debts — Bills 
of Exchange — Returns and Allowances — Capital and Revenue 
Accounts — ^Trading Account — Consignments Outward and Inward 
— Purchases and Sales on Commission — Joint Accounts — ^Partner- 
ships — Branch Jand Departmental Accounts — Contracts — Sectional 
Balancing Ledgers — Reserves — Inaccurate Trial Balances and their 
Correction — Business . Abbreviations — Business Terms and Their 
Meanings — Upwards .Jof 100 Exercises, inclading Examination 
Papers of the IRoyal Society of Arts, London Chamber of Commerce, 
Lancashire and Cheshire Union of Institutes, etc., etc. 

In crown Svo, cloth, i/- 


BOOK-KEEPING (continued). 

187 pp., 2s. 6d. 

Principal Contents. — Auditing — The Preparation of Profit and 
Loss Accounts and Balance Sheets — Bankruptcy, Insolvency 
Accounts and Statements of Affairs — Joint Stock Companies' 
Accounts, the Register of Members and Share Ledger, and the 
Register of Transfers, etc. — The Trading Accounts of Joint Stock 
Companies, and the Profit and Loss Account and the Balance 
Sheets — Liquidation — The Tabular System in General — The 
Tabular System, as used in Hotels, etc. 

8vo, cloth, IS. 

PITMAN'S COMPLETE BOOK-KEEPING. A thoroughly comprehen- 
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embracing practically every kind of account. With about 20 
facsimiles of Company Forms, etc. Enlarged Edition. In crown 
8vo, cloth, 432 pp., 5s. 

The FIRST PART gives full explanation of Single Entry — Method 
of Converting books from Single to Double Entry — Complete 
instruction in the Preparation of Balance Sheet — How to Deal with 
Receipts and Payments by Cheques and Bills — Principal Laws 
governing use of Paper Money — Returns and Allowances — Bad 
Debts — Dishonoured Bills, etc. 

The SECOND PART deals with Agency Accounts — Productive 
Wages Account — Brewery and Colliery Accounts — Accounts for 
Professional services — Hotel Book-keeping — Accounts to be kept 
in hospitals and other charitable institutions — Theoretical and 
Practical use of the Journal — Joint Stock Company Book-keeping — 
Insolvency and Bankruptcy Accounts — Executors' and Trustees* 
Accounts — The Double Account System employed in Railways, 
PubUc Works, etc. 

The THIRD PART gives thorough explanations of various kinds of 
shipping accounts, and the terms, books, and forms connected 
therewith. Inward and Outward Consignments — Accounts Current 
Book — Bankers' Account Current — How to Draw Bills against Ship- 
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Letters of hypothecation and letters of Uen, with Specimens of 
these important documents — Orders by Telegraph Code — Calcula- 
tions of C.I.F. Invoices, etc., etc. 

on Income-Tax Law and Practice. The task of preparing the returns 
to be presented to the Commissioners is one of considerable responsi- 
bility and no little difficulty. The present work has been designed 
as a help to book-keepers and others who are entrusted with the 
duty of compihng the returns, and it deals with just those points 
that are Ukely to occasion doubt or trouble. In crown 8vo, cloth, 
80 pp., 2s. 


BOOK-KEEPING (continued). 

Edition. In crown 8vo, cloth, 213 pp., 2s. 6d. 

Contains answers to all the questions, and fully worked solutions 
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crown 8vo, 48 pp., each 6d. 

Containing papers recently set by the leading Examining Bodies ; 
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Society of Accountants and Auditors ; Institute of Chartered 
Accountants ; Institute of Bankers ; Union of Lancashire and 
Cheshire Institutes, etc., etc. 


PITMAN'S BOOK-KEEPING TEST CARDS. A series of carefully 
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where required. Elementary, Intermediate, and Advanced. 
Per set, is. 6d. 


Including 52 forms for Invoices, Cheques, etc., and 8 blank Exercise 
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of all documents which would be received, and of blank forms 
such as Invoices, Cheques, Bank Paying-in Slip Book, Account 
Books, etc., by which the trader would make and record his 
is arranged on a plan very similar to that which has proved so 
successful in the case of Book-keeping Transactions, No.[;l ; but, of 
course, the transactions include items of a rather more advanced 
character. There is a concisely written text-book, giving clear and 
expUcit instructions in the principles of;^Book-keeping, full particu- 
lars regarding the transactions of a trader, and the trader's books of 
account, forms, documents, etc., the whole .enclosed in a stout 
envelope. The new work is arranged sc as to give not only 
instruction in Book-keeping, but also a good deal of reliable in- 
formation relating to business methods. Price 2S. 


BOOK-KEEPING (continued). 

PITMAN'S HOTEL BOOK-KEEPING. A practical text-book explain- 
ing the principles of book-keeping as applied to Hotel accounts. 
With illustrative forms and exercises. In crown 8vo, cloth, 
72 pp., 2s. 6d. 

W. NicKLiN, A.S.A.A. The authors of this valuable book are 
professional accountants who have also a large and varied experience 
in the conduct of classes and the coaching of candidates for Book- 
keeping examinations. The book abounds with practical hints as 
to the management of classes, the treatment of backward pupils, 
the examination and marking of papers, etc. There are also 
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and advanced students, with fully-worked keys, balance sheets, and 
so on. While primarily appeaUng to teachers, this book will 
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gain in a class. In crown 8vo, cloth, 180 pp., net 2s. 6d. 

A.S.A.A. This book is intended as a guide for those who are 
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methods to be adopted upon entering the profession. For this 
reason considerable space is devoted to the preparation for exam- 
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Second Edition. In crown 8vo, cloth, 120 pp., net 2s. 

ACCOUNTANCY. By F. W. Pixley, F.C.A., Barrister-at-Law. The 
student of Book-keeping, who has thoroughly mastered his subject, 
cannot do better than devote himself to the higher branches of the 
work, and study what is described under the general head of Ac- 
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knowledge and his wide practical experience render him one of the 
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whatever he says may be relied upon as being the latest and most 
up-to-date exposition of the subject. In demy 8vo, cloth, 318 pp., 
5s. net. 

ruled and adapted for working the exercises contained in the 
Primer of Book-keeping. The set consists of : — Cash Book and 
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for the exercises in " Book-keeping SimpHfied " or " Advanced 
Book-keeping.** Fcap. foUo. Journal, 3d. ; Cash Book, 3d. ; 
Ledger, 6d. 



8vo. 64 pp., 6d. 

Deals with the treatment of outgoing and incoming letters, Postal 
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8vo, 64 pp., 6d. 

Principal Contents. — Business Forms, such as Invoices, Credit 
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8vo, 64 pp., 6d. 

Deals with Explanation of Terms — Promissory Notes and 
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COUNTING-HOUSE ROUTINE, ist Year's Course. In crown 8vo, 
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Treats of Advertisements, Correspondence, Forwarding ol Goods, 
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NENT. By A. E. Davies. Contains information of the utmost 
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MASTERS' NEW READY RECKONER. Pitman's Editi'on. Contains 
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lated, giving a range of from 28 lbs. to 60 tons at rates per ton rising 
from 5s. to £5. By Hugh P. McCartney. Compiled for the use 
of and indispensable to Shippers, Railways, Collieries, Export, and 
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168 pp., 2s. net. 



HOW TO START IN LIFE. By A. Kingston. In crown 8vo. 
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A Popular Guide to Commercial, Municipal, Civil Service, and 
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Two hundred Questions on the Chapters. 

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INDEXING AND PRECIS- WRITING. A text-book specially adapted 
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SALESMANSHIP. A Practical Guide for Shop Assistant, Commercial 
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PITMAN »S BUSINESS MAN'S GUIDE. Fifth Edition, Revised. With 
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Temple, Barrister- at-Law, and Author of " Commercial Law of 
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of every-day occurrence. The work includes over 2,000 articles. 
In crown 8vo, cloth cover of special design, 500 pp., net 3s. 6d. 

TARIAL WORK. By Lawrence R. Dicksee, M. Com. F.C.A., and 
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ever-increasing competition which is to be met with. The authors 
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have been found to produce the best results, and place before their 
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character which, whilst suitable for the largest undertakings, is also 
readily adaptable to works and offices of small size. In demy 8vo, 
cloth gilt, 306 pp., net 5s. 

COUNTS. By T. E. Young, B.A., F.R.A.S., and Richard Masters, 
A.C.A. Mr. Young, who has held with marked distinction some 
of the highest positions in the Insurance world, enjoys an 
international reputation as an expert in the subject, while Mr. 
Masters, from his long practical experience as an Insurance Account- 
ant, is famihar with every detail of the book-keeping requisite to 
a well-conducted office. The title of the book is sufficiently expla- 
natory to preclude the necessity for further elaboration of its 
contents. Second Edition, Revised. In demy 8vo, cloth gilt, 146 
pp., net 3s. 6d. 


The attempt has been made in this book to trace the principal 
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Act, 1882, and the amending Act, Bills of Exchange (Crossed 
Cheques) Act, 1906, are printed in extenso in the Appendix. In 
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INSURANCE. By T. E. Young, B.A., F.R.A.S., ex-President of the 
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etc., etc. A complete and practical exposition for the Student and 
the Business Man of the principles and practice of Insurance pre- 
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book has been written expressly for (1) The Actuarial student. 
(2) The student of Fire, Marine and Insurance generally, (3) The 
Insurance Clerk. (4) The Business Man. It treats in an element- 
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of Insurance business as a key to the interpretation of the accounts 
md practice of offices and as a comprehensive foundation for 
maturer study. The uniform object steadily retained in view has 
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aid of illustrative examples actually occurring in insurance work, 
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MONEY, EXCHANGE AND BANKING. Second Edition, Re\Hsed. A 
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As d. practical exposition for law students, business men, and 
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Barlow, M.A., LL.D., and W. Joynson Hicks, M.P. The Locomo- 
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Act, 1878 ; The Highways and Locomotives Act, 1878 (so far as it 
relates to locomotives) ; The Public Health (Ireland) Amendment 
Act, 1879, s. 6 ; The Locomotives on Highv/ays Act, 1896 ; The 
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ENCYCLOPiEDIA OF MARINE LAW. By Lawrence Duckworth, 
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of Marine Law are thus brought together under their distinctive 
headings, and the use of an elaborate Index is dispensed with. The 
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COMPANIES AND COMPANY LAW. Together with the Companies 
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of the Economic Plants of the World and of their Commercial Uses. 
By W. G Freeman, B.Sc, F.L.S., Superintendent, Colonial Econo- 
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PITMAN'S OFFICE DESK BOOK. Contains most of the matters 
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WHERE TO LOOK. An easy guide to the contents of certain specified 
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PITMAN'S SECRETARY'S HANDBOOK. Edited by Herbert E. Blain, 
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HOUSEHOLD LAW. By J. A. Slater, B.A., LL.B. (Lond.). The 
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M.A., Barrister-at-Law. The present volume deals with the law 
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tended for beginners in the study of commercial education, this book 
gives simple but practical instruction in the art of business com- 
position and the writing of commercial letters, and is suitable 
either for private study or for use in class. It does not consist 
merely of a collection of miscellaneous letters, but contains besides 
revisionary exercises and many reproductions in facsimile of 
commercial documents. In crown 8vo, quarter cloth, 146 pp., 
IS. 6d. 



M.A. A complete guide to the accurate use of stops in writing. 

In crown 8vo, cloth, 80 pp., is. 6d. 

compiled to serve as a Primer, or beginner's book, in the study of 
our own language. Special attention has been given to the synthesis 
of sentences, as well as to their analysis. In crown 8vo, cloth. 
219 pp., IS. 

A GUIDE TO ENGLISH COMPOSITION, with Progressive Exercises. 
By the Rev. J. H. Bacon, Rector of Great Gonerby, author of 
" A Complete Guide to the Improvement of the Memory," etc. In 
fcap 8vo, 112 pp., paper, is. ; cloth, is. 6d. 

NOTES OF LESSONS ON ENGLISH. A comprehensive series of lessons 
intended to assist teachers of English Composition and Grammar. 
The amount of formal grammar is reduced to a minimum, while a 
great variety of exercises for composition is provided. In crown 8vo, 
cloth. 208 pp., 3s. 6d. 

PITMAN'S COMMERCIAL SPELLER. An accurate Guide to the 
spelling of about Eight Thousand words which frequently occasion 
doubt. Contains, also, precise directions with regard to Punctua- 
tion, etc. ; lists of Phrases in common use from the I,atin, French, 
and other languages ; Commercial Information in brief about Bills 
of Exchange, I.O.U.'s., Foreign Money, etc., etc. In royal 32mo 
(3 in. by 5 in.), limp cloth, round corners, coloured edges, 84 pp., is. 

ENGLISH. A new and practical Manual of Commercial Corre- 
spondence in two divisions, first, Commercial Correspondence, 
including about 340 letters ; and, second, Commercial English. 
The most complete, most reliable and up-to-date book of model 
business letters that has ever been published. All the letters are 
counted for shorthand speed practice, and editions are published 
in Shorthand, French, German, and Spanish, corresponding page 
for page. In crown 8vo, cloth, 272 pp., 2s. 6d 



work gives all the letters of " Pitman's Commercial Correspond- 
ence " in French, and also contains a List of French Commercial 
Abbreviations, French coinage, weights, measures, and other 
matter of importance to the student of Commercial French, together 
with a number of reduced facsimiles of actual French business forms 
and documents. Notes are added to each letter. In crown 8vo, 
cloth, 240 pp., 2s. 6d. 


this work all the letters contained in " Pitman's Commercial Corre- 
spondence " are translated into German, with useful notes at the 
foot of each letter. It also contains a list of German Business 
Abbreviations, German coinage, weights, measures, etc., and reduced 
facsimiles of a number of German documents and business forms. 
In crown 8vo, cloth, 240 pp., 2s. 6d. 

work contains a Spanish translation of all the letters in " Pitman's 
Commercial Correspondence," with copious notes on the idiomatic 
phrcLses, etc., facsimiles of commercial documents, and a map of 
Spain, with the names of the towns, rivers, etc., in Spanish. In 
crown 8vo, 240 pp., 3s. 


(Reporting Style). This work gives in beautifully engraved 
Shorthand all the letters included in " Pitman's Commercial 
Correspondence," with a chapter on the Shorthand Clerk and his 
Duties. Every care is taken to secure a style of writing which shall 
be a model. In crown 8vo, cloth, 240 pp., 2s. 6d. 

volumes, crown 8vo, cloth] gilt ; each} about 250Jpp. 

English-German 2s. 6d. English 2s. 6d. 

English-French 2s. 6d. English-Italian 3s. od. 

English-Portuguese .... 3s. 6d. 
Each volume contains a very large and widely varied collection of 
business letters, arranged in groups and in series, and dealing at length 
with (fl) Business in Goods ; [b) Banking, etc. ; {c) Commission and 
Consignment Business ; and {d) The Transport and Insurance of 
Merchandise. Each set of transactions is first presented in the 
form of a precis or summary, and then the same transactions are 
fully illustrated by letters. In the English- Foreign volumes the 
information respecting the particular business treated, the precis 
of the transactions, and the letters are given in EngUsh and in 
either French, German, Italian, or Portuguese, according to the 
language dealt with in the volume. In each of the five volumes there 
are Additional Exercises for practice, and a useful List of Business 
Abbreviations in two or more languages, arranged in parallel 



B.A. (Hons.), Cantab. Intended for students who are just beginning 
the study of Commercial German. Facsimiles are furnished of 
German commercial correspondence and business documents. In 
crown 8vo. cloth, 143 pp., 2s. 

the student, the youthful commercial aspirant, or the clerk wishful 
of bettering his position, the book is a guide and counsellor. In 
crown 8vo, cloth, 80 pp., net is. 6d. 

has been limited to the most common and ordinary terms and 
phrases of a commercial nature. No intelligent person who has 
a slight knowledge of the construction of French, German, Spanish, 
or Italian, will find any difficulty in composing a commercial letter 
in any of these languages, if a proper use of the work is made as 
directed in the Introduction. In demy 8vo, cloth. 502 pp., net 
7s. 6d. 

BUSINESS WORDS AND TERMS. A new pocket Enghsh-German 
and German-English Dictionary, with a list of Abbreviations in 
general use, by Fritz Hundel. Size 2 by 6 in., rounded corners, 
roan, net 2S. 6d. 

LANGUAGES. Based on a manuscript of Julius Cornet, by 
H. MiCHAELis. In two parts. First part : Portuguese-English. 
Second Part : EngHsh- Portuguese. Colloquial, commercial, and 
industrial terms have been plentifully introduced throughout the 
book and irregularities in the formation of the plural and in the 
conjugation of verbs have been carefully noted. Second Edition. 
Two volumes, 15s. each, net. 

ABRIDGED EDITION. Two parts in one volume, 15s. net. 

French, German, and Spanish. See page 24. 2s. 6d. 

COMMERCIAL DICTIONARY. A useful dictionary, which should 
always be close at hand for a correspondence clerk or a typist to be 
able to refer to at any moment. Much labour will be saved to the 
ordinary individual by such a book as the present ; for the defini- 
tions are of the crispest character. Univocal words which present 
no difficulty as to spelhng are omitted, and abbreviations, signs, 
anglicized foreign expressions, etc., are placed in their alphabetical 
order in the body of the book. The appendix contains forms of 
address, foreign coinages, weights and measures, etc. In crown 8vo. 
paper boards gd. net ; cloth is. net. 



THE WORLD AND ITS COMMERCE : A Primer of Commercial 
Geography. Contains simply written chapters on the general 
geography of the world, the seven great industries, the commercial 
geography of the British Empire at home and abroad, and of foreign 
countries. The information conveyed is quite up-to-date. In 
crown 8vo, quarter cloth, 128 pp., with thirty-four additional 
maps, IS. 

Principal Contents. — Part I. — The World Generally. — The 
Surface of the Earth — Zones and Heat Belts — Distribution of 
Life — Agriculture — Herding and Ranching — Fishing — Lumbering 
— Mining — Manufacturing — Commerce. 

Part II.— The British Empire.— The United Kingdom.-— The 
British Empire Abroad. 

Part III. — Foreign Countries. 

A thorough description is given of the commercial position, the 
mineral, agricultural and manufactured productions, and chief 
commercial towns of each country. 
DOM. In crown 8vo, quarter cloth, 128 pp., with 30 coloured maps 
and plates, is. 

Principal Contents. — Introduction. — Kinds of Commerce — 
Exchange and Exchanges — Imports and Exports — The Metric 
System — Manufactures — The World generally. Commercial 
Products. — Common Metals and Minerals — Commercial Products 
of Animal Origin — Common Plants and their Commercial Products. 
The United Kingdom. — Position, Configuration and Coast Line 
— Manufactures — Imports and Exports — Means of Transport 
— Commercial Towns — Trade Routes. England and Wales. — 
Scotland. — Ireland. — Mountains — Metals and Minerals — Pro- 
ductions — Animals — Geographical Structure — Climate — Bogs — 
Lakes — Fisheries. 
AND FOREIGN COUNTRIES. In crown 8vo, quarter cloth, 144 pp.. 
with 35 maps. is. 6d. 

Principal Contents. — The British Empire Abroad. — Naval 
and Military Stations — Canada and Newfoundland — Austraha, 
Tasmania, and New Zealand — the British Empire in Asia and 
Africa — the British West Indies, etc. Foreign Countries. — 
Europe generally : France, Germany, Holland, Russia, Belgium, 
Spain, Denmark, Sweden, Norway, Italy, Switzerland, Austria- 
Hungary, Portugal, Turkey, and Greece — Minor European Coun- 
tries — Asia generally — North America generally, the United 
States — Mexico and the RepubUcs of Central America — South 
America generally, and the States of South America. 
Principal Contents see Books I and II immediately above. In 
crown 8vo, cloth, 272 pp., with 72 maps and plates. 2s. 6d. 



COMMERCIAL HISTORY. An introductory Treatise for the use of 
advanced classes in schools. By J. R. V. March ant, M.A., formerly 
Scholar of Wadham College, Oxford, Examiner in Commercial 
History to the London Chamber of Commerce. 

Part I. — The History of Commerce down to the end of the Middle 
Ages — Coloured Maps, Plates, Maps in black and white, fully 
illustrated from ancient tapestries, sculptures, etc., etc. In crown 
8vo, quarter cloth, 112 pp., is. 6d. 

Part II. — The History of Commerce from the Middle Ages to the 
Present Time. — Maps, Plates, etc. In crown 8vo, quarter cloth. 
160 pp., 2s. 

Parts I and II, bound together in cloth, gilt lettered, 272 pp., 

Browning, Fellow of King's College, Cambridge. 125 illustrations, 
beautiful reproductions of eleven famous historical paintings, 
genealogical tables, glossary, summary. 272 pp., is. lod. 

Principal Contents. — " The People," by the Editor ; " The 
Church," by the Rev. Prebendary Reynolds, M.A. (Secretary to 
the Diocesan Board of Education and Diocesan Inspector) ; 
" Foreign Afiairs " and " Expansion of the Empire," by Dr. S. S. 
Fletcher, Master of Method, Day Training College, Cambridge. 
" Parliament," by W. F. Reddaway, M.A., Fellow of King's College, 
Cambridge ; " Law," by J. A. Slater, Barrister- at -Law, and Lec- 
turer under the London County Council ; " Trade," by J. R. V. 
Marchant, Barrister-at-Law, and Examiner to the Chamber of 
Commerce for London ; " Language and Literature," by Dr. Heath. 
University College, London, etc. 


Men and Advanced Classes in Schools. By J. A. Slater, B.A., 
LL.B. (Lond.), of the Middle Temple and North-Eastern Circuit, 
Barrister-at-Law. This work is intended for the service of advanced 
students in schools ; but it hcis been designed in an equally 
important degree as a constant desk companion to the modern 
man of business. It is believed that the method of treatment will 
render the work a useful text-book for the various examinations 
in Commercial Law. With five facsimiles. Bills of Exchange (at 
3 mos.), do. (at sight), Bill of Lading, Charter Party, Cheque 
crossings. Fourth Edition. In crown 8vo. cloth, 227 pp., 2s. 6d. 


COMMERCIAL LAW (continued). 


A work of great usefulness to all engaged in English legal offices. 
The plan followed in this work is that of giving such an account 
of various branches of English law as shall serve to bring out the 
precise significance of the chief terms customarily used by lawyers, 
and often used by laymen. In crown 8vo, cloth, 213 pp., 2s. 6d. 

and Shorthand and other Junior Clerks. This work is supplement- 
ary to " Elementary Law," and its chief object is that of enabling 
junior clerks in English legal offices to gain an intelligible grasp 
of the meaning of the terms that they are called upon to employ 
every day. In crown 8vo, cloth, 200 pp., 2s. 6d. 

work is designed to serve for beginners and junior clerks in solicitors' 
offices the purpose served as regards other callings by office guides 
and other introductory technical books. In crown 8vo, cloth. 2S. 6d. 

CONVEYANCING. By E. A. Cope. Explains the essentials of a 
contract relating to land, illustrates the nature, the form, and the 
structure of the modern deed, the order of its contents, the import- 
ance ol recitals, the clauses impHed by virtue oi the Conveyancing 
and other Acts, the appropriate use of technical expressions, and 
numerous other points. Contains, also, a collection of precedents 
applicable to most of the ordinary transactions with which the 
beginner i? likely to be brought into contact in the course of his work 
in a soUcitor's office. In crown Svo, cloth, 206 pp., 3s, net. 

PITMAN'S BILLS, CHEQUES, AND NOTES. A Handbook for Business 
, Men and Commercial Students. Together with the Bills of Exchange 
Act, 1882. and the Bills of Exchange (Crosse I Cheques) A- 1, 1906. 
The aim of the present volume is to place before the general reader, 
the busmess man, and the commercial student the principles of law 
connected with bills of exchange, cheques, and promissory notes. 
In demy 8vo, cloth gilt. 206 pp. Net, 2s. 6d. 

See page 12. 5s. net. 

Barlow, M.A. LL D . and W. Joynson Hicks, M.P. See page 12. 
Net 8s. 6d. 

ENCYCLOPiEDIA OF MARINE LAW. By Lawrence Duckworth, 
Barrister-at-Law. (See page 12.) Net 5s. 

Barrister-at-Law. Net 5s. See page 13. 



PITMAN'S COMMERCIAL READER (Intermediate Book). A splen- 
didly illustrated reading book, written on the same general plan as 
the Senior Book in the same Series, but intended for younger 
readers. It is divided into nine sections, dealing with the cluef 
branches of Modern Industry, such as Paper-making and the 
Production of Books and Newspapers ; Steam and Machinery ; 
Shipping ; Mining and Metal Works ; Electricity and its Uses ; 
Cotton and what is made from it ; Woollen Manufactures, etc. 
Each Section ends with the life story of some notable industrial 
pioneer. In crown 8vo, cloth, 240 pp., is. Qd. 

PITMAN'S COMMERCIAL READER (Senior Book). An Introduction 
to Modern Commerce. The most important and valuable Reading 
Book yet published for use in the Upper Classes in Day Schools 
and in Evening Continuation Schools. Crown 8vo, cloth, 272 pp., 2s. 
Contains over 160 black and white illustrations, which include 
reproductions of famous pictures by Lord Leighton, P.R.A., Vicat 
Cole, R.A., Sidney Cooper, R.A., and Marcus Stone, R.A., together 
with portraits (reproduced from photographs) of Lord Rothschild, 
Lord Armstrong, Lord Masham, Sir Alfred Jones, Sir George 
WilUams, Guglielmo Marconi, etc., etc., etc. ; six black-and-white 
maps, and a coloured quarto Map of the World, showing the British 
Empire, the chief Telegraph Cables and Steamer Routes, etc. ; 

PITMAN'S COMMERCIAL READER (Junior Book). (In preparation.) 

ing manner with the leading commercial and National Institutions 
of France. The reading matter is most carefully selected, and while 
the student of French is improving his mastery of the language, he 
is at the same time getting a good insight into French commercial 
methods. Thus, while reading about invoices, the actual document 
is brought under his notice. Additional value is given to the book 
by the inclusion of questions and exercises. Maps, illustrations, 
and facsimiles of French commercial documents illustrate the 
text, and in addition the book contains a selection of commercial 
letters, a full Hst of commercial abbreviations in current use, and 
an exhaustive vocabulary. In crown 8vo, cloth, 208 pp., 2s. 6d. 

lines to the French Commercial Reader above. It furnishes a 
practical introduction to German commercial institutions and 
transactions, with questions and exercises which render it well 
suited for use in schools. Students are afforded the fullest help 
possible from plates, illuslxations, maps, and facsimiles of German 
commercial documents. The text has had the benefit of revision 
by modem language masters in well-known schools. In crown Svo, 
cloth, 208 pp., 2s. 6d. 



ENCE. A complete and reliable guide for the student of any kind 
of handwriting, designed for use in class for self-tuition. In fcap. 
quarto, quarter cloth, 2s. 

Contains carefully graduated Exercises, together with Plain 
and Practical Instructions for the Rapid Acquirement of a Facile 
and Legible Business Style of Handwriting — Furnishes also Explicit 
Directions for the Formation of the Recognised Civil Service Style — 
Text Hand — Legal Style — Engrossing Style — Block Lettering, as 
Required for Business Purposes — Valuable Hints (to Business 
Composition — Specimens of Written Business Letters and Various 
Commercial documents, such as Account Sales, Accounts Current, 
Bills of Exchange, Promissory Notes, I.O.U.'s., Invoices, Statements, 
Receipts, etc. — Lists of Business Abbreviations, and Particulars 
of the Examination Requirements of the Society of Arts, 
Union of Lancashire and Cheshire Institutes, Midland Union 
of Institutes, and other Examining Authorities. 

The whole of the numerous exercises, copies and illustrations, 
are facsimile reproductions of the author's actual handwriting. 

BUSINESS HANDWRITING. The object of this work is to enable 
students to acquire the habit of writing with ease and rapidity, 
in such a manner that the meaning rf even careless writing may be 
at once evident to the reader. The many illustrations and exercises 
form a special feature of the work, and these are photographic 
reproductions of the actual writing of the author and his professional 
friends. In crown 8vo, quarter cloth, 84 pp., is. 

Copy Books contain carefully graded sets of exercises in business 
work. The copies are engraved in a clear style of writing, for the 
purpose of guiding the student to a rapid and legible commercial 
hand. In fcap. folio, 32 pp., each 6d. 

No. I. — Documents and Exercises relating to the Home Trade. 

Principal Contents. — Commercial Terms and Abbreviations — 
Copying and Docketing Letters — Copying and Arrangement of 
Addresses — Subscriptions and Signatures of Letters — Letter- 
Writing — Composing Telegrams — Home Invoices, Cheques, and 

No. 2. — Documents and Exercises relating to the Import and Export 

Principal Contents. — Shipping Invoices of various kinds — 
Account Sales — Statements of Account — Credit Notes — Inland 
Bill and Promissory Note — Account Current — Balance Sheets — 
Bills of Exchange — Bank Deposit SHps — Bills of Lading — Advice 
Notes — Customs Declaration Forms, and Despatch Notes for 
Parcels Post — Brokers' Notes — Market Reports — Price Lists — 
Letters of Advice — Insurance Accounts, etc.. with blank forms to 
be filled up by the student, and also a list ot Commercial Terms 
and Abbreviations with their meanings. 


HANDWRITING (continued). 

for the dual purpose of a copy-book of commercial handwriting 
and to enable the student to familiarize himself with the filling 
up of business documents, etc. Among the forms given are : — 
Accounts Current, Account Sales, Invoices, Bill of Lading, Bills of 
Exchange, Cheques, Consignment Notes, etc. In large post 4to, 
printed in red and black, in wrapper, 32 pp., 6d. 

most common forms in every-day use in business to be filled up by 
the student. 26 separate forms in envelope. 6d. Forms sepa- 
rately, per dozen, 3d. 

PITMAN'S OFFICE ROUTINE COPY BOOK, No. i. In large post 4to, 
24 pp., 3d. 

Contains: — Specimen Addresses — Clerical, Commercial, Express 
Dehvery, French, German, Italian, Miscellaneous, Ofl&cial, Private, 
Railway, Registered, and Spanish, with Forms for Transmitting 
Money or Goods by Post or Rail. 

PITMAN'S OFFICE ROUTINE COPY BOOK, No. 2. In large post 4to, 
24 pp., 3d. 

Contains : — Inland Invoices — Statements of Accounts — Receipts 
— Telephone Message and Reply — A Credit Note — Export Mer- 
chant's Invoice — Telegrams — Cheques — Letters Advising and 
Acknowledging Payment. 

PITMAN'S OFFICE ROUTINE COPY BOOK, No. 3. In large post 4to, 
24 pp., 3d. 

Contains: — Letters Ordering Goods — Letters Advising Travel- 
ler's Call — House Agent's Letters — Reply to an Inquiry — Letter 
enclosing Copy of Advertisement — AppHcation for Shares — Letter 
Advising Despatch of Catalogue — Letter Advising DeUvery of a 
Cycle — Letter Requesting a Special Favour — Letter of Recom- 
mendation — Dunning Letters — A Promissory Note — Order for 
Advertisement and Reply — Banker's Receipt for Share Deposit. 

of papers set at various examinations, with suggestions for obtaining 
the best results. In crown 8vo, 40 pp., 6d. 

RULED FORMS for use with above Books I and II. Each fcap. 
folio, 40 pp., 8d. 



PITMAN'S FRENCH COURSE, Part I. Grammar, with exercises 
carefully selected conversational phrases and sentences, corre- 
spondence, short stories from French authors, and judiciously chosen 
vocabulary with imitated pronunciation. In crown 8vo, paper, 6d. ; 
cloth, 8d. 

PITMAN'S FRENCH COURSE, Part II. In crown 8vo, paper, 8d. ; 
cloth, lod. 

KEY TO PITMAN'S FRENCH COURSE, Parts I and II. In crown 8vo, 
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— ZT rsvr 25 CENTS 

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