4. To provide for expansion of the classification under each group, and symbolize each subdivision by an addition to the symbol for the group.
If these general rules are observed, the notation may be numerical or alphabetical, whichever serves the purposes noted above, and also is most easily memorized without the use of an elaborate key to interpret the system.
Adjustment of Fire Losses
The Insurance Contract
A fire insurance policy is a contractual engagement, modified by the conditions stated, to pay or replace, in part or in whole, any loss through fire, covering the property specified for a definite period. The amount to be paid cannot exceed the face value of the policy. The main points covered in the policy are the parties, the property, the risk, the amount, the term, the premium, and the conditions governing. There are three ways in which the contract may be terminated, namely: by expiration, cancellation, or forfeiture. Generally the contract holds good until noon of the day named as the date of expiration. Therefore, if a fire should break out in the forenoon on that day but the greater part of the damage were caused after the noon hour, the whole loss would be covered according to the terms of the policy. The policy can be canceled immediately by the insured by giving notice to the insurance company. The latter, however, must give notice and wait five days before the cancellation will be effective.
In case of cancellation, the premium cost for the expired term is usually higher proportionately than for the whole term; what is known as the “short rate” becoming effective. The causes for the forfeiture of the policy are many and various. Among the reasons are concealment or misrepresentation, or fraud in connection with taking out the policy or in substantiation of claims for losses incurred. Some of the parts of the agreement relative to occupancy, vacancy, change in title, use or allowance of dangerous substances may be the cause. Then again, neglect of the clauses as to the maintenance of an adequate sprinkler system, making provisions for watching the building, etc., may lead to forfeiture.
Requirements in Case of Loss
When a loss occurs the first thing necessary is to give at once a written notice to the insurance company and to endeavor to protect the property from further damage. The next step is to separate the damaged and the undamaged movable property, and to put these two classes in order so as to facilitate checking up. Then follows the making out of an inventory giving accurate details concerning the kind, the amount, the cost, and the damage claimed in respect to the goods. Upon the arrival of the adjuster of the insurance company, adjustment may be made immediately, or it may be a protracted affair, depending on conditions. The insured is required by the terms of the policy to submit a sworn proof of loss within 60 days. This proof must enumerate the facts and beliefs of the insured regarding the origin and time of the fire, the interest the insured has in the property, together with the interest, if any, held by others, the cash value of each item, the sum total of the loss sustained, the encumbrances on the property, other insurance, whether valid or not, a copy of all descriptions and schedules of all the policies, any change in title, use, occupation, location, possession, or exposure of the property since the issuance of the policy. It is also required to state by whom and how the insured building was occupied at the time of the fire. Sometimes the insurance company may require that this proof be verified by plans or specifications of the building, machinery, or fixtures that have been destroyed or damaged. At its option, it may request a certificate from an impartial magistrate or notary public substantiating the correctness and honesty of the claims presented. It is further required that the insured keep himself ready to exhibit any remains of the property in question. He may also be required to submit to an examination under oath and produce at the option of the insurance company any books of account, bills and other vouchers, and permit copies or extracts to be made from them.
Determination of Value of Loss
The insurance policy gives no hard and fast rule regarding the determination of value. The usual phraseology is: “This Company shall not be liable beyond the actual cash value of the property at the time any loss or damage occurs and the loss or damage shall be ascertained or estimated according to such actual cost value, with the proper deduction for depreciation, however caused, and shall in no event exceed what it would then cost the insured to repair or replace the same with material of like kind and quality.”