event the loss exceeds a stated item of $25, $50, or $100. AMOUNT OF INSURANCE The policy is usually written for a stated amount of insurance, in accordance with the policyholder's estimate of the maximum value of the car insured. There is probably no one feature of the policy that has caused so much trouble for the companies as this item of amount of insurance. The average automobile | depreciates very rapidly. If the policyholder takes out his insurance at the time he buys a new car, which is the usual practice, then he naturally expects an amount of insurance equal to the amount he has had to pay for his car. If total loss occurs soon after, he expects, and usually receives, payment from the insurance company almost equal to the full amount of insurance. If the total loss occurs several months later, however, there is a question as to the actual amount of loss or damage. The assured naturally thinks his car is still worth almost as much as when new, whereas the insurance company knows that the actual value of the car is at least 20% less under ordinary circumstances, and that it may be as much as 40% or 60% less, depending on trade conditions, depreciation on automobiles in general, and the wear and tear on the car itself. It is important to bear in mind that the policy restricts the amount to be paid by the insurance company in the event of loss to the actual loss or damage to the property insured, which in no event shall exceed the actual cash value thereof at the time such loss or damage occurred (without compensation for the loss of use of the property), and that the payment shall in no event exceed what it would then cost to repair or replace the property, or such parts thereof as were damaged, with others of like kind and quality. REINSTATEMENT OF AMOUNT OF INSURANCE When a policy is written for a definite amount of insurance, each loss paid reduces the amount of insurance of the policy accordingly. An additional premium is required of the policyholder to reinstate the policy to its original amount of insurance. If the company pays the full amount of insurance stated in the policy on account of a total loss, the assured has had the full benefit of his policy coverage, even though the policy has not expired. "NO AMOUNT POLICY" 2 There has been agitation recently for a fire policy that does not name any particular amount of insurance. A flat premium is charged for the car, and the car is insured for whatever value it may have at the time of loss. In the event of loss, the amount of actual loss is determined and that amount is paid no matter how large or small it may be. As a matter of fact, 2 Sometimes referred to as Actual Value Policy, Market Value Policy, Cash Value Policy, or No Sum Policy. See articles in April 25th, 1924, Automobile Insurance number of the Eastern Underwriter for pros and cons of cash value plan. there is no difference between the "no amount policy” and the "amount" policy in the settlement of a partial loss, and very little difference in the settlement of a total loss. The proponents of the "no amount" form of policy appear to be gaining ground and a number of companies are writing that form. They claim that the "no amount" policy will accomplish (1) elimination of competition among agents on account of amount of insurance to be allowed and elimination of correspondence in respect thereto; (2) simplification of rating procedure, making it easier for agents to understand and sell automobile insurance; (3) possibility of enabling adjusters to better satisfy the assured in the event of loss, without increasing the amount of settlement; (4) elimination of moral hazard so often attendant on a policy written for a definite amount of insurance. The opponents claim that it is an advantage to have an amount of insurance expressed in the contract, as the named amount acts as a stop limit to exorbitant claims. The opponents claim further that it is not fair to charge the same premium for all cars of the same type and model; one man's car three years old may be in excellent repair and condition, and may be worth twice as much as another three-year-old car of identical make and model. VALUED AND NON-VALUED POLICIES Practically all of the policies sold to-day are "nonvalued." This means that the payment of loss depends upon the actual value of the property destroyed at the time of its destruction. For a number of years, however, a "valued" policy was sold quite freely. The car was insured for a specific amount of insurance and, in the event of total loss, the insurance company paid the full amount without question. The car may have been worth more, but in most cases it was worth considerably less. An additional premium was charged for this valued policy but the additional premiums were not sufficient to pay the additional losses and the companies were finally forced to abandon the coverage. The marine companies were largely responsible for the introduction of the valued policy which was patterned after a practice in common usage in marine underwriting. TRANSPORTATION INSURANCE The transportation coverage is now a standard part of practically every company's fire insurance contract. It embraces almost every conceivable form of loss to the car while the car is being transported in any conveyance by land or water. Transportation in any conveyance by air is not generally covered, although it is interesting to know that an automobile has been transported by airplane. No additional premium is charged for the transportation coverage, as a general rule, because the hazard is negligible. WINDSTORM COVERAGE The fire policy may be endorsed to include direct loss or damage caused by tornado, cyclone or windstorm (excluding damage done by hail, rain, sleet or snow, whether driven by wind or not), on payment of a small additional premium, which depends on the territory where the car is used. HAIL COVERAGE The coverage may be further extended, by payment of a small additional premium, to include direct loss or damage done by hail (excluding damage done by rain, sleet or snow, whether driven by wind or not). It is not customary further to extend the policy to cover the damage done by rain, sleet or snow, probably because there is no demand for such coverage. WATER DAMAGE, EXPLOSION, EARTHQUAKE Water damage coverage is usually added by an endorsement which includes also the earthquake and explosion hazard. The endorsement extends coverage to direct loss or damage by earthquake, explosion (excluding rupture of tires and explosions within the combustion chamber of an internal combustion engine) and accidental and external discharge or leakage of water. The additional premium charge is relatively small. V LOSS OF USE On rare occasions the assured will be interested in a coverage that reimburses him for each day's loss of use of his car resulting from some peril insured against. This loss of use coverage has been sold by one or two companies, usually with a waiting period provision of from three to seven days before the per |