formity in rates on certain commodities is arrived at is through reinsurance exchanges, where companies exchange business. which is written at agreed-upon rates. As instances, there may be cited the "Cotton Reinsurance Agreement," the "Cotton Fire and Marine Underwriters," the "Burlap Agreement," "Joint Grain Certificates," "Lumber Reinsurance Association," "Inland River Agreement," and "New Orleans River Association." While the underwriters' associations are principally concerned with rates on hulls, the agreements relate primarily to cargo risks.

Policy conditions. It has previously been explained that various arrangements may be made to adapt the insurance to the vessel or commodities to be covered and that the ordinary provisions of the policy are generally modified by special agreements and clauses. The underwriter's liability is thereby extended or reduced and naturally the rate varies in accordance with this fact. Obviously the hazard is increased considerably by the addition of a "warehouse to warehouse clause," and greatly reduced by restricting coverage to total losses only. It is impossible and unnecessary to enumerate all the possible variations and their effects.25

Underwriting judgment.-Finally, when we come to the end of the specific factors which have been enumerated there remains an interminable list of unclassified, unanalyzed and untabulated considerations to which only an underwriter's experience can enable him to give proper weight. The ability to evaluate properly these considerations and to apply them to specific cases is commonly called "underwriting judgment." Indescribable, yet clearly recognized, it has enabled some individuals to obtain positions of preeminence in this respect, so that testimony shows that their acceptance of a risk is sufficient to induce others to write on the same risk. This factor is present to some extent in all forms of insurance ratemaking. It would be possible to construct a list in which the various forms of insurance were arranged in order as they depended upon underwriting judgment as contrasted with statistics. Among those at the head of the list would appear marine insurance and at the bottom of the list life insurance. Underwriting judgment is especially important in the marine field because the event insured is uncertain, the hazards are many and peculiarly difficult to measure in figures and coöperation between underwriters is limited.

25 See appendices LXIV to C.

PART VI

OTHER FORMS OF CASUALTY INSURANCE

CHAPTER XX

AUTOMOBILE INSURANCE

Types of automobile coverage and types of companies.-In order to obtain complete protection the owner of an automobile must have five types of policies. For convenience in discussion, however, these may be divided into three groups, the liability and property damage forms, the collision form, and the fire and theft forms. The automobile insurance business is distributed between two types of companies, the casualty companies and the fire companies. In very few States is it possible to obtain complete protection in a single policy or company as the laws have been framed on the assumption that casualty risks belong to casualty companies and fire risks to fire companies. Liability insurance is written entirely by casualty companies, fire and theft insurance entirely by fire companies, and property damage and collision insurance is divided, casualty companies receiving probably the bulk of property damage and fire companies the greater part of collision insurance. The demand for complete coverage in a single policy is not great and such as it is has been largely met by cooperative companies operating under substantially similar management, and issuing combination policies.

Liability insurance policies.'-Liability insurance is insurance against legal liability for damages because of bodily injury to others arising out of the ownership, maintenance or use of an automobile. This policy also promises that the company will defend the insured in suits, pay legal costs, make investigations and settlements of claims and pay for immediate surgical relief to the injured. The policy is designed to cover the ordinary use of an automobile only and, therefore, contain limitations to its scope. It applies in the United States and Canada only, unless the territorial scope is extended by an endorsement paid for by an additional premium. In regard to use, the insured may not employ a private passenger car in carrying passengers for hire nor is the car covered while towing a trailer, or while 1 See Appendix CII.