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( Name and Address of Branch Office.)
Fire Insurance is made binding in favor of
from at noon, on
in the Companies and in amounts specified below, for not
exceeding days from said date until
This insurance is made binding upon the mutual agreement that it shall at once terminate and become void upon delivery of policies in substitution, or at noon upon the day following that upon which notice is given to the applicant or broker that the risk is declined (legal holidays excepted).
Any loss occurring under this binder shall be settled as per form furnished, or in the absence of such form, as concurrent with any other insurance on same property at time of loss, and shall be adjusted in accordance with the conditions of the form of policy used by the subscribing Companies in the State of Pennsylvania.
Subject to Coinsurance Clause. Rate
its agent to be delivered to the insured, but in the meantime, ten hours before the policy was actually written, the property was destroyed. Hearing of the loss, the company at once telegraphed its agent not to deliver the policy, which instruction was carried out, although the insured tendered the premium. The court held "that the contract was complete when the proposal was accepted, and that it became operative, in accordance with its own terms, at noon on the 12th day of March while the property was still in existence. "* It was further declared, "that it was competent for the parties to make contracts that should relate back, and be operative from the time of the beginning of the negotiations, or to any other period, there is no good reason for doubt."2
A contract of insurance may also be issued in such a manner as to cover property distantly located, although it has already been destroyed, provided the insured had no knowledge of its status.8 In marine insurance it is a very common practice to insure property "lost or not lost," the underwriter agreeing to pay the loss, if it later develops that the property was destroyed, prior to the date in the policy. Retroactive insurance of this kind, although rarely met with in fire insurance to-day, because of the promptness with which news can be obtained by modern methods of communication, may serve a very useful purpose in protecting property in transit, when the same is reported missing or has not been heard of for some time.
By agreement, also, the parties to the fire-insurance contract need not specify the date when the policy shall terminate, but may leave this to be determined by either party at will. When the dates are thus left in blank, the policy is
■D. Ostrander, "The Law of Fire Insurance," p. 47. 2Ibid. 'Illustrated by Security Fire Insurance Company vs. Kentucky, etc, Insurance Company, 7 Bush. (Ky.), 81 (1896).
called an "open" one. In a prominent case1 it was decided that "the agreement that the risk should run from the first day of August, 1885, to a day to be named by the defendant is in law an agreement as to the duration of the risk, and is equivalent in law to a contract for a certain time, because under the terms of agreement, the time can be rendered certain. '' In fact, although the standard contract contemplates the insertion of the dates which mark the beginning and ending of the term, the weight of authority is to the effect that, should both be missing, the insurance should nevertheless be considered good "for a reasonable time." In one case the court declared,2 "the making of the contract of insurance was not a mere idle thing. It had a substantial purpose and meaning. . . . Some meaning must be given to the insurance, and it must be regarded, we think, at least for a reasonable time.''
THE RENEWAL OF THE CONTRACT
Closely related to the term of the contract is the practice of renewal. The Standard Policy provides "that this policy may by a renewal be continued under the original stipulations, in consideration of premium for the renewed term, provided that any increase of hazard must be made known to this company at the time of renewal, or this policy shall be void." The renewing of a policy does not necessarily require the writing of a new policy. It is sometimes, though not frequently effected by the issuance of a renewal receipt, a copy of which is herewith presented. (See Fig. 5.)
The essential thing to be noted about a renewal policy is that, while in all particulars it should resemble the original
1Imboden vs. Detroit, etc., Insurance Company, 31 Mo. App., 321 (1881).
illustrated by Schroeder vs. The Trade Insurance Company of Camden, 190 Illinois, 157.
contract, legally it is a new contract, Avhich, unless expressed to the contrary, is subject to the terms of the original policy. Special privileges granted by the company under the original policy, but not part of the contract, cannot be demanded under the renewal. The case of Hartford Fire Insurance Company vs. Walsh, 54111., 164, will serve as an illustration of what has been decided in many states. Here the owner
Amount, $ Premium, $
THE INSURANCE CO. OF
t (Address of company.)
In Consideration of Dollars,
being the premium on Dollars,
Policy No is hereby renewed and continued in force
for to wit, from the day of
19..., at noon, until the day of 19..,
insured a house under a one-year policy and renewed the insurance for two successive years. The building was destroyed by fire under the second renewal, and the company refused payment because the property had remained vacant and unoccupied for a longer time than allowed by the policy without the consent of the company. The owner admitted the fact, but argued that he had received verbal consent to a vacancy under the first renewal, and that, therefore, he had a right to expect the same treatment under the next renewal.
But the court refused to allow this claim, holding that "a renewal of a policy is in effect a new contract of assurance, and, unless otherwise expressed, on the same terms and conditions as were contained in the original policy. If, then, the property was occupied when the last renewal occurred, it, under the terms of the policy, became the duty of the assured to give the same notice that was required in the policy. . . There can be no pretense that there was a continuation of the former insurance, but it must be regarded as a new contract, under the same terms and conditions as entered into and formed the original contract of insurance.''
Furthermore, the description of the property, where a policy is renewed, must apply to the property as it stands at the time of renewal; and any increase of hazard which is not disclosed will work an avoidance of the renewed policy. The risk (description of property) insured under the original policy expires when the policy expires, and each renewal must be considered as applying to a new risk. In accordance with the policy, "any increase of hazard must be made known to the company at the time of the renewal,'' and concealment or misrepresentation will avoid the policy. It may be here stated that authorities advise that where for any reason the original policy has been altered as to amount, location, etc., the renewal should be by a new policy and not by a "renewal receipt;" also that under no conditions should a "renewal receipt" be granted which materially changes the original contract.
With the exception of the description of the property, a renewal policy may be presumed by the holder to be in all respects like the original policy. Suppose, for example, that the original policy contained no coinsurance clause, but that the renewal policy did, and the policy-holder, relying on the good faith of the company, failed to read the renewal policy. Supposing a loss occurs, on what basis shall it be settled— with or without coinsurance? Justice would seem to dictate