session, or interest, and in this connection their attitude has been heretofore that only material changes in the title or possession of the property will nullify the policy. Thus the appointment of a receiver is not considered such a change in the title or possession of the property as to lead to a forfeiture (136 U. S., 223), since receivers receive their authority from the act of the court, and the appointment is not made with a view to changing the title or right to possession, but to managing the property for the benefit of those ultimately entitled to the same. Nor will this provision be violated where there has been an execution of a contract of sale according to the terms of which the vendor retains the title until the purchaser has made all payments (142 Ill., 537).

It is a general rule, however, that the provision against the transfer or change of the insured's title is invalidated through. the conveyance of an undivided interest in the property, although the amount of insurance happens to be considerably less than the remaining interest of the insured in the property (10 Mich., 279). In the case of the transfer of the property by and between partners, the ruling of the courts is by no means uniform, the rule in some states being that the policy provision is not invalidated by the sale of one partner's interest in the property to another (149 N. Y., 382; 57 Neb., 622). On the contrary, the courts of other states (47 Penna., 204) consider the sale of his interest by one partner to another as coming within the scope of this provision. In those states where a transfer of property by one partner to another is considered as not violating the policy, it is held that a change in the firm by which a third party becomes a member of the firm does constitute a violation of the policy and renders it void.1

1So many cases may arise for adjudication under that provision of the policy which provides that it shall become null and void if, without the insurer's consent, "any change other than by death of the insured takes place in the interest, title, or possession of the

INDORSEMENTS NOT SUGGESTED BY THE POLICY

In addition to the various indorsements just described, many other kinds of special agreements in the form of indorsements exist, which are not suggested by any of the provisions in the standard fire policy. Almost any kind of special agreement may be entered into by the parties to the contract, which, when indorsed on the policy will supersede anything to the contrary in the policy, and will constitute the latest agreement. Some of these clauses have already been mentioned in other chapters, and copies of nearly all can be easily obtained from the offices of any large insurance company or brokerage firm. Frequently many of these clauses are combined in the same "rider" which is attached to the policy, and in many instances the wording of given clauses varies materially in different localities, because they are prepared by different underwriters' associations or insurance exchanges. Briefly stated, practically all of the hundreds of special clauses in use which have not been mentioned already, can be listed under one of the following five groups:

1. Those indorsements providing for an extra premium because of some deficiency in the risk, until the same has been remedied in a manner satisfactory to the company.

2. Permits for the use in certain places of certain prohibited articles, processes of manufacture, and methods of generating heat, light, and power. These permits in most cases are of a very detailed character, containing half a dozen warranties and a dozen or more "cautions" as to the proper use of the articles.

3. Prohibitory clauses, preventing the use of certain ar

subject of insurance, etc.," that the reader is referred to the summary of cases decided by the Supreme Court of Pennsylvania and presented in Moise and Matlack's "The Law of Insurance in Pennsylvania."

ticles and methods of generating heat, light, and power, which are not enumerated in the policy itself. As examples of such clauses in common use there may be mentioned the so-called "dynamo clause," which exempts the company from loss or damage to dynamos, switches, or other electrical appliances that may be caused by electrical currents, artificial or not, unless the same occur in consequence of fire outside of the machines themselves; the "bituminous coal clause' which exempts the company from liability for loss occasioned by the spontaneous combustion of bituminous coal on the premises of the insured; and the "consequential damage clause" which protects the company against indirect or consequential loss, including loss or damage caused by change of temperature occasioned by the destruction by fire of the refrigerating or cooling apparatus of the plant.

4. Clauses enumerating in detail the various groups of articles specifically insured under the policy, thus making unnecessary an elaborately written description of the property in the policy itself. These indorsements are usually very long, and go under captions such as "household furniture form," "automobile form," "merchandise form," "retail store form," "dwelling form," "stable form," "clothing form," "farm form," "form for building in process of construction," etc. Generally these various "forms" include other clauses which are applicable to the risk in question.

5. Special clauses according to which the company assumes extra liability, or makes a blanket policy specific with reference to certain items, or provides for the proper maintenance of fire-protection facilities, in view of which it has accepted a risk, or given a lower premium. By the so-called "cold-storage clause" the company, in consideration of an additional premium, assumes liability for loss and damage to the property within the described building caused by change of temperature resulting from the destruction or disablement of the cooling apparatus, connection or supply

pipes, etc. Similarly, under the "rent clause" the insurance company agrees to make good the loss of rents caused by fire and actually sustained by the insured on occupied or rented portions of the premises which have become untenantable during the time that is required to restore the premises as they were before the fire. Companies also, under the "livestock clause" insure horses, cattle, and other live stock against death by lightning while in the described premises. On the other hand, certain clauses specifically limit the amount of the insurance under a given policy which is applicable to a given item of the property described, as where, for example, "not more than 15 per cent of the amount of this policy shall cover on pattern cards, drawings, designs, lithographic stones, and negatives."

Various clauses also provide for the proper maintenance of fire-protective appliances. Thus the "signaling system clause" stipulates that in view of the described premises being fully equipped with a perfect automatic fire-alarm system, etc., a reduction is made in the premium of the policy, but on the understanding that if the apparatus is at any time removed at a later date, or becomes inoperative, the company shall at once receive notice of the fact, and a prorata proportion of the reduction in the premium shall be refunded to the company for the unexpired term of the policy. Likewise the "automatic sprinkler clause" provides for due diligence on the part of the insured to maintain such equipment in complete working order during the term of the insurance; and the "perfect fire-protection clause" makes similar provision.

CHAPTER XIV

THE REINSURANCE RESERVE

At

THE nature and purpose of the reserve in fire insurance becomes apparent if we take into account the manner in which a company earns its premium. Thus let us suppose that a company issues an annual policy for a premium of $120. This premium is payable in advance, and since the policy has a year to run, it is clear that the company has not yet earned this sum, but will become entitled to it only in the proportion that the policy reaches its maturity. the end of the first month one twelfth of the term has elapsed, and the company can rightfully consider that part of the premium, or $10, as earned. Eleven twelfths of the premium, however, or $110, must be considered unearned, since the company has not yet furnished protection for the eleven months remaining in the term. At the end of six months one half of the premium, or $60, is earned, and the other half unearned. It is not until the end of the twelfth month that the company has furnished the full year's insurance, and is, therefore, entitled to the full premium.

This unearned portion of the premium constitutes the reserve. It must be regarded as a sum held in trust by the company for its policy-holders. Although paid to it in advance the company cannot claim this sum as its own property. It belongs to the policy-holders, and must be earned by the company before it can be used for its own purposes. The reinsurance reserve may thus be defined as "the unearned premium"; or as the liability of the company to its policy