Fire Insurance Historical Path

In 1666 came the great fire of London, which burned for four days and nights and spread over 436 acres of territory. This was an alarming and appalling calamity. Over 85 per cent, of the buildings in London were destroyed, while the property loss is estimated to have been about ten million pounds, - a sum which has been calculated to equal over three hundred million dollars at present values.

In the absence of insurance this was a blow from which London was slow to recover, as is shown by the fact that in 1673, seven years later, about one thousand buildings were yet to be replaced. Relatively, this London fire was the greatest in the history of the world, and the date of it - September 2 -was observed as a Fast Day for more than one hundred years thereafter.

Immediately after the fire various plans for the protection of individuals against loss by fire began to be devised. In 1667 the first regular system for insuring buildings against fire began. In that year, one Nicholas Barbon opened an office where he individually proposed to insure houses and buildings. A few years later, in 1680, after having had some success, he formed a partnership known as "The Fire Office." This company, for a given consideration, engaged to pay the assured the amount of indemnity declared in the policy, or contract, should his house or building be destroyed by fire, or to repair it should it be only "damnified" -i.e., damaged. No liability, it will be noted, rested upon the assured beyond the payment of the premium.

In 1681, a few years after this first company was established, an attempt was made by the city of London to establish an insurance account, or business, and funds and property were put aside and dedicated for that purpose.

Houses were insured for any term up to one hundred years. But the enterprise did not prosper and was abandoned in 1683.

Then followed, in the same year, what was called the "Friendly Society." This concern, which had an existence of nearly one hundred years, conducted its business upon an entirely different plan, as follows: First, the assured paid yearly a small sum, varying according as the building to be insured was brick or frame.

This charge was to cover the expenses and, we may presume, the profits of those who operated the company. Second, the assured deposited with the company a sum equal to five annual payments as a guarantee that future payments and assessments would be met as required. This money could be appropriated by the company if the assured failed to keep up his payments. Third, the assured signed an agreement to contribute his share toward the payment of any and every loss which the company might sustain up to an amount not exceeding thirty shillings for every one hundred pounds of insurance carried by him.

It will be seen that all losses were to be paid from the contribution of the assured, upon whom, also, rested all liability and for whom the operators of the company or the "undertakers," as they were termed, acted only as collectors and distributors.

This was a form of mutual insurance, as it is now called; that is to say, insurance where the policy-holders are directly liable for one another's losses. This company was also fairly successful.

Another policy mutual company was organized in 1696. This company proposed a deposit to be paid back, less expenses, when contracts should terminate; also that profits from interest on invested funds over and above losses and expenses should be divided among the members or policy-holders, and that each year a rate of assessment should be declared by the directors, according to which levies should be made on the policy-holders for payment of losses or for the distribution of profits to them.

For Future Lense Topics Are:
Cheap Contents Insurance
Student Car Insurance;
Ladies Car Insurance