TITLE XXIII. INSURANCE. § 2038. § 2039. § 2040. CHAPTER XCVIII. THE GENERAL PRINCIPLES OF INSURANCE. § 2037. Insurance defined A contract of indemnity. Reinsurance. Double insurance - Liability of successive insurers-Contribution. § 2042. Valued and open policies distinguished-Policy "to whom it may concern." § 2048. § 2049. Countersigning by agent - Indorsements on policy in general. § 2050. § 2051. § 2052. Duration of risk- When it commences and terminates - Renewals. What papers are part of contract. § 2053. Warranties are strictly construed. § 2054. Written matter prevails over printed words. § 2055. Representatious — In general. $2056. Representations must be material. § 2057. Matters of opinion. Subsequent change in circumstances. Conditions of policies - Notice of change of circumstances. § 2065. Consent of insurer. § 2066. Provisions against “other insurance”. In general. § 2070. § 2071. § 2072. § 2073. § 2074. Waiver of forfeiture - By usage. § 2075. § 2076. § 2077. § 2067. What is and what is not "other insurance." § 2068. Non-payment of premium as agreed forfeits policy. § 2069. Taking premium note Effect of. Non-payment of premium note or interest thereon. What is and what is not an excuse for non-payment of premium. Notice of loss - Time within which it must be given - Notice in general. Mode of. By whom and to whom given. § 2091. Remedy of insurer or insured against third party causing loss- § 2092. Remedies of insured against insurer. § 2093. Remedies against officers and agents of company. § 2094. Remedies of insurer against insured. § 2037. Insurance Defined A Contract of Indemnity. -Insurance is a contract whereby one for a consideration undertakes to pay money if another shall suffer loss. The contract of insurance is an executory contract executed by the payment of the sum insured on a loss.1 It is a personal contract, and does not pass with the title to the property insured.2 § 2038. Reinsurance. Reinsurance is a contract of indemnity to the reinsured, whatever be the subject-matter, and binds the reinsurer to pay to the reinsured the Disbrow . Jones, Harr. (Mich.) 1 Mutual Life Ins. Co. v. Wager, 27 Barb. 354. 48. loss sustained in respect to the subject insured to the extent for which he is reinsured. A contract for reinsurance extends no further than the risk taken by the original underwriter; he cannot stipulate for indemnity against a risk which he has not assumed. A policy of reinsurance is not void because the description of the property insured differs from that contained in the origi nal policy, when the description may be corrected by construction, there being enough to identify the property.3 In an action on a contract for reinsurance, defendant cannot set up a misrepresentation made while obtaining the original policy. The reinsurers are liable for the costs and expenses of a suit paid to the party originally insured. The reinsured, in order to recover against the reinsurer, must prove his risk or interest in the subjectmatter, and the fact and amount of loss, in the same manner as the original insured must have proved them against him; and the reinsurer is entitled to make the same defense to an action brought against him on the second policy as the original insurer might have done on the first policy. An insurance company having reinsured in another company to indemnity itself against loss on its policy, and discharged its liability by the payment of a less amount than that of the original insurance, the sum so paid by it is the measure of indemnity to be recovered from the reinsuring company; provided such sum is within the amount of the reinsurance policy, and does not exceed the amount of actual loss, and such 1 May on Insurance, sec. 11; Eagle Ins. Co. v. Lafayette Ins. Co., 9 Ind. 443. A contract of reinsurance is not within the statute of frauds: Com. Ins. Co. v. Ins. Co., 19 How. 318. Contra, Egan v. Fireman's Ins. Co., 27 La. Ann. 368. Unless expressly authorized it is ultra vires the officers of an insurance company: Hutchinson v. Ins. Co., 53 Cal. 622. * Commonwealth Ins. Co. v. Ins. Co., 35 Pa. St. 475. Yonkers Ins. Co. v. Ins. Co., 6 Rob. (N. Y.) 316. Jackson v. Ins. Co., 99 N. Y. 124. New York Central Ins. Co. v. Ins. Co., 20 Barb. 468. 6 Yonkers Ins. Co. v. Hoff. Ins. Co., 6 Rob. (N. Y.) 316. 7 New York Ins. Co. v. Ins. Co., 1 Story, 458; Eagle Ins. Co. v. Ins. Co., 9 Ind. 443; Hone v. Ins. Co., 1 Sand. 137; Delaware Ins. Co. v. Ins. Co., 3 Grant Cas. 71. policy contains no condition for pro-rating loss or limiting liability. Where a contract of reinsurance provides that the loss, if any, shall be payable pro rata, and at the same time with the reinsured, the liability of the company reinsuring accrues at the same time with the liability of the reinsured; and in order to sustain an action, it is not necessary that the company reinsured shall have actually paid the loss, but it is sufficient if they were liable to pay. A judgment against the original insurer is binding upon reinsuring companies who had notice of the suit and an opportunity to defend. The liability of the insuring company can be litigated only once." ILLUSTRATIONS.- Plaintiffs' agent issued to C policies of insurance upon her mortgage interest in certain premises. Upon being notified thereof, plaintiffs directed the policies to be canceled; the agent thereupon applied to defendant to reinsure the risks, which the latter agreed to do. Subsequently, it was agreed that a policy should issue direct to C, and one was executed accordingly. Held, that the contract was for original insurance, and that plaintiffs could not maintain an action thereon upon the ground of a reinsurance: Excelsior Fire Ins. Co. v. Royal Ins. Co., 55 N. Y. 343; 14 Am. Rep. 271. An insurance company knew that A was insured on his interest in a vessel, and for double the amount of its possible earnings. Held, that it was bound to disclose that fact to another company from which it sought reinsuranee: Sun Mutual Ins. Co. v. Ocean Ins. Co., 107 U. S. 485. P. insured goods for six thousand dollars, and effected a reinsurance with defendant for two thousand dollars, the policy of reinsurance providing that the loss should be payable "pro rata, at the same time and in the same manner as the reinsured company." A loss happened, for which P. paid six hundred dollars in full discharge of the liability. Held, that P. could recover only two hundred dollars of defendant: Illinois Mutual Ins. Co. v. Andes Ins. Co., 67 Ill. 362; 16 Am. Rep. 620. The A insurance company reinsured a risk in the B company. The building was burned, the A company was sued, and the two companies agreed that the case should be fought, the A company to control the defense. Without the consent of the B company, the case was compromised. Held, 1 Ins. Co. v. Ins. Co., 38 Ohio St. 11; 43 Am. Rep. 413. 2 Blackstone v. Alemania Fire Ins. Co., 4 Daly, 299. 3 Strong v. American Central Ins. Co., 4 Mo. App. 7; Strong v. Phoenix Ins. Co., 62 Mo. 289; 21 Am. Rep. 417. that the B company was not liable to the A company for any part of the money paid by way of compromise: Commercial Union Assurance Co. v. American Central Ins. Co., 68 Cal. 430. The A insurance company sold out its business to the B company. In consideration thereof the B reinsured the A company's risks, and agreed to pay, satisfy, and discharge the losses. Held, that this was more than a mere reinsurance, and that there was sufficient privity between a policy-holder and the B to enable the former to maintain an action against the latter for a loss: Johannes v. Phenix Ins. Co., 66 Wis. 50; 57 Am. Rep. 249. § 2039. Double Insurance Liability of Successive Insurers. Double insurance is where two or more policies are taken out upon the same interest.1 To constitute double insurance, both policies must be upon the same insurable interest, either in the name of the owner thereof, or of some one for his benefit. The right to contribution is based upon the concurrence of the policies, and it is necessary that the several insurers should be bound with equal certainty and in the same sense for the same loss.3, An agreement between different owners of property that one of them shall take out insurance on said property in his own name does not amount to double insurance. So an insurance by a mortgagor and a mortgagee severally may be effected without the insurance of either impairing that of the other. Where one of two policies of insurance in different companies covers the building only of the party insured, and the other covers the building, machinery, etc., this does not constitute double insurance." In order to hold different policies of fire insurance to contribute to the same loss, the insurance must have been on the same interest in the same property, or some portion thereof. Thus on the destruction of merchandise of a consignor, with whom the consignee had contracted to keep 1 May on Insurance, sec. 13. Etna Fire Ins. Co. v. Tyler, 16 Wend. 385; 30 Am. Dec. 90. Baltimore Ins. Co. v. Loney, 20 Md. 20. Burbank v. Ins. Co., 24 N. H. 550; 57 Am. Dec. 300. Jackson v. Mass. Ins. Co., 23 Pick. 418; 34 Am. Dec. 69. Sloat v. Ins. Co., 49 Pa. St. 14; 88 Am. Dec. 477. |