INSURANCE POLICIES.

Lyttelton Times, Volume X, Issue 603, 14 August 1858, Page 3

INSURANCE POLICIES.

(Fiom the ' Sydney-Morning-Herald..')

We direct attention to a recent decision of the Court of Common Pleas at Westminster —a decisionlof the highest importance to persons interested in Life Insurance Companies, and to which we direct their instant attention.

■In most of the policies issued—in all \ that we have seen —a condition is inserted that, after the. expiration of the year, a policy may be continued if, within " the days of grace," the premium be paid. We have no doubt it would be foiind that nine persons out of* the ten defer the-pay-ment of their premiunis for some "days'" after the annual date of the policy. By the decision referred to, it will be seen that this practice is attended with the most serious risk; for should the person whose life is insured die before the premium is tendered, the policy would become void. This astounding- decision has taken the world by surprise; }-et, nevertheless, it is undoubtedly correct if the policy be in the usual form, and contan no saving* provision. The document, strictly scrutinised, unquestionably amounts to this, and no more : that whereas a person making* proposals to insure his life must first submit to medical examinations and provide certificates, and is liable to have the premium rated according' to the classification of his life, no such preliminaries are interposed upon the renewal of a policy, whenever payment is made within the space of one month after the time covered by the premium is expired. Such, however, has never been understood. It has always been supposed that, providing-' the person insuring' die within the month, although the premium be not paid, the insurances offices would pay the policy. Under this impression, multitudes of per-' sons have availed themselves of what appeared to be a piece of liberality, but what, if strictly acted upon, would prove to be a most. grievious delusion. There were some peculiarities in the ease upon which this decision accrued. The United Mutual Insurance Company took part of the risk of the Merchauts' and Tradesmen's Insurance Company. The premium was due on October the 13th; the days of grace, as allowed by the United Mutual Insurance Company, expired, on November the 3rd. The life fell in on November the 12th. The manager of the United Mutual on the 14th paid the premium to the Merchants' and Tradesmen's Company —that is, two days after the life liad expired. The defendants in this action had received the premium after the expiration of their own days of grace, as a matter of courtesy and accommodation to the other company —neither party being aware, however, that the person whose life was insured had died. In this case, therefore, not only had the year expired, but the days of grace had also expired, and without raising the question whether the days of

grace, had they continued to run, would have secured the policy, the defendants might have claimed a verdict, because the additional indulgence was granted in ignorance of the main fact. In reality, a new insurance barl been obtained upon the life o* a dead man.

It was upon pronouncing a decision in this case, that the general question arose upon which the judges have declared that the days of grace do not. secure the insurer, excepting when the life does not in the mean time fall in; then the policy may be continued upon the same terms by paying the premium within the thirty days. We do not see what great advantages has been derived from the original concession of these clays of grace. No doubt delay of payment is always an agreeable thing1, but in point of fact a much more substantial boon would be conferred upon persons insuring by allowing them to delay the payment, even if at a considerable interest, for some months — at all events after they had insured for a certain number of %-ears. These days of grace, however, having- been set out as one of the inducements to insure, itbecomes of the highest moment that it shall have a determinate meaning not only in law but in practice. It is most unwise and dangerous to speculate upon the, justice of Insurance Companies. Considering what, large sums are frequently assured, and considering how frequent the changes which take place in the management of Insurance Companies, it is of the highest moment j that all the laws of such institutions should -j 1 be thoroughly understood ond have a fixed j and unchangeable character. The object, j of insurance is to put a certainty against- { an uncertainty. A man in business, or j one enjoying a salary, is tolerably satisfied that, so long as he shall live, he can provide i'pr his family. But the possibility of j instant or early death is an impression most painful to any sensitive mind burdened with the domestic cares. No man j ,is worth a straw who, with the present rate and facility of insurance, enprys a moderate income, if he does not. according" to his station in life, provide against an event ever impending, and which, but for such a provision, would plunge those most dear to -him, in deep distress and misery. In his mind he puts the certainty of his policy against the uncertainty of his life, and balancing the'one against the other enjoys the repose which is insured by the consciousness that a provision has been made. If, hoivevei*, the Insurance Companies, by the vag-neness of the terms they employ, and by the uncertainty of their practice draw men into snares of this kind, the very principle of life insurances is shaken, and it is merely one uncertainty placed ia a pm-allel line with smother. The man may live on, and therefore lo.se by insurance, or he may die,'and bis policy bo disputed, and his family gain nothing by insurance. These are considerations which fortify indolence nrirl selfishness, and ops- ( rate to an extent not to be easily estimated. Every case of dispute raised about the payment of a premium, unless for the resistance of fraud—unless justified by circumstances which are so clear and strong' as to carry public opinLm with the j Office—:tends to lessen confidence in the principle of insurances, and thus to inflict not only a serious injury 011 society, but also on the insurance companies themselves. There is, of course, always hanging about these institutions the fear that, by mismanagement or by extraordinary misfortunes, the funds may be exhausted, and thus the policy become waste paper.* To ■"prevent this elaborate calculations have bean made —facts have bean collected from all quarters, and the experience of various companies collated. We were led to imagine that the thing" was tolerably s ire, and that no greater uncertainty remained than must attach to till human projects ; but this decision has raised a difficulty never dreamt of, and we can fancy that when it becomes known to many of" our reade.rs, who are relying upon, these, days of j grace, they will feel no very pleasant seni sations. No doubt the companies that choose to take advantage of this decision will be able to do so, whatever disappointment it may occasion. They will be clear gainers, providing* they intend to grant no policies for the future, but surely no man will be mad enough to go to a company that puts upon its policy a clause so ensnaring, and leaves to co'.ijectur-i its intended practice. Let the companies conn forward as many have done in England' and cither state that- they mean to abide by the decision of the Cour', or that the popular interpretation of the policy is the true one. Nor should we be content with

any. mere inference. The consent ot silence is not to hi; accepted in matters of business We do not pretend to dictate what the compa-iies ought to do. If the)' choose W» say thi'it the decision of the Court of G.nnmo'.i Pleas has expressed precisely the intention of their days of grace, all we can reply is that a shameful trap has been laid. Men who perhaps have hard work to stfrape together the money to keep up tlieir policies, will learn with something1 like horror that, after paying- for many years, tlieir families have been by the very contrivance of the company exposed to total forfeiture for at liast one month in twelve. We sea that a very large number of the English insurance companies have declared that the families of -nn3 r person who may die insured within the thirty day's grace, will be entitled to the policy apon the-payment of she -premium. We await a similar movement in the colonies.