CHAPTER I. NATURE AND HISTORY OF INSURANCE. SECTION 1. DEFINITIONS. The following are some of the best recent definitions of insurance: "Insurance is a contract by which the one party, in consideration of a price paid to him adequate to the risk, becomes security to the other that he shall not suffer loss, prejudice, or damage by the happening of the perils specified to certain things which may be exposed to them; a contract whereby one party undertakes to indemnify or guarantee the other against loss by certain specified risks; an act or system of insuring or assuring against loss; specifically the system by or under which indemnity or pecuniary payment is guaranteed by one party or several parties to another party, in certain contingencies, upon specified terms."1 "Insurance is a conditional contract, whereby one party undertakes to indemnify another against loss, damage, or liability arising from some specified but contingent event." "A contract whereby, for an agreed premium, one party undertakes to compensate the other for loss on a specified subject by specified perils." * SECTION 2. THEORY AND PURPOSE OF INSURANCE. The purpose of insurance is so far as possible to do away with accidental losses by distributing among a number, all of whom were exposed to a 122 Cyc., p. 1384-1385. Vance on Insurance, p. 1, note 1. • Vance on Insurance, p. 1. common peril, the loss which has fallen upon one of them. Except to a certain extent in the case of life insurance 'policies, the contract is, or should be, strictly one of indemnity. This principle of indemnity is illustrated by the two following citations: "But it appears to us, that the claim of the plaintiff to recover in this action is founded upon an entire misapprehension of the nature and legal effect of a contract of insurance. An insurance of buildings against loss by fire, although in popular language it may be called an insurance of the estate, is in effect a contract of indemnity with any owner, or other person having an interest in the preservation of the buildings, as mortgagee, tenant, or otherwise, to indemnify him against any loss which he may sustain, in case they are destroyed or damaged by fire. If, therefore, the assured has wholly parted with his interest before they are burnt, and they are afterwards burnt, the underwriter incurs no obligation to pay anybody. The contract was to indemnify the assured; if he has sustained no damage, the contract is not broken. If indeed, on a transfer of the estate, the vendor assigns his policy to the purchaser, and this is made known to the insurer, and is assented to by him, it constitutes a new and original promise to the assignee to indemnify him in like manner, whilst he retains an interest in the estate, and the exemption of the insurer from further liability to the vendor, and the premiums already paid for insurance for a term not yet expired, are a good consideration for such promise, and constitute a new and valid contract between the insurer and the assignee. But such undertaking will be binding, not because the policy is in any way incident to the estate, or runs with the land, but in consequence of the new contract. Even the assignment of a chose in action, with the consent of the debtor, and a promise on his part to pay the assignee, constitute a new contract on which the assignee may sue in his own name."4 "The plaintiff can only recover an indemnity. Then what has this party lost, if he has sold his interest in the ship, irrespective of the policy? Bank's interest is not protected, because she gave no authority to effect the insurance. Unless, therefore, there was some understanding that the policy should be kept alive for her benefit the plaintiffs, suing on behalf of Page, have lost nothing. If the policy had been handed over with the bill of sale, or there had been an order to the brokers to hand it over, the case would be different; then the parties might sue as trustees for the purchaser; but we cannot infer that, no facts being stated in the case to warrant such an inference.' SECTION 3. FORMS OF INSURANCE. The principal forms of insurance are fire insurance, life insurance, and marine insurance. The following minor forms of insurance are also in existence at the present time-accident insurance, benefit insurance, benevolent insurance, casualty insurance, fidelity insurance, guaranty insurance, lightning insurance, plateglass insurance, rent insurance and title insurance. SECTION 4. HISTORY OF INSURANCE-MARINE INSURANCE. The oldest form of insurance was that of marine insurance. This seems to have originated in Rhodes, to have been adopted by the commercial cities of Italy and by the towns of the Hanseatic League • Powell vs. Innes, 11 M. & W., 10. • Wilson vs. Hill, 3 Metc., 66. |