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14 HASKINS & SELLS February Insurance On the IN an effort to minimize possible losses a business organization ordinarily carries insurance to provide against losses from fire, water, cyclone, theft, accident, and other hazards. But to limit insurance to the conservation of tangible assets is only partial protection. The success of an enterprise often is due principally to the ability of the executives who have the direction of the resources at their disposal. That a business organization may suffer a loss through the death of an executive is no longer questioned. The rule that the beneficiary has an "insurable interest" only when he is a near relative or a dependent has been discarded. It is not only permissible but expedient that a company should protect itself against the loss of a highly valued executive. So-called "business insurance" is a particular application of the principle of security against loss through distribution of risk which is embodied in every form of insurance. Its function is to indemnify the business concern against the loss of Lives of Executives earning power of an important officer in a manner similar to the protection given to a man's family of life insurance. That earning power may be founded on various qualities, such as peculiar managerial ability, technical knowledge, or character. That a fire will occur before the useful life of a building ceases is problematical, but that an individual will die some time is certain. If the former type of contingency warrants insuring, certainly the latter does. The stupendous valuations which are frequently (and legitimately) attributed to good-will in many instances reflect the earning power of executive brains. It is only logical that the income from goodwill be protected as well as the returns from any tangible asset. Business insurance is applicable to any type of organization, whether it be single proprietorship, co-partnership, or corporation. The man who is in business for himself may be solely responsible for the success of his business. He may wish to protect his family against his premature
Object Description
Title |
Insurance on the lives of executives |
Author |
Anonymous |
Subject |
Business insurance |
Citation |
Haskins & Sells Bulletin, Vol. 10, no. 02 (1927 February), p. 14-15 Haskins & Sells Bulletin, Vol. 10, no. 03 (1927 March), p. 21-23 |
Date-Issued | 1927 |
Source | Originally published by: Haskins & Sells |
Type | Text |
Collection | Deloitte Digital Collection |
Digital Publisher | University of Mississippi Libraries. Accounting Collection |
Date-Digitally Created | 2009 |
Identifier | HS Bulletin 10-p14 |