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74 HASKINS & SELLS October A Story of Use and Occupancy INSURANCE is usually associated with fires, thefts, accidents, and deaths. But of late years, and particularly the last two or three, there has come into some vogue a form of insurance known as Use and Occupancy. The term is somewhat ambiguous to the uninitiated, but is used to denote insurance against loss of profit through business interruption resulting from fire; in short, business interruption insurance. It is separate and distinct from property loss insurance, and like the latter may be covered by an adjustable or by a valued policy. Under the valued form of policy the assured pays a higher rate of premium, but in settlement receives the amount of the insurance carried regardless of the actual loss. Probably most of the use and occupancy policies carried at present, however, are on an adjustable basis as a result of which the loss sustained by fire has to be determined. Property loss settlements are now made with comparative ease from reports prepared by adjusters who fix the amounts, if at times somewhat arbitrarily, from quantities actually determined or estimated, prices, supposed to represent replacement values, and in some cases with an additional allowance for expenses related to the physical property destroyed. The method has become more or less standardized and permits of little practical controversy. Use and occupancy settlements present more of a problem in that the form of insurance is relatively new. Methods of arriving at the amount of loss have not yet been developed because of the meagre experience available on which to base methods, and further, because the determination of the amount lost by the assured requires reference to the books and records and is subject to involvement through the many accounting questions which invariably arise. Briefly, use and occupancy settlements are largely a matter of accounting. A recent case of use and occupancy insurance is of more than passing interest because of the fact that two firms of accountants were retained to determine the amount of loss; one firm by the assured, the other by the underwriters. Failing to agree on the amount of loss the two firms, under authority of an appraisal agreement to which their principals became parties, called in a third party to act as umpire in the dispute. This case is thought to be one of the first of its kind to go to arbitration and illustrates what may be accomplished by this method, particularly where the questions are those of accounting and are submitted to an accountant, since in this case the findings
Object Description
Title |
Story of use and occupancy |
Author |
Anonymous |
Subject |
Fire losses Insurance -- Accounting |
Citation |
Haskins & Sells Bulletin, Vol. 06, no. 10 (1923 October), p. 74-77 |
Date-Issued | 1923 |
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 6-p74 |