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1945 Theatre Catalog, 4th Edition, Page 471 (445)

1945 Theatre Catalog, 4th Edition
1945 Theatre Catalog
1945 Theatre Catalog, 4th Edition, Page 471
Page 471

1945 Theatre Catalog, 4th Edition, Page 471

come in. There is too little of this inv surance purchased. We hear again and again of the small business man put out of business permanently by fire. This is not necessarily because he was unable to collect insurance to cover the physical damage done by the fire, but probably because he could not afford to continue his fixed charges and re-establish himself after the interruption of his business by fire. It is not within the scope of this article to cover the technicalities of this form of insurance.


Fire insurance is nowvcommonly written with what is known as extended coverage, added to the policy. This makes the policy cover in addition to insurance against fire, insurance against Windstorm, explosion, riot and civil commotion, aeroplane, and several other minor types of loss.

The value of extended coverage has been proven in recent hurricanes and was outstandingly proven in the case of the Empire State Building disaster.

The fire insurance policy is a highly technical document. It is, however, not within the province of this article to turn the theatre operator into an expert on this subject.

The owner of property, today, should make certain that he has adequate fire insurance. With increasing costs of labor, and material, the amount that he carried a few years ago, if sufficient then.

is undoubtedly inadequate today. His

policy may contain what is known as a co-insurance clause Which is, in brief, a requirement that he carry insurance to the amount of 80 or 90 per cent or some other prescribed percentage of the insurable value; otherwise he may be penalized in case of loss.

It is important that he understand clearly what is meant by itinsurable Value], for the insurable value is the amount of insurance the owner should carry and also the amount that he may reasonably expect to collect in case of loss.

Book value is not insurable value, and may have little, if any, relation to the amount of insurance that he can collect. Real estate value is not insuratle value. He may properly collect either more or less than the book value or the real estate value. The original construction cost is not the insurable value, nor is the fair sales value, nor is the purchase price the insurable value. They may have no bearing whatever on the insurable value.

The only true measure of insurable value is todayis replacement cost of the damaged or destroyed building or equipment with an identical brand new building or equipment, less a suitable allowance for depreciation and obsolescence.

The one best way of determining this is to obtain the services of a thoroughly competent appraisal company. An insurance appraisal of this type is expensive but may be worth its weight in gold the day after the fire. Reasonably reliable appraisals may at times be obtained from local contractors, architects, engineers or of edurse from employes familiar with building construction costs.

If original building-cost records are available and no extensive improvements



have been made, the original costs can be brought up-to-date by applying factors comparing todayis costs with those of the year during which the theatre was built. The tables issued by the Engineering News-Record are generally accepted by insurance companies. From the cost so established should be deducted a percentage for depreciation, based upon the age and physical condition of the building.

The cost of excavation and foundations should first be deducted before any of these calculations are made.

The result of these steps produces the insurable value.


A fidelity bond, as its name implies, protects the employer against losses caused by acts of dishonesty or infidelity of his employes. There are several forms of bond but it is not within the scone of this article to discuss them in detail. There are two principal plans: one is to bond each and every employe and the other is to bond only certain selected employes. The first is the safer, for the employe who may be in the poorest position to involve the employer in a loss may be the very one who causes the loss.

It should be borne in mind in establishing the amount of insurance to be carried under a fidelity bond that while the employe may take comparatively small sums at one time, over a long period of years, this may accumulate to a substantial sum.

An important service is rendered by the Bonding Company in investigating applicants.


This form of insurance covers loss of money, securities and other property as

a result of safe burglary or holdup. In order for a loss to be covered under a safe burglary policy it is necessary that the safe shall have been entered by force and violence of which visible marks shall be evident. The mere opening of a safe by manipulating the combination is not suiiicient basis for a claim, The holdup must be an actual holdup as we commonly understand it. Money must have been taken with the knowledge of the custodian of the money, by violence or putting the custodian in fear of violence.

There has recently come on the market an improved form of protection for money and securities. Under this, many of the technicalities including those described above are waived and the mere fact that the money has been lost may be suliicient basis for claim. The additional cost of what is known as a "Broad Form Monies and Securities Policy" is justified.


No discussion of insurance is complete without mentioning loss and accident prevention.

More and more various forms of insurance are paid for on what is known as an experience basis; that is, the cost is determined by the losses. It is thus to the advantage of the property owner or operator to do everything within reason to prevent losses.

What is more important to him is his legal liability in case of accident. He should so conduct his operations that following an accident he can clearly show that he had made every reasonable effort to prevent accidents.

This can be accomplished only by actual intelligent effort, and by constant vigilance. The manager must have the importance of safe operation uppermost in his mind, and impress it upon his employes constantly.

BUSINESS INTERRUPTION is, perhaps, the theatreman's most dreaded experience, regardless of what may be the cause of that interruption. For example, when a ceiling drops, as it did in this case, the theatre is forced to close for repairs, with a consequent stoppage of revenue. If the theatre is properly covered, a business-inferrupiion insurance policy insures income to cover expenses that continue whether the theatre is open or not.
1945 Theatre Catalog, 4th Edition, Page 471