The great fire that gave birth to home insurance

The great fire that gave birth to home insurance

The great English civil servant, Samuel Pepes, was completely asleep in his London home when his servant woke him up around three in the morning on September 2, 1666. A great fire was raging in the British capital, she said. Pepys looks out the window, sees flames in the distance, but goes back to bed thinking that there is no danger waiting for him at the moment. When he wakes up, he learns that 300 dwellings have already burned down and that the fire is spreading. This was the beginning of what is now known as the Great Fire of London.

The next day, panic began to set in. Samuel Pepys collects his money and most valuable assets and decides to save himself from the growing hell. “While carrying my cart through the night, I saw how the streets were filled with people fleeing on foot or on horseback, trying to put their hands on the carts at any cost to get their goods,” he recounts in his memoirs, one of the rare writings of the era that allows us to understand the development of this tragedy. .

In 1666, firefighters did not exist. These are citizens and soldiers trying to fight the fire with simple buckets of water, but also tear down buildings that are still standing in order to stop the flames from rising. A little less than five days later, the fire was extinguished, but the losses were enormous: about ten dead according to the official report – although that number is now doubtful – nearly 13,200 homes were destroyed and nearly £10 million destroyed, or About 2.4 billion Canadian dollars in today’s money. Roughly 100,000 Londoners who lost almost everything were left homeless overnight.

protect your investment

It is time for Reconstruction and few who will take part in it are like Nicholas Barbon, the English physician and economist who quickly became one of London’s most influential property investors. Because he wanted to protect his buildings – and his investments – from a future fire, he had the idea to expand the concept of insurance, which already applies to marine cargo, to cover damage to homes caused by fire. In 1680 he founded the Fire Bureau, the first modern insurance company.

Barbon’s first insurance contracts specifically covered “burned, demolished, or cursed” homes. The “destroyed” dwellings are those that have been voluntarily destroyed to prevent the spread of flames in the neighborhood, while the “damned” ones have only been partially damaged.

And unlike current insurance contracts, insurance contracts at the time were particularly simple. There are only two tariffs: 2.5% of the rental value for brick homes and 5% for log homes, which burn more easily, for coverage generally equivalent to 10 times the rental value. They are all paid annually or all at once for the term which can range from 7 to 31 years.

These insurances are gaining popularity over time, but they are not affordable for all budgets. In 1690, it was estimated that one in 10 homes in London were insured, according to the Museum of London.

Every insurance company has its own team

In the years following the establishment of the fire office, competition arose. The Friendly Society was founded in 1683, then the Fire Office Hand in Hand in 1696 and the Sun Insurance Bureau in 1710. When a fire breaks out, each insurance company deploys its own banner to put it out and manage the identification of metal-secured homes Signage affixed to the facade, such as this one from Hand in Hand Fire Office. If a team extinguishes a fire that has come on a home insured by another company, the latter generally compensates its competitor. In principle, neither insurance nor watering.

Fire damage will remain the main risk covered by insurance for decades, in Europe as elsewhere. It would be necessary to wait until 1804 to see an insurance company open its doors in Canada – the Phoenix Insurance Company, in Montreal – and until 1950 to insure the modern home to cover many risks (fire, flood, lightning, etc.) in the same line became more democratic.

Nowadays, there is no need to install sheet metal to know insured homes. Almost all of them, home insurance is not mandatory in Quebec, but it is often required by mortgage lenders. Fortunately for uninsured homeowners, firefighters put out any fire, regardless.

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