“The question whether or not it is wise to insure, and to what amount, appears to me a very difficult one. If a person’s property be such that the loss of his house and furniture would not be a ruinous injury, then it appears to me it would be absurd for him to insure, because more than half the premium consists of duty to the Government, and by becoming his own insurance broker he saves that sum and the profit also. It appears to me also to be bad policy to insure to a great amount, because by a strange arrangement in all insurance offices, the sum paid for damage is not estimated, as it ought to be, by considering what proportion the damage bears to the whole value of the building, and paying the sufferer the same fraction of the insurance. Thus, if a house be worth £1,000, and is insured for £100, if the building is damaged to the amount of £100, the office will pay the whole of that sum; whereas I should say it ought to pay only the tenth part of £100—that is, £10; for the rate of insurance upon a large sum is no less than that upon a small one, and the probability of a house being injured to the amount of £100 is greater than the chance of its being injured to the amount of £200, still greater than the chance of its sustaining an injury to the amount of £300, and so on. “It was reasoning in this manner that induced me to insure for so small a sum; but I forgot that our risk was greater than that of our neighbours, in consequence of so many persons residing under the same roof. For this reason, and because we should not be equally well able to bear a second loss, we have now insured to a much greater amount; but I am not sure that we were not right before, and are mistaken now, because the circumstance of our having been unfortunate is no proof of error, any more than the gaining a prize in the lottery is a proof of the propriety of purchasing a ticket. “Some people have very strange ideas about insurance from fire. They appear to think that it actually prevents a fire taking place. Birmingham furnishes a remarkable instance of an error of this kind. The workhouse, which is the property of the whole town, is insured in the Birmingham Fire Office, which is supported by a comparatively small number of individuals. I wonder whether the company insures its own office? Perhaps it does in another—or perhaps in its own!”