If we understand the immense utility of insurance, and the grounds, or, as may well be said, the indispensable conditions of this utility, we shall see that these depend upon a few simple principles; and we shall also see that merchants in their practice, and courts in their decisions of the multifarious and complicated questions presented by the law of insurance, constantly regard these principles. And it may be added, that if the sagacity of merchants, stimulated by a sense of direct interest, and gradually taught by experience, has discovered these principles and applied them to practice, it is not less true that courts have been too sagacious to disregard this practice. Since the days of Lord Mansfield, who set a wise example in this respect, the jurisprudence of England and America, in the matter of insurance, has done little else than adopt the usage of merchants, and give to it the force of authority.

What are these principles? They are few and easily stated. And indeed they all rest on one principle. It is, that if insurance be made too costly to the insured, and if it be too difficult for them to obtain indemnity for loss by reason of the narrow construction of the law, or the severe application of technical requirements, the practice of insurance would be checked, and it would be left very much to the wealthiest and the most careful merchants, who are those that need it least, and who would be most disposed – to use a common phrase – to “stand as their own insurers.”