The Gentlemen's Hour

107

“Insurance companies don’t generally kill people,” Cheerful says, “in the physical sense. They hire lawyers who kill people in the financial sense.”

At first, Cheerful wasn’t, well, cheerful about Boone waking him up late at night, which for him is anything after 9:00 p.m. So when Boone rang his bell at the unheard-of hour of eleven twenty-three, Cheerful expected that someone had better be dead. Well, yeah, someone was, but it was Phil Schering, and Cheerful didn’t give a damn about that, except for how it might affect Boone.

Cheerful has a very simple philosophy about humanity. He loves his few friends—basically the Dawn Patrol—and would do anything to help them. The rest of the human race exists solely to make him money.

Which it does.

And money is the topic that Boone came to seek his advice about. Cheerful looks at the copy of Schering’s bill and says, “Technically, Hefley’s is not an insurance company. It’s a reinsurer.”

“Meaning that it insures again?”

Correct, Cheerful instructs him. Sometimes a primary insurance company takes on a risk that is too large for it to cover on its own, so it mitigates some of that risk by insuring it with a “reinsurer.”

“Kind of like a small bookie laying off a piece of a large bet?” Boone says.

“That’s a rough but adept analogy,” Cheerful admits.

“So a bunch of expensive homes drops into a hole,” Boone says. “The insurance company can’t handle the whole loss, so they turn to the reinsurer to pick up the bill.”

It’s not that simple, Cheerful explains. For one thing, it’s highly unlikely that all the homes, or even a majority of them, would have the same insurance company, and even less likely that each of those carriers would reinsure with Hefley’s. The company probably had one or more of the destroyed homes, which, as total losses, would stack up into the tens of millions of dollars, and hired Schering to determine the cause of the loss.

“But the cause of the loss is simple,” Boone says. “The landslide.”

“That’s ignoring the question,” Cheerful grumbles, “of what caused the landslide. What was the cause of the cause?”

“Why does that matter?”

“It matters a lot,” Cheerful says.

Insurance companies do not write coverage for earth movement. It’s right there in the small print under “Excluded Coverages.” What the underwriting gurus would tell you is that insurance is meant to protect you from accidental, sudden events—storms, floods, fires—and that earth movement is neither sudden nor accidental. It takes a long time and it’s no accident. The earth is always moving—that’s what dirt does.

“So Hefley’s is off the hook anyway. The earth moved.”

“Not so fast,” Cheerful says. “You can’t just look to the cause of the loss, you have to find the ‘proximate cause.’”

“You mean, what sort of caused it?”

“Not the approximate cause, surf bum,” Cheerful says. “The proximate cause.”

“What’s that?”

“Go to the library,” Cheerful says. “Preferably a law library. You know any good law firms?”

“Yes.”

“Good night.”

“Good night,” Boone says. “Are those baby hippos on your pajamas?”

“Yes. So what?”

“Nothing. It’s just funny, that’s all.”

“Is it?”

“No.”

“I didn’t think so. Get out.”

Boone gets out.