We use fair value measurements to record fair value adjustments to certain assets to determine fair value disclosures. Fixed maturity available-for-sale securities and equity securities are recorded at fair value on a recurring basis. FASB ASC Topic 820 “Fair Value Measurements and Disclosures” establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The three levels of the fair value hierarchy under ASC Topic 820 are as follows:

Under ASC Topic 820, we base fair values of assets on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It is our policy to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements, in accordance with the fair value hierarchy in FASB ASC Topic 820. Fair value measurements for assets where there exists limited or no observable market data and, therefore, are based primarily upon our or other third-party’s estimates, are often calculated based on the characteristics of the asset, the economic and competitive environment and other such factors. Management uses its best judgment in estimating the fair value of financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts we could have realized in a sales transaction on the dates indicated. The estimated fair value amounts have been measured as of their respective period end and have not been re-evaluated or updated for purposes of the consolidated financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each period-end. Additionally, changes in the underlying assumptions used, including discount rates and estimates of future cash flows, could significantly affect the results of current or future valuations.

We obtain one price for each security primarily from a third-party pricing service (“pricing service”), which generally uses quoted prices or other observable inputs for the determination of fair value. The pricing service normally derives the security prices through recently reported trades for identical or similar securities, making adjustments through the reporting date based upon available observable market information. For securities not actively traded, the pricing service may use quoted market prices of comparable instruments or discounted cash flow analyses, incorporating inputs that are currently observable in the markets for similar securities. Inputs that are often used in the valuation methodologies include, but are not limited to, non-binding broker quotes, benchmark yields, credit spreads, default rates, and prepayment speeds.

In instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest-level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability.

Amortized cost/cost, gross unrealized gains, gross unrealized losses, and fair value of fixed maturity and equity securities by major security type for the results at September 30, 2019 and December 31, 2018 are as follows:

	Amortized Cost/Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
September 30, 2019
U.S. government	$	12,798,909	$	118,141	$	50,783	$	12,866,267
States, territories, and possessions		1,100,524		49,258		—		1,149,782
Subdivisions of states, territories, and possessions		12,531,299		358,227		11,231		12,878,295
Industrial and miscellaneous		64,875,153		1,490,372		21,167		66,344,358
Total bonds		91,305,885		2,015,998		83,181		93,238,702
Equity securities		6,579,604		1,137,479		365,437		7,351,646
	$	97,885,489	$	3,153,477	$	448,618	$	100,590,348

	Amortized Cost/Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
December 31, 2018
U.S. government	$	12,859,101	$	87,354	$	208,699	$	12,737,756
States, territories, and possessions		1,111,879		14,497		897		1,125,479
Subdivisions of states, territories, and possessions		13,230,690		105,965		44,591		13,292,064
Industrial and miscellaneous		59,561,984		14,030		1,524,644		58,051,370
Total bonds		86,763,654		221,846		1,778,831		85,206,669
Equity securities		7,568,810		524,526		826,242		7,267,094
	$	94,332,464	$	746,372	$	2,605,073	$	92,473,763

At September 30, 2019 and December 31, 2018, contractual maturities of investments in bond securities are as follows:

	September 30, 2019				December 31, 2018
	Amortized Cost/Cost		Fair Value		Amortized Cost/Cost		Fair Value
Due in less than one year	$	9,173,518	$	9,173,406	$	7,094,266	$	6,549,872
Due after one year to five years		58,418,818		59,389,696		50,676,297		47,892,580
Due after five years to ten years		22,981,731		23,875,216		27,617,956		29,361,896
Due after ten years		731,818		800,384		1,375,135		1,402,321
	$	91,305,885	$	93,238,702	$	86,763,654	$	85,206,669

Realized gains and losses are determined using the specific identification method. During the three and nine months ended September 30, 2019 and 2018, proceeds from maturities and sales and gross realized gains and losses on securities and other investments are as follows:

The components of net realized investment (losses) gains for the three and nine months ended September 30, 2019 and 2018 are as follows:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2019			2018		2019			2018
Gain (loss) on sales of bond securities	$	9,984		$	16,691	$	(18,264	)	$	13,226
(Loss) gain on sales of equity securities and other investments		(10,720	)		23,536		(162,416	)		84,601
Total (loss) gain on sales of investments		(736	)		40,227		(180,680	)		97,827
Unrealized (loss) gain on equity securities and other investments		(115,157	)		185,266		1,090,056			150,916
Total net realized investment (losses) gains	$	(115,893	)	$	225,493	$	909,376		$	248,743

The components of net investment income for the three and nine months ended September 30, 2019 and 2018 are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Bonds	$	621,987	$	592,550	$	1,748,218	$	1,726,507
Cash and short-term investments		108,572		19,196		286,156		48,790
Equity securities		60,975		83,365		202,468		231,878
Other investments		6,875		2,050		22,251		1,081
		798,409		697,161		2,259,093		2,008,256
Less investment expenses		28,402		33,584		94,583		93,646
Net investment income	$	770,007	$	663,577	$	2,164,510	$	1,914,610

The fair value and unrealized losses of our securities that were temporarily impaired as of September 30, 2019 and December 31, 2018 are as follows:

	Less than 12 months				12 months or longer				Total
Description of securities	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
September 30, 2019:
U.S. government	$	3,424,282	$	9,856	$	5,336,033	$	40,927	$	8,760,315	$	50,783
Subdivisions of states, territories, and possessions		—		—		139,500		11,231		139,500		11,231
Industrial and miscellaneous		4,338,594		9,577		3,493,028		11,590		7,831,622		21,167
Total fixed maturities		7,762,876		19,433		8,968,561		63,748		16,731,437		83,181
Equity securities		834,110		48,272		698,627		317,165		1,532,737		365,437
Total temporarily impaired securities	$	8,596,986	$	67,705	$	9,667,188	$	380,913	$	18,264,174	$	448,618

	Less than 12 months				12 months or longer				Total
Description of securities	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
December 31, 2018:
U.S. government	$	1,757,021	$	5,521	$	8,858,782	$	203,178	$	10,615,803	$	208,699
States, territories, and possessions		410,416		897		—		—		410,416		897
Subdivisions of states, territories, and possessions		3,138,650		11,729		1,993,170		32,862		5,131,820		44,591
Industrial and miscellaneous		28,187,416		563,317		25,787,215		961,327		53,974,631		1,524,644
Total fixed maturities		33,493,503		581,464		36,639,167		1,197,367		70,132,670		1,778,831
Equity securities		2,914,528		471,382		631,297		354,860		3,545,825		826,242
Total temporarily impaired securities	$	36,408,031	$	1,052,846	$	37,270,464	$	1,552,227	$	73,678,495	$	2,605,073

Fair values of interest rate sensitive instruments may be affected by increases and decreases in prevailing interest rates, which generally translate, respectively, into decreases and increases in fair values of fixed maturity investments. The fair values of interest rate sensitive instruments also may be affected by the credit worthiness of the issuer, prepayment options, relative values of other investments, the liquidity of the instrument, and other general market conditions.

We evaluated each security and took into account the severity and duration of the impairment, the current rating on the bond, and the outlook for the issuer according to independent analysts. We found that the declines in fair value are most likely attributable to increases in interest rates, and there is no evidence that the likelihood of not receiving all of the contractual cash flows as expected has changed. Our fixed maturity portfolio is managed by our investment committee in concert with an outside investment manager for investment grade bond investments. By agreement, the investment manager cannot sell any security without the consent of our investment committee if such sale will result in a net realized loss.

We monitor our investment portfolio and review securities that have experienced a decline in fair value below cost to evaluate whether the decline is other than temporary. When assessing whether the amortized cost basis of the security will be recovered, we compare the present value of the cash flows likely to be collected, based on an evaluation of all available information relevant to the collectability of the security, to the amortized cost basis of the security. The shortfall of the present value of the cash flows expected to be collected in relation to the amortized cost basis is referred to as the “credit loss.” If there is a credit loss, the impairment is considered to be other-than-temporary. If we identify that an other-than-temporary impairment loss has occurred, we then determine whether we intend to sell the security, or if it is more likely than not that we will be required to sell the security prior to recovering the amortized cost basis less any current-period credit losses. If we determine that we do not intend to sell, and it is more likely than not that we won’t be required to sell the security, then the amount of the impairment loss related to the credit loss will be recorded in earnings, and the remaining portion of the other-than-temporary impairment loss will be recognized in other comprehensive income (loss), net of tax. If we determine that we intend to sell the security, or that it is more likely than not that we will be required to sell the security prior to recovering its amortized cost basis less any current-period credit losses, then the full amount of the other-than-temporary impairment will be recognized in earnings.

For the three and nine months ended September 30, 2019 and 2018, we determined that none of our securities were other-than-temporarily impaired. Adverse investment market conditions, or poor operating results of underlying investments, could result in impairment charges in the future.

The table below presents the level within the fair value hierarchy generally utilized by us to estimate the fair value of assets disclosed on a recurring basis at September 30, 2019:

.	Total		Level 1		Level 2		Level 3
U.S. government	$	12,866,267	$	—	$	12,866,267	$	—
States, territories, and possessions		1,149,782		—		1,149,782		—
Subdivisions of states, territories and possessions		12,878,295		—		12,878,295		—
Industrial and miscellaneous		66,344,358		—		66,344,358		—
Total bonds		93,238,702		—		93,238,702		—
Equity securities		7,351,646		7,351,646		—		—
	$	100,590,348	$	7,351,646	$	93,238,702	$	—

The table below presents the level within the fair value hierarchy generally utilized by us to estimate the fair value of assets disclosed on a recurring basis at December 31, 2018:

	Total		Level 1		Level 2		Level 3
U.S. government	$	12,737,756	$	—	$	12,737,756	$	—
States, territories, and possessions		1,125,479		—		1,125,479		—
Subdivisions of states, territories and possessions		13,292,064		—		13,292,064		—
Industrial and miscellaneous		58,051,370		—		58,051,370		—
Total bonds		85,206,669		—		85,206,669		—
Equity securities		7,267,094		7,267,094		—		—
	$	92,473,763	$	7,267,094	$	85,206,669	$	—

At September 30, 2019 and December 31, 2018, we had ownership interests in limited partnership equity hedge funds. Our partnership interests are measured at fair value using the funds’ net asset values as a practical expedient and are excluded from the fair value hierarchy tables above. At September 30, 2019, the fair value and cost basis of these investments were $3,320,010 and $2,800,000, respectively. At December 31, 2018, the fair value and cost basis of these investments were $4,051,399 and $3,547,687, respectively. During the three and nine months ended September 30, 2019, we sold an investment in a limited partnership and recognized a realized gain of $36,714. There were no sales of limited partnerships during the same periods in 2018.