Lesson Notes By Weeks and Term - Senior Secondary 1

Indemnity

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Term – 2nd Term

Week: 5

Class: Senior Secondary School 1

Age: 15 years

Duration: 40 minutes of 2 periods each

Date:       

Subject:      Insurance

Topic:-       Indemnity

SPECIFIC OBJECTIVES: At the end of the lesson, pupils should be able to

  1. Define indemnity
  2. Discuss the relationship between indemnity and insurable interest
  3. Explain the methods of providing indemnity

INSTRUCTIONAL TECHNIQUES: Identification, explanation, questions and answers, demonstration, videos from source

INSTRUCTIONAL MATERIALS: Videos, loud speaker, textbook, pictures

INSTRUCTIONAL PROCEDURES

PERIOD 1-2

PRESENTATION

TEACHER’S ACTIVITY

STUDENT’S ACTIVITY

STEP 1

INTRODUCTION

The teacher reviews the previous lesson on proximate cause

Students pay attention

STEP 2

EXPLANATION

He defines indemnity and discusses its relationship with insurable interest

 

 

Students pay attention and participates

STEP 3

DEMONSTRATION

He explains the methods of indemnity

Students pay attention and participate

STEP 4

NOTE TAKING

The teacher writes a summarized note on the board

The students copy the note in their books

 

NOTE

INDEMNITY

In literary sense, indemnity is the restoration of the insured to same financial position after a loss as he enjoyed immediately prior to the loss. In insurance, indemnity is the mechanism by which insurers provide financial compensation to the insured in an attempt to place him in the same position after the loss as he enjoyed immediately before the loss.

The relationship between indemnity and insurable interest 

- There is a direct link between indemnity and insurable interest.

- The provision of indemnity for a total loss will be in line with the extent of insurable interest in existence which is measurable in financial term. 

- The indemnity payable would equal to the insurable interest at the time of the loss.

Note:  With life and personal accident policies, there is normally an unlimited interest, which meansü an indemnity can never be given. 

In indemnifying the insured, the guiding principle is usually “the sum insured or the market value”, whichever is less.

For full indemnity to be provided the sum insured must be adequate to represent the full value at risk, else it will be subject to average in event of partial loss to reduce the amount of claim.

The methods of providing indemnity/the options available to insurers to execute indemnity

The four basic methods of providing indemnity are:

  1. Cash payments

This involves the insurance company giving cheques for the amount admitted by the insurer under the reported claims. It is the most popular method of claims settlement and very easy to execute.

  1. Repair

This is the method applied by an insurer in settlement of motor and other property insurance claims. An object adequately repaired constitutes a full indemnity.

  1. Replacement

This is a method used by the insurer to replace an article lost due to the insured perils instead of making cash payment available to the insured. This may be possible with such items as jewelry and furs where depreciation will be very negligible and which the insurer could easily get a discount from a good dealer.

  1. Reinstatement

This is a method commonly used in fire insurance claims whereby the insurer promises to effect settlement through reinstating or rebuilding of subject matter of insurance to the position it was before the fire.

EVALUATION:    1. Define indemnity

  1. What is the relationship of indemnity with insurable interests?
  2. Discuss the methods of providing indemnity

CLASSWORK: As in evaluation

CONCLUSION: The teacher commends the students positively