Lesson Notes By Weeks and Term - Senior Secondary 2

Term – 3^rd Term

Week: 8

Class: Senior Secondary School 2

Age: 16 years

Duration: 40 minutes of 2 periods each

Date:       

Subject:      Insurance

Topic:-       Business interruption insurance

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

1. Define business interruption insurance
2. Discuss the scope of business interruption insurance
3. State the exclusions in business interruption insurance

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

INSTRUCTIONAL MATERIALS: Videos, loud speaker, textbook, pictures

INSTRUCTIONAL PROCEDURES

PERIOD 1-2

NOTE

BUSINESS INTERRUPTION INSURANCE

Business interruption insurance is a type of insurance that covers the loss of income that a business suffers after a disaster.

Business interruption insurance is a type of insurance coverage that replaces income lost in the event that business is halted due to direct physical loss or damage, such as might be caused by a fire or a natural disaster. It is not sold as a separate policy but is either added to a property/casualty policy or included in a comprehensive package policy as an add-on or rider.

SCOPE OF BUSINESS INTERRUPTION INSURANCE

Most business interruption insurance covers the following items:

1. Profits: Will provide reimbursement for profits that would have been earned had the event not occurred.
2. Fixed costs: These can include operating expenses and other incurred costs of doing business.
3. Temporary location: Some policies cover the costs involved with moving to and operating from a temporary business location.
4. Commission and training cost: In the wake of a business interruption event, a company will often need to replace machinery and retrain personnel on how to use the new machinery. Business interruption insurance may cover these costs.
5. Extra expenses: Business interruption insurance will provide reimbursement for reasonable expenses (beyond the fixed costs) that allow the business to continue operating while the business gets back on solid footing.
6. Civil authority ingress/egress: A business interruption event may result in government-mandated closure of business premises that directly cause financial loss. Examples include forced closures because of government-issued curfews or street closures related to a covered event.
7. Employee wages: Coverage of wages is essential if a business does not want to lose employees while shutting down. This coverage can help a business owner make payroll when they cannot operate.
8. Taxes: Businesses are still required to pay taxes, even when disaster hits. Tax coverage will ensure a business can pay taxes on time and avoid penalties.
9. Loan payments: Loan payments are often due monthly. Business Interruption coverage can help a business make those payments even when they are not generating income.

EXCLUSIONS IN BUSINESS INTERRUPTION INSURANCE 

• Broken items resulting from a covered event or loss (such as glass)
• Flood or earthquake damage, which are covered by a separate policy
• Undocumented income that is not listed on your business financial records
• Utilities
• Loss of goodwill in the insured company
• Increase in replacement cost as a result of fluctuation in exchange rate
• Undamaged stock which has depreciated in value
• Loss o f income due to Pandemics, viruses, or communicable diseases (such as COVID19)

EVALUATION:    1. Define business interruption insurance

2. In four sentences, discuss the scope of business interruption insurance
3. State three exclusions in business interruption insurance

CLASSWORK: As in evaluation

CONCLUSION: The teacher commends the students positively