Lesson Notes By Weeks and Term - Senior Secondary 2

Business interruption insurance

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Term – 3rd Term

Week: 9

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. State the conditions for insurance claim in business interruption insurance
  2. Enumerate the benefits business interruption insurance
  3. Highlight practical illustrations on the importance of 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

PRESENTATION

TEACHER’S ACTIVITY

STUDENT’S ACTIVITY

STEP 1

INTRODUCTION

The teacher reviews the previous lesson on business interruption insurance

Students pay attention

STEP 2

EXPLANATION

He states the conditions for insurance claim in business interruption insurance and enumerates its benefits

 

 

Students pay attention and participates

STEP 3

DEMONSTRATION

He highlights practical illustrations on the importance of business interruption insurance

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

BUSINESS INTERRUPTION INSURANCE

CONDITIONS FOR INSURANCE CLAIMS IN BUSINESS INTERRUPTION INSURANCE 

  1. The insurer is only obligated to pay if the insured actually sustained a loss as a result of the interruption. The amount that will be recouped by the business will not exceed the limit stated in the policy.
  2. To recover under the business interruption policy, the insured must prove that he sustained damage to property that is covered under the policy and that the damage was caused by a covered cause of loss, that there was an interruption to the business ("suspension of operations") which was caused by the property damage, and that there was an actual loss of business income during the period of time necessary to restore the business and that the loss of income was caused by the interruption of the business and not by some other factor or factors.

BENEFITS OF BUSINESS INTERRUPTION INSURANCE 

  1. It helps to rebuild or repair the damaged business premises.
  2. It helps in paying the salaries and wages and other outstanding costs.
  3. It helps to replace lost income.
  4. It helps to keep the business moving.
  5. It pays for profit which would have been earned.

 

PRACTICAL ILLUSTRATIONS ON THE IMPORTANCE OF BUSINESS INTERRUPTION INSURANCE COVER

Example 1: Heavy rain causes serious water damage at a restaurant. A contractor tells the owner that renovation could take up to a year. While commercial property insurance covers the repairs, the owner can’t make money while the business is under construction. Business interruption insurance helps recoup the lost revenue.

Example 2: A fire damages an electronics store, making it impossible for the business to serve customers. While the business is closed for renovations, it still needs to make rental payments on the store. Business interruption insurance covers these costs until the shop reopens.

Example 3: An intruder breaks into a law firm, vandalizing the office and breaking several windows. The law firm is forced to relocate to a new office space until the windows and locks are replaced. Business interruption insurance pays for the moving costs and rent at the new location.

Example 4: A pipe bursts at an architecture firm, flooding the office and destroying walls, carpeting, and furnishings. The firm is forced to close for a month for renovation. Business interruption insurance helps the firm meet payroll (salaries and wages) obligations while the repairs are underway. Example 5: A fire destroys a contractor's trailer, forcing him to withdraw from bids and miss his revenue goals. At the end of the quarter, the business still needs to pay estimated taxes on the revenue it made before the fire. Business interruption insurance covers these costs so the contractor can use his money to get the business up and running again. Example 6: An accounting firm is forced to suspend business after a property inspection finds that its office is structurally unsound. While the business isn’t bringing in revenue, it still needs to make monthly payments on a small business loan. Business interruption insurance covers payments while the business is closed.

EVALUATION:    1. State the conditions for insurance claims in business interruption insurance

  1. Enumerate three benefits of business interruption insurance
  2. Give three practical illustrations on the importance of business interruption insurance

CLASSWORK: As in evaluation

CONCLUSION: The teacher commends the students positively