TOTAL CHILD SCHOOL, PORT HARCOURTWEEK: 5
TOPIC: INSURANCE
CLASS: JSS2
GENDER: MIXED
AVERAGE AGE: 12 YEARS
DURATION: 2 PERIODS (40min. for each period)
REFERENCE: WABP junior secondary business studies book 2 and
Classic business studies book 2
BEHAVIOURAL OBJECTIVES: By the end of the lesson, students should be able to:
PREVIOUS KNOWLEDGE: the students have been taught “insurance” as an aid to trade.
Biblical Objective:
To plan wisely and provide protection against unforeseen risks while trusting God as our ultimate security.
Biblical Truth:
The Bible encourages prudence and foresight, teaching that responsible preparation is part of good stewardship.
Bible Verse:
“The prudent see danger and take refuge, but the simple keep going and pay the penalty.” — Proverbs 22:3 (NIV)
LESSON CONTENT
STEP 1: DEFINITION OF INSURANCE
Insurance is a financial provision made to protect individuals and organisations from losses which might be caused by unforeseen events such as fire, accidents and burglary.
INSURANCE COMPANIES
Insurance companies can be defined as financial institutions established to bear the risks of businesses and pay compensation to victims.
STEP 2: INSURABLE AND NON-INSURABLE RISK
INSURABLE RISKS
Insurable risks are the type of risks which the insurer can make provision or insure against because it is possible to collect, calculate and estimate the likely future losses e.g motor, life etc.
NON-INSURABLE RISKS
Non-insurable risks are the type of risks which the insurance company is not ready to insure against simply because the likely future losses cannot be estimated and calculated.
Some examples of non-insurable risks are:
1. Loss of profit through competition
2. Gambling
3. Launching of a new product
4. Opening of a new shop
5. Risks due to war
6. Change in fashion
7. Loss incurred as a result of bad management
8. Loss of profit through fall in demand.
STEP 3: PRINCIPLE OF INSURANCE
Principles of insurance refer to the basic principles which must be fulfilled in insurance.
These are:
1. Indemnity
2. Insurable interest
3. Utmost Good Faith (Uberrimae Fides)
4. Contribution
5. Proximate cause
6. Subrogation
7. Insurable risk
INDEMNITY: Under this principle, the insured will be given compensation for loss suffered. He will be restored to his former position before the loss occurred.
INSURABLE INTEREST: This is one of the principles of insurance which sta tes that one can only insure properties that will bring loss or liabilities to him upon destruction. Example, you cannot insure the motor car of your friend or neighbor.
UTMOST GOOD FAITH (UBERRIMAE FIDES)
This principle states that in any insurance contract, all relevant information that will affect the validity of the agreement must be disclosed by the parties involved.
CONTRIBUTION: The principle states that, where a person has insured a certain risk with many insurance companies, he cannot claim compensation in full capacity for each of the insurance companies. This means that each of the insurance companies will pay a certain proportion of the loss.
PROXIMATE CAUSE: The principle states that there must be a link between the loss suffered and the risk for which the insurance has been taken e.g Mr Eke insured his car against fire, but the car had accident. The insurance company can only compensate if it is fired and not accident.
SUBROGATION: The principle implies that the insurance company can take over the rights of the insured once he has been compensated. Example, Mr. Abiodun’s car had an accident, and he has been compensated. The car is no longer his own, the insurer can sell the scrap.
STEP 4: BENEFITS OR IMPORTANCE OF INSURANCE
1. It encourages a businessman to take risk.
2. It rebuilds a businessman back to his standard in a case of contingencies.
3. With a good insurance cover, one can obtain loans and overdraft from the bank.
4. It is a wedge against losses from fraud, accident, burglary etc.
5. In the case of life assurance, a family can still live wealthy at the demise of their bread winner.
EVALUATION: The teacher evaluates the lesson by asking the student the following questions.
ASSIGNMENT
1. State four differences between insurance and assurance.
2. Mention at least five insurance companies in Nigeria.