Class: Senior Secondary School 2 (SS2 / SSS2)
Term: Second Term
Week: 8
Age: 16 years
Duration: 45 minutes
Subject: Insurance
Curriculum Theme: Types of Insurance
Previous Lesson: Business Interruption Insurance: Meaning, Breakdown and Scope.
Topic: Business Interruption Insurance (cont.)
Subject Matter: Fire incidence under business interruption insurance, consequential loss policy

Specific Objectives

By the end of the lesson, pupils should be able to:

Cognitive Domain:

Explain fire incidence under business interruption insurance.
Describe how fire incidence triggers claims under business interruption insurance.
Define consequential loss policy.
State examples of losses covered by a consequential loss policy.

Affective Domain:

Appreciate the importance of business interruption and consequential loss policies for business continuity.
Value the role of insurance in mitigating financial risks caused by disruptions.

Psychomotor Domain:

Identify situations where a business interruption claim due to fire would be necessary.
Differentiate between direct property loss and consequential loss.

Discuss the broader impact of business interruptions on employees and the community.

Reference Materials

The following resources were used in planning this lesson:

Senior Secondary Schools Education Curriculum
State Unified Scheme of Work
Adewale, A. A. (2018). Comprehensive Insurance for Senior Secondary Schools. Lagos: University Press Plc.

Instructional Materials

The teacher will teach this lesson with the aid of:

A chart illustrating types of business disruptions
A specimen business interruption insurance policy document

Rationale for the Lesson

This lesson enables pupils to understand how businesses can protect themselves from financial losses following disruptions like fire. It helps them recognize the value of insurance in ensuring business continuity and stability, which is important for economic well-being.

Prerequisite/Previous Knowledge

Pupils have a basic understanding of insurance concepts and the general principles of business interruption insurance.

Lesson Content/Board Summary

Business Interruption Insurance (Continuation)

Fire Incidence Under Business Interruption Insurance

Fire incidence is a common peril that can cause significant damage to business premises and operations. Under business interruption insurance, a fire incident that causes physical damage to insured property can trigger a claim for loss of income and other related expenses.

How fire triggers claims:

A fire must occur at the insured premises, causing physical damage.
The damage must directly lead to an interruption or disruption of the business operations.
The interruption must result in a reduction in turnover or an increase in the cost of working.
The loss must occur within the indemnity period specified in the policy.

Consequential Loss Policy

A consequential loss policy, also known as a business interruption policy, provides cover for financial losses that result from the interruption of a business due to an insured peril, such as fire, flood, or machinery breakdown. It covers losses beyond the direct physical damage to property.

Examples of losses covered by a consequential loss policy:

Loss of Gross Profit: This is the reduction in the difference between sales and variable costs due to the interruption.
Increased Cost of Working: Expenses incurred to avoid or reduce the loss of gross profit during the interruption (e.g., renting temporary premises, hiring extra equipment).
Auditor’s Fees: Costs for the accountant or auditor to prepare and certify the claim details.
Wages of Key Employees: Payment of salaries to essential staff who are retained during the interruption to ensure a quick restart.
Rent Payable: Continued payment of rent for the damaged premises during the period of interruption.

Teaching Methods/Instructional Techniques

Discussion, Lecture, Demonstration, Question and Answer, Visual Aids

Instructional Procedures

Step 1: Introduction

Time: 5 minutes
Teaching Skill: Set Induction
Teacher’s Activity: The teacher reviews the previous lesson on business interruption insurance and asks pupils to recall its main purpose.
Pupils’ Activity: Pupils respond by stating that business interruption insurance covers financial losses from business disruptions.
Learning Point: Pupils recall prior knowledge of business interruption insurance.

Step 2: Fire Incidence under Business Interruption Insurance

Time: 10 minutes
Teaching Skill: Explanation/Illustration
Teacher’s Activity: The teacher explains how a fire incident at a business premises can lead to a business interruption claim, using real-life scenarios.
Pupils’ Activity: Pupils listen attentively and ask questions for clarification regarding fire-related claims.
Learning Point: Pupils understand the link between fire incidents and business interruption claims.

Step 3: Triggering Claims

Time: 7 minutes
Teaching Skill: Elaboration
Teacher’s Activity: The teacher explains the specific conditions that must be met for a fire incident to trigger a business interruption claim, such as physical damage and an indemnity period.
Pupils’ Activity: Pupils take notes on the conditions required to trigger a claim.
Learning Point: Pupils identify the criteria for a valid fire-related business interruption claim.

Step 4: Consequential Loss Policy Introduction

Time: 8 minutes
Teaching Skill: Definition/Concept Introduction
Teacher’s Activity: The teacher introduces the concept of a consequential loss policy, explaining it as a policy that covers financial losses resulting from business interruption due to insured perils.
Pupils’ Activity: Pupils define consequential loss policy in their own words.
Learning Point: Pupils grasp the definition and purpose of a consequential loss policy.

Step 5: Examples of Covered Losses

Time: 5 minutes
Teaching Skill: Listing/Examples
Teacher’s Activity: The teacher provides and explains various examples of losses covered under a consequential loss policy, such as loss of gross profit and increased cost of working, using the chart.
Pupils’ Activity: Pupils identify and list different types of losses covered by the policy.
Learning Point: Pupils can enumerate specific losses covered by a consequential loss policy.

Step 6: Discussion on Policy Importance

Time: 5 minutes
Teaching Skill: Facilitation/Discussion
Teacher’s Activity: The teacher leads a brief discussion on the importance of these policies for business survival and economic stability.
Pupils’ Activity: Pupils contribute to the discussion, sharing their views on the benefits of such insurance.
Learning Point: Pupils appreciate the significance of business interruption and consequential loss policies.

Step 7: Evaluation/Review

Time: 5 minutes
Teaching Skill: Questioning/Assessment
Teacher’s Activity: The teacher evaluates the learning by asking the following questions:

Explain how a fire incident can trigger a business interruption claim.
Define a consequential loss policy.
Mention three types of losses covered by a consequential loss policy.
Why is it important for businesses to have a consequential loss policy?

Pupils’ Activity: Pupils answer orally and in writing.
Learning Point: Pupils demonstrate understanding of the lesson.

Step 8: Conclusion

Time: 5 minutes
Teaching Skill: Summarization/Assignment
Teacher’s Activity: The teacher summarizes the key learning points of the lesson and assigns homework: “Research a recent business disruption in Nigeria and discuss how business interruption insurance could have helped the affected business.”
Pupils’ Activity: Pupils listen to the summary and copy the assignment.
Learning Point: Pupils consolidate their understanding and prepare for further learning.

Lesson Keywords

Fire Incidence – An occurrence of fire causing damage to property.
Business Interruption – A temporary cessation of business operations due to an unforeseen event.
Consequential Loss Policy – An insurance policy that covers financial losses resulting from business interruption.
Gross Profit – The profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services.
Increased Cost of Working – Additional expenses incurred by a business to continue operations after a disruption.

Differentiation

For pupils who grasp the concepts quickly, the teacher will encourage them to research specific clauses in a business interruption policy. For those who need more support, the teacher will provide simplified examples and additional one-on-one explanations.

Note for teachers using this lesson plan

Teachers should use visual aids effectively, such as charts or diagrams illustrating the flow of a business interruption claim. Encourage pupils to relate the concepts to local businesses and current events to make the lesson more engaging and relevant.