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Junior and Senior level Ag Bus. | |Colorado Agriscience Curriculum

|Section: |Advanced Agribusiness |

|Unit: |Management of Agricultural Business Records |

|Lesson Title: |Insurance |

|Colorado Ag Education Standards|AGB11/12.03 - The student will be able to formulate and analyze financial records and use the information for|

|and Competencies |evaluation and planning. |

| | |

| |Define the types of insurance. |

| | |

| |Determine insurance needs. |

| | |

| |Understand liability laws relating to agriculture. |

| | |

|Colorado Model Content |English Standard 1: Students read and understand a variety of materials. |

|Standard(s): | |

| |English Standard 4: Students apply thinking skills to their reading, writing, speaking, listening, and |

| |viewing |

| | |

| |English Standard 5: Students read to locate, select, and make use of relevant information from a variety of |

| |media, reference, and technological sources. |

|Student Learning Objectives: |Students will be able to identify different types of insurance needs |

| |Students will be able to identify various types of insurance tools available for risk management |

| |Students will have the opportunity to contrast and compare types of insurance needs and coverage in real life|

| |situations. |

|Time: |50 minutes |

|Resource(s): |Introduction to Risk Management, USDA 1997; Farm and Ranch Business Management, 2004, Deere and Company; |

| |Agribusiness Management and Entrepreneurship, Newman and Wills, 3rd Edition. |

|Instructions, Tools, Equipment,|Find a newspaper article, a magazine article, pictures, or some example of an agricultural disaster that has |

|and Supplies: |happened and be ready to discuss the ramifications of it. |

| |Computer, LCD projector, |

|Interest Approach: |All the planning and management that you do cannot prepare you for a catastrophic event. |

| |Show slide 1 of slide show |

| |Sometimes things can happen that you just have no control over. |

| |Show slide 2 |

| |These events can become so overwhelming that they could cause you to lose the farm or business. There are |

| |some things that no amount of planning can avoid or prepare you for, but there are possible solutions that |

| |can help you overcome these and not lose everything you have worked so hard for. |

| |Read the article or show the clip of something that happened in your area or to another agricultural business|

| |that you have read about. Share with the students the devastation that can be brought about by unforeseen |

| |disasters. |

| |Show slide 3 |

| |Anything can happen and sometimes does-- that is why we have insurance. |

| Objective 1: |Students will be able to identify different types of insurance needs |

| |Use slides 4-6 with this section. |

| |We just saw how one event or one unforeseen problem can completely wipe you out financially. This can come |

| |from natural disasters, health problems, or accidents. There is something you can do to reduce the amount of|

| |risk you will endure. Insurance is a tool that can be used to reduce the risk for each individual. |

| |There are basically three areas of insurance. |

| |Life and health insurance |

| |Property and casualty insurance |

| |Production insurance—Crop insurance |

| |Students may have experiences in some areas of insurance. Ask them: Have any of you had wind or storms |

| |destroy a building or your house? |

| |Allow the students to share their experiences with the incident and then ask them if they had any experience |

| |with the insurance companies. |

| |A person takes out an insurance policy and pays a professional risk taker (the insurance company) a small but|

| |regular sum of money (premium) to assume the financial burden in case of the unexpected. |

| |As we have seen from the examples we shared it is not always possible to assume all of the risk yourself. |

| |Ask yourself “How much risk am I willing to bear?” |

| |Insurance is a tool that can be used to reduce the amount of individual risk you must bear. There are some |

| |unforeseen happenings that we will all experience in our lives. Some of these are what we call |

| |catastrophic—or a great and sudden disastrous loss. Insurance companies insure major losses due to |

| |catastrophic loss that may otherwise cause the business to be ruined financially. The cost of the insurance |

| |premium may be substantial yet not nearly as bad as the loss that is created. Insurance is not meant to make |

| |a profit but to keep from financial ruin. |

|Objective 2: |Students will be able to identify various types of insurance tools available for risk management |

| |Students may have some knowledge of health insurance or life insurance. Letting them share some of their |

| |experiences may be helpful at this time to allow for some discussion on types of insurance that are |

| |available. Do not let this turn into story time however and watch that it does not become an agent or |

| |company bashing event. |

| |Use slide 7-11 with this section. |

| |We have heard of some of the types of insurance available. Let us list the types of insurance and the |

| |purpose of each one of them. |

| |Life Insurance– Protects your family against loss of income because of a death in the family |

| |Accident and Health Insurance– Protects you against the expenses arising from illness and accident, as well |

| |as loss of income from illness and accident |

| |Property and Casualty Insurance– Protection against loss if property is damaged, destroyed, or stolen. |

| |Liability Insurance– Protects against lawsuits if you cause personal injury or damage property of others |

| |Each of these types of insurance has their place in managing risk in a business. There are a few points to |

| |be aware of in deciding what insurance you need and the amount of coverage you would want. They are: |

| |Insure against losses that may lead to financial disaster |

| |Insure the irreplaceable or the most necessary property first |

| |Don’t insure anything you can easily afford to replace yourself |

| |Be sure the coverage is adequate |

| |Buy insurance that provides coverage for situations you are likely to have a claim |

| |Remember insurance is not there to make money |

| |Insurance is there for the business to use as a tool. There are many reasons for taking out insurance and |

| |can help a business to be financially viable and successful. Few businesses could bear the risk of a death or|

| |catastrophic disaster and still be successful. Especially in the starting years of a business before it has |

| |had a chance to develop a reserve financial base. |

| |Being able to protect the family from severe financial loss in case or a business loss or business financial |

| |crisis is a very important role of insurance in managing risk. A small premium may be able to be absorbed by|

| |the business that would cover any disaster or unforeseen business loss. |

| |Liability insurance can take the risk of financial disaster away in case of someone else getting hurt on your|

| |property or in your business. Whether the business is at fault or not insurance will cover the cost of |

| |injury and also the cost of litigation, as long as the business is not negligent. |

| |Insurance may allow the business to take on other risks—such as expansion, etc – that it would not otherwise |

| |be able to bear the risk. |

| |Has anyone known of someone who got hurt on the job? Who paid for the medical bills? Who paid the salary of|

| |the person while they were not able to work? Worker’s Compensation is an insurance that covers the business |

| |and its employees in case of an unexpected accident at the work place. Some specific things about Workers |

| |Compensation are: |

| |Insurance system required for employees of a business |

| |Covers job related injuries and sickness |

| |In a job-related accident or sickness occur, the worker’s compensation policy from the business is the only |

| |policy paying for the employee’s expenses |

| |It is possible to get worker’s compensation on a self-employed person |

| |Disability insurance can protect insured against a loss of income caused by injury or illness. It provides |

| |income for a specified amount of time. |

| | |

| |There are many types of insurance and insurance companies. The insurance you get and the service you receive|

| |will depend on the decision you make about where to get your insurance. All insurances and agents are not |

| |created equal. Here are some tips on deciding where to get insurance: |

| |Insurance agents are salespeople– pick one you can trust |

| |Independent agents can offer a variety of coverage from many different insurance companies |

| |Price should not be the only decision– make sure to check into– coverage, service, needs, financial |

| |stability, and prompt payment of claims |

| |Remember: Insurance is an important and sometimes necessary tool to control business risk. |

|Objective 3: |Students will have the opportunity to identify types of coverage’s that might be needed in real life |

| |situations. |

| |Students should answer worksheet on types of coverage’s |

|Review/Summary: |Students should be handed out the worksheet on insurance. This can be a good way to reinforcement on the |

| |risk management factor of insurance coverage. |

|Application--Extended Classroom|An insurance agent from your community would be a great resource person to get him to come to your class and |

|Activity: |give a presentation to your students. |

| |General farm insurance has liability included. A lesson from a landowner or agent who has dealt with such |

| |things as hunting, recreation, and trespass on private property may be a great speaker to enforce this area. |

|Application--FFA Activity: |Have a program at an FFA meeting about the importance of liability insurance and hunting. |

|Application--SAE Activity: |Worker’s compensation insurance is needed anytime a student is employed. The agreement page should provide |

| |for insurance coverage for placement students. Have students look into the worker’s compensation guidelines |

| |from state and national government. |

|Evaluation: |(see below for print out entitled Evaluation)(Answers are in red) |

| |What are the three basic areas of insurance? |

| |Life and health insurance |

| |Property and casualty insurance |

| |Production insurance—Crop insurance |

| | |

| |How does insurance help to control the risk a business has to bear? |

| |A person takes out an insurance policy and pays a professional risk taker (the insurance company) a small but|

| |regular sum of money (premium) to assume the financial burden in case of the unexpected. |

| | |

| |What are the four basic types of business insurance available and the purpose of each type of insurance? |

| |Life Insurance– Protects your family against loss of income because of a death in the family |

| |Accident and Health Insurance– Protects you against the expenses arising from illness and accident, as well |

| |as loss of income from illness and accident |

| |Property and Casualty Insurance– Protection against loss if property is damaged, destroyed, or stolen. |

| |Liability Insurance– Protects against lawsuits if you cause personal injury or damage property of others |

| | |

| |There are many points to remember in deciding what insurance a business might need. Three examples are: |

| |Insure against losses that may lead to financial disaster |

| |Insure the irreplaceable or the most necessary property first |

| |Don’t insure anything you can easily afford to replace yourself |

| |Be sure the coverage is adequate |

| |Buy insurance that provides coverage for situations you are likely to have a claim |

| |Remember insurance is not there to make money |

| |Explain the importance of Worker’s Compensation to the business. How does it limit the liability of the |

| |business in case of unexpected injury to employees? |

| |Worker’s Compensation is an insurance that covers the business and its employees in case of an unexpected |

| |accident at the work place. Some specific things about Workers Compensation are: |

| |Insurance system required for employees of a business |

| |Covers job related injuries and sickness |

| |In a job-related accident or sickness occur, the worker’s compensation policy from the business is the only |

| |policy paying for the employee’s expenses |

| |It is possible to get worker’s compensation on a self-employed person |

| |Disability insurance can protect insured against a loss of income caused by injury or illness. It provides |

| |income for a specified amount of time. |

| |What are three tips in deciding where to get insurance? |

| |Insurance agents are salespeople– pick one you can trust |

| |Independent agents can offer a variety of coverage from many different insurance companies |

| |Price should not be the only decision– make sure to check into– coverage, service, needs, financial |

| |stability, and prompt payment of claims |

|Other: |INSURANCE WORKSHEET (see below) |

| |Answers: |

| |1.Liability |

| |2.Fire |

| |3.Worker’s Compensation |

| |4.Medical |

| |5.Mortgage |

| |6.Property |

| |7. Life |

Evaluation

Name:

What are the three basic areas of insurance?

1.

2.

3.

How does insurance help to control the risk a business has to bear?

What are the four basic types of business insurance available and the purpose of each type of insurance?

1.

2.

3.

4.

There are many points to remember in deciding what insurance a business might need. Three examples are:

Explain the importance of Worker’s Compensation to the business. How does it limit the liability of the business in case of unexpected injury to employees?

What are three tips in deciding where to get insurance?

1.

2.

3.

INSURANCE WORKSHEET

Name:

Fill in the blank

A farmer who is allowing the local FFA members to hunt on his farm may want to make sure his _______________________ insurance is up to date.

The local feed store just put in a corn fired steamer for grain and may want to make sure his _____________ insurance covers corn fired burners.

A harvest crew business owner may want to check out his __________________ ______________ insurance coverage before hiring anyone under 18.

I hope my _____________________ insurance covers my back operation.

I purchased __________________ insurance so if something happens to me the farm will be paid for.

When my house burned down I wish I had looked at my ______________ insurance better so I would have enough to rebuild my house.

Who would have thought I would have lived through a tornado hitting my yard. I think I’ll check my ______________ insurance policy to care for my family if something does happen to me.

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