AM11

Agriculture Management, Economics, & SalesRisk Management Tools – Insurance

Unit: Agribusiness Management

Lesson Title: Risk Management Tools – Insurance

Standards ABS.07.04.01.a. Determine the meaning and importance of risk and uncertainty with AFNR enterprises.ABS.07.04.01.b. Describe alternative approaches to reducing risk, including the use of insurance for product liability, property, production or income loss and for personnel life and health.

Missouri Personal Finance MM.6. Evaluate how insurance (e.g., auto, home, life, medical and long-term health) and other risk management strategies protect against financial loss.

CCSS.ELA-Literacy.CCRA.R.9 Analyze how two or more texts address similar themes or topics in order to build knowledge or to compare the approaches the authors take.CCSS.ELA-Literacy.W.11-12.1 Write arguments to support claims in an analysis of substantive topics or texts, using valid reasoning and relevant and sufficient evidence.CCSS.ELA-Literacy.W.11-12.2 Write informative/explanatory texts to examine and convey complex ideas, concepts, and information clearly and accurately through the effective selection, organization, and analysis of content.

Student Learning Objectives

Slide 2 in AM11 Risk Management Tools – Insurance Lesson ObjectiveAfter completing the lesson on insurance, students will demonstrate their ability to apply the concept in real-world situations by obtaining a minimum score of 80% on an Insurance Blog.

Enabling ObjectivesAs a result of this lesson, the student will…

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1. Define insurance, identify four common types of insurance, and explain three things to consider before purchasing insurance.

2. Define the importance of crop insurance to farmers.3. Explore the legal liabilities of farmers and ranchers.

Time: Approximately 100 minutes

List of ResourcesBacon K., Boren N., Kirkwood V., Birkenholz R., Plain R., Rohrbach N.

(1988). Agriculture Management and Economics Instructor Guide. Columbia, MO: Instructional Materials Laboratory.

Bacon K., Boren N., Kirkwood V., Birkenholz R., Plain R., Rohrbach N. (1988). Agriculture Management and Economics Student Reference Guide. Columbia, MO: Instructional Materials Laboratory.

Insurance Information Institute. (n.d.). Be Smart and Get Renters Insurance. Retrieved from http://www2.iii.org/video/advice-from-dummies-be-smart-and-get-renters-insurance-.html.

Insurance Information Institute. (n.d.). Choosing An Insurance Company. Retrieved from http://www2.iii.org/video/advice-from-dummies-choosing-an-insurance-company.html.

Insurance Information Institute. (2013). Insurance Topics. Retrieved from http://www.iii.org/insurance_topics/.

Insurance Information Institute. (n.d.). Smart Auto Insurance Tips. Retrieved from http://www2.iii.org/video/advice-from-dummies-smart-auto-insurance-tips.html.

Insurance Information Institute. (n.d.). Smartly Saving Money on Homeowners Insurance. Retrieved from http://www2.iii.org/video/advice-from-dummies-smartly-saving-money-on-homeowners-insurance.html.

Jobes R., Steward J., Casey J., Bangert L. (2011). Farm Business Management Student Guide. Moline, IL: John Deere Publishing.

Life. (2013). Life Insurance for Business Videos. Retrieved from http://www.lifehappens.org/videos/real-life-stories-videos/life-insurance-for-business-videos/.

Milhollin, R., Massey, R. (n.d.). Crop Insurance in Missouri. Retrieved from http://extension.missouri.edu/publications/DisplayPub.aspx?P=MP749.

Mo.gov. (n.d.). Missouri Department of Insurance. Retrieved from http://insurance.mo.gov/.

Agribusiness Management AM11 Risk Management Tools – Insurance

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MSN Money. (2014). Saving and Budgeting. Retrieved from http://money.msn.com/budgeting-savings/.

List of Tools, Equipment, and SuppliesAM11 PowerPoint PresentationAM11 Activity Sheet and Evaluation PacketNote cards or small sheets of paper for review activity

Key Terms:Slide 3 in AM11 Risk Management Tools – Insurance

The following terms are presented in this lesson (shown in bold italics):Insurance Negligence

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Interest Approach: Use an interest approach that will prepare the students for the lesson. Teachers often develop approaches for their unique class and student situations. A possible approach is included here.

Slide 4 in AM11 Risk Management Tools – InsuranceInsurance 101 – Watch the following videos on insurance from the Insurance Information Institute.

http://www2.iii.org/video/advice-from-dummies-choosing-an-insurance-company.html http://www2.iii.org/video/advice-from-dummies-smartly-saving-money-on-homeowners-

insurance.html http://www2.iii.org/video/advice-from-dummies-be-smart-and-get-renters-

insurance-.html http://www2.iii.org/video/advice-from-dummies-smart-auto-insurance-tips.html

Following each video, students should discuss their reaction(s) to be captured on the whiteboard.

At the conclusion of the videos, facilitate a discussion about insurance, asking questions like “Why shouldn’t you choose the cheapest insurance? Why do we need insurance? What types of insurance should you purchase? Does a business need different insurance than individuals?”

The questions asked should spark dialogue amongst the students about their knowledge of insurance before beginning the lesson.

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Summary of Content and Teaching Strategies

Objective 1: Define insurance, identify four common types of insurance, and explain three things to consider before purchasing insurance.

Teaching Strategies Related Content1. Review the discussion about insurance

from the interest approach and ask students for a definition of insurance.

Slide 5 in AM11 Risk Management Tools – Insurance

2. Ask students, “What are some different types of insurance we could buy?”

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3. Ask students, “What should we as individuals and business owners consider when buying insurance?”

Slide 7 in AM11 Risk Management Tools – Insurance

Insurance Protects one financially from

unexpected economic loss Lessens the hardship of unexpected

economic loss Meets obligation to others who are

injured or suffer a loss due to one’s actions

Allows one to take financial risks for large purchases by functioning as collateral for a loan

Types of Insurance Coverage Property Insurance – Protection

against financial loss of property that is damaged, stolen, or destroyed

Liability Insurance – Protection against lawsuits if you cause personal injury or property damage

Life Insurance – Protection for family against loss of income because of a primary caretaker’s death

Accident and Health Insurance – Protection against the expenses from an illness or accident or loss of income due to an illness or accident

Buying Insurance Insure against losses that may lead to

financial disaster Insure irreplaceable and necessary

property first Do not insure anything that is easily

affordable to replace – Insurance premiums on these items may be more expensive than the risk of loss or the actual value of the item; A bike, a beat-up car

Be sure coverage is adequate –

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4. Complete an insurance investigation using AM11.1 as pairs or small groups. Review findings as an entire class.

Slide 8 in AM11 Risk Management Tools – Insurance

Insurance purchased five years ago may not be adequate; Values of houses fluctuate; Some policies adjust for inflation

Buy insurance that provides coverage for situations where a loss is likely to occur – Take out flood insurance if your home is in a low-lying area near a river; Carry liability insurance if you own land or a business and hire workers

Consider all costs – Paying insurance premiums reduces amount of money individual or business has available for other purchases

Objective 2: Define the importance of crop insurance to farmers. Teaching Strategies Related Content

1. Let’s think of farmers and agricultural production. How can insurance be beneficial to them?

2. Teach students about crop insurance and what to do when crop damage is recognized.

Slide 9 in AM11 Risk Management Tools – Insurance

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3. Explore Missouri crop insurance at http://extension.missouri.edu/publications/DisplayPub.aspx?P=MP749.

Crop Insurance Protects farmers from natural disasters

– Drought, severe storms, floods Applications for crop insurance must

be submitted by assigned deadlines – March 15th for corn and soybeans in Missouri

Crop Damage File claims within 72 hours of noticing

damage Contact crop insurance agent Document losses, but do not destroy

any crop until receiving direction from insurance company

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Objective 3: Explore the legal liabilities of farmers and ranchers. Teaching Strategies Related Content

1. Following laws are very important to the livelihood of farmers and ranchers. Why is this?

2. Introduce the legal liabilities involved with farming.

Slide 11 in AM11 Risk Management Tools – Insurance

3. Facilitate a discussion on what students consider negligence.

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4. Have students identify two or three negligent acts.

5. Farmers also have legal liabilities when it comes to land. What are land owners responsible for when it comes to people adjacent to their land?

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6. What are land owners responsible for when it comes to people on their land?

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Legal Liabilities Laws can affect farmer’s livelihood

more than the average citizen Damages have to be paid by negligent

party If farmer does not have sufficient

money or liability insurance to cover damages, he may lose his farm

Liability insurance reduces risk – Substitutes small, regular payments for a large unexpected payment

Negligence Liability depends on negligence Lapse of an individual to something a

responsible person would do in the same situation

Legal Liabilities and LandPeople adjacent to land

Take reasonable care to prevent injury or property damage

Strong wind blows part of a building into neighbor’s crop land – Liable for damages to neighbor’s crop

Excavate near property line causing neighbor’s land to cave in – Liable for damages to neighbor’s land

People on land Invitees – Business visitor; Person on

your property with your consent and for your benefit or a mutual benefit; Salesmen, repairmen, independent contractor, prospective buyers/customers; Duty to warn of hidden dangers; Duty to inspect property for hidden dangers

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7. Farmers also have legal liabilities as employers. What are employers responsible for when it comes to their employees?

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8. Assign small groups or pairs to one of the following issues to research:

Livestock and fences Animals on highways Handling strays People injured by animals Livestock pollution laws and

regulations Agricultural chemical laws and

regulations

Licensees – On your land solely for their own benefit or convenience; Tolerated, not invited; Warn licensees of any dangers

Trespassers – Neither invited nor desired on land; Liable for personal injuries land owner intentionally inflicts; May use reasonable force to remove from property; Cannot use deadly force unless trespasser is inflicting harm to family

Liabilities of EmployersEmployees

A person whose tasks the employer directs and controls

Greatest control over employee and greatest liability

Responsibilities to Employees – Provide safe place to work; Provide safe tools, machinery, and equipment; Warn and instruct of dangers they could not be expected to discover; Provide competent employees; Make reasonable conduct rules for all employees

Agents Person who transacts business or

manages employer’s affairs Hired farm manager Responsible for agent’s acts while

doing employer’s work

Independent Contractor Performing a job without control from

employer Custom harvester, crop duster, well

drillers Not responsible for negligent acts

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9. Complete AM11.2 following research.

Review/SummarySlide 18 in AM11 Risk Management Tools – Insurance

The insurance needs of individuals and businesses vary with each individual case. Insurance is designed to protect families and firms from jolting financial losses.

Review:

Slide 19 in AM11 Risk Management Tools – Insurance Use PPT slide to have students answer review questions orally or individually on a sheet of notebook paper.

Slide 20 in AM11 Risk Management Tools – Insurance Exit cards: Students will answer the following questions on a note card or small slip of paper and hand to teacher as they exit:

What did you learn today about insurance? What questions do you still have about insurance?

Application

Extended Activities

Conduct an insurance cost experiment by having students compare the cost of insurance for such things as a dream car vs. a practical car; a dream house vs. a practical house. Have students present their quotes and conclusions in a ½ - page summary.

Review students’ current Supervised Agricultural Experience Programs, examining them for potential insurance needs and/or liability issues. Have students share their thoughts and ideas with the teacher during next SAE visit.

Examine students’ ownership SAE record books, identifying how they could use insurance to manage risk in their operation. Encourage them to visit with local business owners with a similar business, interviewing them about how they manage risk using insurance. Have students share their results with the teacher during next SAE visit.

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Invite a local insurance agent to class to discuss with students such things as how to lower insurance rates, the process for getting insurance, the importance of insurance, etc. Have students prepare 5-8 questions for the class visit. Prepare a top 10 list of insurance points learned from the insurance agent.

EvaluationInsurance Blog AM11.3

Alternate - Paper-pencil Quiz Evaluation AM11.4

Answers to EvaluationEvaluation AM11.3Answers will vary. Use scoring guide on AM11.3 to assess student work.

Alternate Evaluation AM11.41. Answers should include any two of the following: Protects one financially from

unexpected economic loss; Lessens the hardship of unexpected economic loss; Meets obligation to others who are injured or suffer a loss due to one’s actions; Allows one to take financial risks for large purchases by functioning as collateral for a loan

2.3. Property Insurance – Protection against financial loss of property that is damaged,

stolen, or destroyed4. Life Insurance – Protection for family against loss of income because of a primary

caretaker’s death5. Accident and Health Insurance – Protection against the expenses from an illness or

accident or loss of income due to an illness or accident6. Liability Insurance – Protection against lawsuits if you cause personal injury or property

damage7. Answer should include any four of the following: Insure against losses that may lead to

financial disaster; Insure irreplaceable and necessary property first; Do not insure anything that is easily affordable to replace; Be sure coverage is adequate; Buy insurance that provides coverage for situations where a loss is likely to occur; Carry liability insurance if you own land or a business and hire workers; Consider all costs

8.9.10.11. Protects farmers from natural disasters – Drought, severe storms, floods12. Applications for crop insurance must be submitted by assigned deadlines; Crop damage

claims need to be filed within 72 hours of noticing damage; Document losses, but do not

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destroy any crop until receiving direction from insurance company13. Laws can affect farmer’s livelihood more than the average citizen; Damages have to be

paid by negligent party; If farmer does not have sufficient money or liability insurance to cover damages, he may lose his farm; Liability insurance reduces risk

14. Lapse of an individual to something a responsible person would do in the same situation

Agribusiness Management AM11 Risk Management Tools – Insurance