How it works
A risk is a chance of a costly surprise, like a river flooding a cellar.
Many families pay a small share into a pot, so a few who have a big bill are helped. That is insurance.
The small yearly payment is a premium. Asking the pot to pay is a claim.
Coins nobody needs stay in the pot for a wetter year. A calm year is the plan working.
Worked examples
The pot in year one
- 20 families each put in 1 coin: 20 × 1 = 20 coins.
- Two cellars flood at 10 coins each: 2 × 10 = 20 coins.
- The pot pays both bills and is empty.
The pot in year two
- Another 20 coins go in.
- One cellar floods, so the bill is 10 coins.
- 20 − 10 = 10 coins stay in the pot.
The pot in year three
- 10 coins are left over and 20 new coins go in: 10 + 20 = 30 coins.
- Three cellars flood at 10 coins each: 3 × 10 = 30 coins.
- The pot holds exactly enough.
The fair share
- One year's bills were 20 coins, shared by 20 families.
- 20 ÷ 20 = 1 coin each.
- That fair share is the premium.
A taste of the worksheets
These are some of the questions on the sets. The printable sheets have more and an answer key.
- True or false? In a dry year nobody floods and the pot pays nothing. Did the plan fail?
- True or false? Otis says: if I put my coin in the pot, the river will stay in its bed. Is Otis right?
- Which one is not true about insurance and the Marsh Lane pot? 💸 A premium is the money the pot pays out / 📅 Unused coins can stay in the pot for next year / 🏺 Many families pay a little into one pot
- Which one is not true about insurance and the Marsh Lane pot? 🧰 Real insurers keep extra coins for a very wet year / 🍞 The pot pays for bread bought every week / 🌊 A pool helps the few with a big surprise cost
- Which one is not true about insurance and the Marsh Lane pot? 🙋 Asking the pot to pay a bill is a claim / 🥇 The pot pays only the family that paid in the most / 🌊 A pool helps the few with a big surprise cost
Words to know
- risk
- A chance of a costly surprise.
- insurance
- Many share a small cost so a few do not face a big one alone.
- premium
- The small yearly payment into the pot.
- claim
- Asking the pot to pay a bill.
Watch out for
- Insurance does not stop a flood. It shares the cost of one.
- A dry year is not wasted. The premium buys peace of mind.
- The pot pays only for floods that really happen, so a claim is checked.
- Every family pays the same premium. The pot pays whoever has a claim, not the one who paid the most.
Try it
Twenty families each put in 1 coin. How many coins are in the pot?
20 coins. 20 × 1 = 20.
The pot holds 30 coins and pays one 10-coin bill. How many coins stay in the pot?
20 coins. 30 − 10 = 20.
Is the small yearly payment into the pot a premium or a claim?
A premium. Asking the pot to pay is the claim.
For grown-ups
Ask a grown-up about one big surprise cost that people share, like a storm or a broken car. Who helps to pay for it?
Real insurers keep extra coins for a very wet year and charge a little more to cover their own work, and real rules differ by place. Talk about one big surprise cost that many people share, like a storm, and who helps to pay for it.