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14. ABC Insurers paid the claim of R90 000 to the insured and thereafter instructed its attorneys to institute a legal claim against the third party, for which it was successfully paid R98 000, excluding legal fees. The difference in the amount paid to the insured and that received by the insurer is the

a.legal fees.

b.value-added tax.

cexcess.

d. reinsurance contribution.

15. LTA Bank purchased a new camera system at a cost of R1 500 000, excluding VAT. The chief financial officer insured the camera system at 60% of the full cost price to the bank to save on premium costs. The insurance policy requires an amount of R80 000 to be paid for each claim submitted by the bank. Three years after the camera system was purchased and insured, it was damaged by fire. The appointed loss adjuster found that the damage amounted to R450 000. The claim amount submitted to the insurer must have been

a.R270 000

b.R450 000

c.R370 000

d.R190 000

16 LTA Bank purchased a new camera system at a cost of R1 500 000, excluding VAT. The chief financial officer insured the camera system at 60% of the full cost price to the bank to save on premium costs. The insurance policy requires an amount of R80 000 to be paid for each claim submitted by the bank. Three years after the camera system was purchased and insured, it was damaged by fire. The appointed loss adjuster found that the damage amounted to R450 000. The insurer is liable for

a.R190 000

b.R450 000

c.R370 000

d.R270 000

17. LTA Bank purchased a new camera system at a cost of R1 500 000, excluding VAT. The chief financial officer insured the camera system at 60% of the full cost price to the bank to save on premium costs. The insurance policy requires an amount of R80 000 to be paid for each claim submitted by the bank. Three years after the camera system was purchased and insured, it was damaged by fire. The appointed loss adjuster found that the damage amounted to R450 000. The insurer must have paid into the bank account of the insured.

a.R270 000

b.R450 000

c.R190 000.

d.R370 000

18. LTA Bank purchased a new camera system at a cost of R1 500 000, excluding VAT. The chief financial officer insured the camera system at 60% of the full cost price to the bank to save on premium costs. The insurance policy requires an amount of R80 000 to be paid for each claim submitted by the bank. Three years after the camera system was purchased and insured, it was damaged by fire. The appointed loss adjuster found that the damage amounted to R450 000. The insured is underinsured by an amount of

a.R690 000

b.R270 000

c.R600 000

d.R450 000

19. Use the following information of Ligo Fleet Company to answer the question below:

Number of vehicles 300

Depreciation 10% on a straight line basis

Deductible (excess) per claim R20 000

Claims information

1. Ligo Fleet Company submitted three vehicle claims amounting to R800 000 on 5 January 2022. The three vehicles were stolen in the three provinces of the country.

2. Ligo Fleet submitted five vehicle claims amounting to R1 200 000 on 3 March 2023. The five vehicles were stolen in the five provinces of the country.

Policy changes

The parties agreed to change the current deductible method to a disappearing deductible method in the 2 January 2023 renewal negotiations.

Management should apply the recapture value of 25% of the depreciation rate.

Question

Calculate the amount of money the insurer will pay to the bank of Ligo Fleet Company for the claims submitted on the 5 January 2022.

a.R760 000

b.R740 000

c.R800 000

d.R780 000

20. Use the following information of Ligo Fleet Company to answer the question below:

Number of vehicles 300

Depreciation 10% on a straight line basis

Deductible (excess) per claim R20 000

Claims information

1. Ligo Fleet Company submitted three vehicle claims amounting to R800 000 on 5 January 2022. The three vehicles were stolen in the three provinces of the country.

2. Ligo Fleet submitted five vehicle claims amounting to R1 200 000 on 3 March 2023. The five vehicles were stolen in the five provinces of the country.

Policy changes

The parties agreed to change the current deductible method to a disappearing deductible method in the 2 January 2023 renewal negotiations.

Management should apply the recapture value of 25% of the depreciation rate

Question

Calculate the new deductible amount after the payment of the claims submitted on the 3 March 2023.

a.R72 000

b.R86 000

c.R80 000

d.R100 000

Use the following information of Ligo Fleet Company to answer the question below:

Number of vehicles 300

Depreciation 10% on a straight line basis

Deductible (excess) per claim R20 000

Claims information

1. Ligo Fleet Company submitted three vehicle claims amounting to R800 000 on 5 January 2022. The three vehicles were stolen in the three provinces of the country.

2. Ligo Fleet submitted five vehicle claims amounting to R1 200 000 on 3 March 2023. The five vehicles were stolen in the five provinces of the country.

Policy changes

The parties agreed to change the current deductible method to a disappearing deductible method in the 2 January 2023 renewal negotiations.

Management should apply the recapture value of 25% of the depreciation rate.

Question

Using a deductible of R20 000, calculate the claims amount which will result in a zero deductible after the 3 March 2023.

a.R820 000

b.R825 000

c.R810 000

d.R815 000

22. Use the following information of Information of Kgadi Properties to answer the question below:

Building name Location Property Value Content Value

Building A South Africa (Gauteng) R8 million R1 300 000

Building B Zimbabwe (Harare) R3 million R500 000

Building C Namibia (Windhoek) R9 million R960 000

Additional Information

1. The latest risk assessment report of Kgadi Properties indicates that existing control measures could salvage the buildings and the contents as follows:

Building A 68%

Building B 85%

Building C 76%

2. The shareholders of Kgadi Properties are concerned by the role of the South African government and other SADC countries in the Russia and Ukraine war.

3. Building and content amounts are shown in rands values because it is a reporting currency of Kgadi Properties.

Question

Calculate the Probable Maximum Loss (PML) of Kgadi Properties if the latest risk assessment report indicates that SADC would be severely impacted by the war between Russia and Ukraine.

a.R22 760 100

b.R20 721 400

c.R22 038 600

d.R20 000 000

Answer & Explanation Solved by verified expert

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