Question
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
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. R825 000
b. R810 000
c. R815 000
d. R820 000
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