Yan calculated that the typical maximum loss event that could occur in terms of his household contents would be no more than R250,000. Although his furniture, appliances, clothes etc. are currently worth R570,000, he takes out household contents cover for R250,000 based on his calculation.

Four months later his house is burgled and electronic goods valued at R40 000 are stolen. On submission of a claim, he is told by his insurer that they consider him to be his own insurer for a portion of the loss.

1.1Why do they regard him as having carried part of the risk for the loss himself and how will this influence the claim amount due to Sam. (2)

1.2How much will he pay in total if the excess is R1 500? (8)

1.3Yan asks you to advise him regarding insurance on his son's car. It is a second-hand Honda (2001 model) which he bought for his son, who is a student. Explain the different kinds of car insurance available and make a recommendation regarding the best type for this car. Motivate your recommendation. (6)