In a scenario where two liability policies cover the same loss of £12,000, how much will Policy X contribute if it is subject to a £4,000 excess?

In this scenario, the calculation of how much Policy X will contribute involves understanding how an excess works in insurance policies. An excess is the amount deducted from a claim; it represents the portion of the loss that the insured is responsible for before the insurance coverage comes into play.

Since Policy X has an excess of £4,000, this means that for any loss incurred, the first £4,000 will not be covered by the insurance. Therefore, when a loss of £12,000 occurs, Policy X will first deduct its excess of £4,000 from the total loss. This leaves a claimable amount of £8,000 (£12,000 loss - £4,000 excess).

Assuming that both policies cover the loss equally, Policy X would then cover £8,000 of the remaining loss. However, the answer you've given, £4,800, appears to be a miscalculation.

If the intention is to find how much of the loss Policy X would handle after accounting for the excess, the contribution from Policy X is accurately £8,000, given the total loss of £12,000 and the £4,000 excess. Thus, the appropriate contribution reflects the impact of the excess directly on the loss