Aggregate Limit Definition

In insurance, an Aggregate Limit refers to the maximum amount an insurer will pay for covered losses during a specific policy period. Unlike a per occurrence limit, which applies to each individual claim, the aggregate limit applies to the total amount of claims paid out over the policy term. For example, if a business liability policy has an aggregate limit of $1 million, once the insurer has paid out $1 million in claims during the policy period, no further claims will be covered under that policy, even if they are within the per occurrence limit.

Aggregate limits are common in liability insurance policies, such as general liability or professional liability insurance, where multiple claims could arise from different incidents over the course of the policy term. Insurers use aggregate limits to manage their exposure to losses and ensure that policyholders have adequate coverage throughout the policy period. Understanding aggregate limits is crucial for businesses and individuals to assess their insurance needs and potential financial risks.