Aggregate Limit in Insurance

An aggregate limit is the maximum total amount your insurer will pay for all covered claims during the policy period (usually one year). Once this total cap is reached, the insurer won’t pay any more claims, even if the policy is still active.

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Why It’s Significant

• It stops you from getting unlimited payouts in a bad year with multiple claims.
• It helps keep insurance premiums lower and affordable for everyone by putting a ceiling on total payouts per year.
• It can leave you personally paying if several incidents happen and the limit is used up.

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How Does It Work?

• It covers the sum of all claims in the policy year, not just one incident.
• It typically resets to full amount when the policy renews (usually annually).
• It applies in addition to the per-occurrence (or per-claim) limit which caps payout for any single incident.
• It is found mainly in liability policies (e.g., Directors and Officers (D&O) Liability Insurance) where multiple claims can occur.

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Aggregate Limit vs. Per Occurrence Limit

Aggregate Limit: The overall maximum for all occurrences combined during the policy term.

Per Occurrence Limit: The maximum amount paid for a single claim or incident.

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Example‍

Situation: Say, you have a $2 million aggregate limit on your general liability policy.

What Happens Without Understanding the Aggregate Limit: You think “$1 million per occurrence” means you’re always covered up to $1 million per claim.

Why the Aggregate Limit Matters: After the insurer has paid out a total of $2 million for all claims combined in the policy year, coverage stops completely even if you have many more claims and the policy hasn’t expired yet.

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Common Mistakes to Avoid

• Incorrectly believing the per-occurrence limit (e.g., $1M each claim) resets fully for every new claim regardless of total payouts. Remember: every claim also counts toward the aggregate limit.
• Expecting the aggregate limit to reset after each claim.
• Assuming “per occurrence claim” and “aggregate” are the same thing.
• Buying a policy with a low aggregate because the premium is cheap, then getting caught out in a busy year.

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When is the Best Time to Contact a Broker?

If your business could face more than one or two claims a year (retail, construction, consulting, allied health, etc.), it’s worth checking whether your current aggregate limit is high enough for your real risk.

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Got a Question?

Need help checking your aggregate limits or understanding how they apply to your business? Tank Insurance can review your policy and explain it clearly.