Aggregate Limit
Plain English
An aggregate limit is the policy's total budget for the year. Each claim paid uses some of it up, and once it's used up, the policy pays nothing more until the period renews. A policy can show a smaller per-claim limit and a larger aggregate limit, and both apply at the same time.
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On this page
Definition
An aggregate limit is the most a policy will pay in total for all covered claims during the policy period, regardless of how many claims there are. The NAIC glossary defines it as "the maximum dollar amount or total amount of coverage payable for a single loss, or multiple losses, during a policy period, or on a single project." It's common on business liability policies, alongside a per-occurrence limit that caps any single claim.
Why It Matters
A business with several claims in one year can run out of coverage even though no single claim reached the per-claim limit. Knowing how much of the aggregate is left matters before the next claim, and it's one reason some businesses add an umbrella policy.
Real-World Example
Imagine a contractor's liability policy with a $1,000,000 per-occurrence limit and a $2,000,000 aggregate limit for the year. In March a claim pays $800,000, and in June another pays $900,000. Each is under the $1,000,000 per-claim cap, but together they've used $1,700,000 of the aggregate. If a third claim in October is worth $600,000, only $300,000 of aggregate remains, so this policy can pay at most $300,000 toward it. The policy's wording decides which payments, such as defense costs, count toward the aggregate.
Common Misconceptions
- Reading the per-occurrence limit as the most the policy can pay in a year. The aggregate is the yearly total.
- Assuming the aggregate resets after each claim. It generally resets only at renewal.
- Adding the per-occurrence and aggregate figures together. They're two caps on the same coverage, not two pots of money.
Key Takeaways
- The aggregate limit caps total payments across all claims in a policy period; a per-occurrence limit caps each single claim.
- Both apply at once: each claim is limited by the per-occurrence cap and by whatever aggregate remains.
- Some policies have more than one aggregate, for example one for products and completed operations. The declarations page lists them.
- Whether defense costs reduce the aggregate depends on the policy's wording. Ask if it isn't clear.
Frequently Asked Questions
Where do I find my aggregate limit?
On the declarations page of a business liability policy, usually listed as "general aggregate" next to the "each occurrence" limit.
Do personal policies have aggregate limits?
Some do for specific coverages, but they're most visible on business liability policies. Check your declarations page.
What's it commonly confused with?
The per-occurrence limit. Per occurrence is the most for one claim; the aggregate is the most for all claims in the policy period.
Related Terms
Related Coverages
- General Liability Insurance
- Business Owners Policy
Related Scenarios
Explore the rest of the Business Insurance category.
Browse Business Insurance terms →Sources
The factual claims on this page were checked against these sources. Rules and figures change, so check the source itself if you need to confirm the current version.
- Glossary of Insurance TermsNational Association of Insurance Commissioners (NAIC)
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