What Is An "Aggregate Limit" And Why Is It Important?

Liability insurance protects businesses and professionals when problems occur, but the coverage provided is subject to various conditions and limits, including a limit or cap on the total amount of money the insurer will pay for any and all claims made and reported during a given policy period. In this bulletin, we explain such "aggregate limits" and their usefulness in customizing insurance coverage based on a company's risk exposure and budget. We focus here on claims-made-and-reported policies commonly issued to professionals, but aggregate limits apply in the general liability context as well. 

What is an aggregate limit of liability?

• Liability policies, including Professional Liability/E&O policies, include certain limits on the coverage(s) available for third-party claims (including lawsuits) made against an insured during a given policy term (usually one year).