What Is a General Aggregate in Insurance?

Q: What Is the Difference Between Aggregate Limit and Per Claim Limit?

The aggregate limit is the total amount that your insurer will pay for all covered claims during your policy period. The per claim limit, also called per occurrence limit, is the maximum amount your insurance carrier will pay for a single claim. So, if your general liability insurance policy has a $1 million per claim limit and a $2 million aggregate limit, your insurer will pay up to $1 million for each claim, but no more than $2 million for all claims combined during your policy period.

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Key Takeaways

The general aggregate limit applies to the total covered losses an insurer will pay during a policy period.
If you reach your aggregate limit before the end of your policy period, additional claims must be covered out of pocket unless you have additional coverage.
For a $1 million aggregate limit, if $750,000 in claims have already been paid during your policy period and a $300,000 claim arises, your insurer will only cover $250,000 of that claim. That leaves $50,000 to be paid by the policyholder (unless you have commercial umbrella insurance as backup protection).

What Is an Aggregate Limit in Insurance?

An aggregate limit for insurance is the maximum amount of money an insurer will pay for claims during the policy period. Another name for this is “aggregate limit of liability.” You’ll typically find general aggregate limits for many types of business liability insurance policies, including general liability insurance and professional liability insurance.

How Does the General Aggregate Limit Work?

The general aggregate limit applies to the total amount insurance companies will pay for covered losses during the policy period. If you reach the limit before the end of your policy period and there’s another claim, you’ll have to cover the costs out of pocket.

Aggregate Limit Insurance Example

Let’s say you have a $1 million aggregate limit for your general liability coverage, also known as commercial general liability (CGL) insurance. That means the $1 million limit is the maximum amount your insurer will pay for claims during the policy term.

In your current policy period, your insurer already covered $750,000 worth of liability claims. A customer sues your business to cover their medical bills and ongoing care costs after slipping and falling at your store.

The total claim costs $300,000.
Your insurance company will only cover $250,000 because of the aggregate limit.
You must cover $50,000 out of pocket, unless you have a commercial umbrella insurance policy.

small business owner happy to know aggregate meaning in insurance

Why Is It Important To Understand the General Aggregate Meaning in Insurance?

Many small business owners may not fully understand the insurance aggregate definition or how aggregate limits work until it’s too late. If your business is at risk of a major catastrophe, it’s essential to have higher limits for general aggregate coverage. Otherwise, you may end up without insurance coverage for the remainder of your policy.

What Is the Difference Between Occurrence Limit and General Aggregate Limit

An occurrence limit is the maximum an insurance company will cover per individual claim. The aggregate claim limit is the total claim costs an insurer will cover during a policy period, which is usually one year.

Do All Insurance Policies Have an Aggregate Limit?

Not every type of business insurance has aggregate limits. Typically, insurance coverage that’s required by a state won’t have an aggregate limit. This includes business car insurance or workers’ compensation insurance.

How To Increase Your Aggregate Limit With an Excess Liability Policy

Excess liability policies extend the coverage limits for certain insurance policies. Another name for this coverage is commercial umbrella insurance. If you have a general liability insurance policy, you can get umbrella insurance to extend the aggregate limit of insurance. So, if a claim exceeds your general liability policy’s payments limit, your umbrella coverage can help pay the difference.

Protect Your Small Business With Coverage From The Hartford

We know choosing the right aggregate limit for your business can be hard. It’s impossible to predict the future, but preparing for the worst-case scenario can help your business deal with a catastrophe. You can work with an insurance agent or one of our specialists to figure out the right general aggregate limit for your business. We’re here to answer your questions about our business insurance coverage and share how we can help protect your business. Get a quote today.

Frequently Asked Questions About Insurance Aggregate Limit

What Is the Difference Between Aggregate Limit and Per Claim Limit?

The aggregate limit is the total amount your insurer will pay for all covered claims during your policy period. The per claim limit, also called per occurrence limit, is the maximum amount your insurance carrier will pay for a single claim. So, if your general liability insurance policy has a $1 million per claim limit and a $2 million aggregate limit, your insurer will pay up to $1 million for each claim, but no more than $2 million for all claims combined during your policy period.

What Is an Aggregate Limit Maximum?

An aggregate limit maximum is the highest total amount an insurance company will pay for all covered claims during a policy period. Small businesses in lower risk industries often have limits like $300,000 to $500,000 to keep premiums affordable. Larger businesses or those in high-risk industries may need limits of $2 million or more to ensure broader protection from large claims.