Aggregate Limit
What Does Aggregate Limit Mean?
An aggregate limit is the maximum amount of money an insurer will pay to settle claims within a specified period, typically referred to as an annual limit, as this period is usually one year. Once the total claims reach this limit, the policyholder is responsible for covering any additional expenses incurred thereafter.
Insuranceopedia Explains Aggregate Limit
Insurance companies often impose aggregate limits on their policies to prevent their potential payouts from becoming unlimited. Without such limits, insurers could face financial difficulties due to excessive obligations. Aggregate limits help insurers align their obligations with their capacity to pay while still maintaining profitability. If a person files claims in a policy year that exceed the aggregate limit, they will need to cover the excess amount out of pocket.
