What is the limit that the insurer will pay for all losses that occur during a policy period?

The aggregate limit refers to the maximum amount an insurer is willing to pay for all covered losses that occur during a specified policy period, usually one year. This limit is crucial for policyholders to understand because it represents the total coverage available for multiple claims within that timeframe.

For instance, if a homeowner’s insurance policy has an aggregate limit of $300,000, this means that the insurer will cover claims for property damage, liability, and other specified losses, but the total payout across all claims cannot exceed that threshold during the policy year. This is important for individuals or businesses that may face multiple incidents.

In contrast, a per occurrence limit pertains to the maximum amount the insurer will pay for an individual loss or claim, which could be different from the aggregate limit. The deductible amount is the amount the insured must pay out of pocket before the insurance coverage kicks in, and the basic limit typically refers to the minimum coverage amount required for specific types of policies or coverages. Understanding the aggregate limit helps policyholders assess their financial risks and manage their insurance coverage effectively.