Aggregate Limit
Key Takeaway
The maximum amount the insurer will pay for all covered claims during a single policy period. Once the aggregate limit is exhausted, no further coverage is available until the policy renews.
Definition
The maximum amount the insurer will pay for all covered claims during a single policy period. Once the aggregate limit is exhausted, no further coverage is available until the policy renews. For law firms, selecting adequate aggregate limits is critical because multiple claims in a single year can rapidly erode available coverage.
Why This Matters for Law Firms
This term defines the boundaries of what your insurance will and will not pay for. Law firms that misunderstand coverage terms risk discovering gaps in protection only after a claim has been filed, when it is too late to remedy the situation. Reviewing these terms with your broker before binding coverage is a critical risk management step.
Example Usage in Context
During a coverage review meeting, the firm administrator might note: "Our policy includes a aggregate limit provision -- let's make sure we understand exactly what that means for our specific practice areas before we sign off on the renewal."
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