Aggregate Limit of Liability - Home Insurance

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What is an Aggregate Limit of Liability?

<lingo>An aggregate limit of liability is the most an insurance company will pay to an insured over the course of a specific period. Both the time period and total limits will be covered in the terms of the policy.
 While some liability payments will be paid on a "per occurrence" or "per claim" basis, the aggregate caps the total payout over a time period, frequently a year. This protects an insurance provider from repeated claims of the same nature from a single insured.</lingo> 

Aggregate Limit of Liability Clearly and Briefly Explained

Insurance companies will often use aggregate limits to minimize their exposure to large losses. Let's say a homeowner has a $25,000 per claim, or per occurrence limit on liability claims in his homeowners' insurance policy. He may also have a $100,000 aggregate limit of liability. This insured would reach his aggregate liability limit if he has four claims that reach $25,000 each over the course over the policy period, typically a year. In this scenario, the insurance provider has capped or maxed out the coverage for that time period. Any liability claims made during the remaining period would not be covered. The insured has reached his maximum aggregate limit of liability with his insurance company. In some instances, the aggregate limit may be the same as the per claim limit. For example, a policy may have a $100,000 per claim limit along with a $100,000 aggregate limit. 


<twitter>An aggregate limit of liability is the most an insurance company will pay to an insured over the course of a specific period.</twitter>



In this example, a single successful claim of $100,000 submitted to the company would reach the insured's aggregate limit. Any combination of successful claims totaling $100,000 would reach the aggregate limit. This aggregate limit of liability should be reviewed to see if it is sufficient after each policy renewal period.  


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