Aggregate Limit
The aggregate limit is the maximum total amount an insurance policy will pay for all covered claims during the entire policy period, typically one year.
The aggregate limit establishes a ceiling on the total amount the insurer will pay across all claims during the policy term. While the per-occurrence limit caps individual claims, the aggregate limit caps the cumulative total. Once the aggregate limit is exhausted, the policy provides no further coverage for the remainder of the term, regardless of the per-occurrence limit.
For a standard commercial general liability policy with a $1,000,000 per-occurrence limit and a $2,000,000 aggregate, the insurer will pay up to $1,000,000 for any single claim, but no more than $2,000,000 total across all claims during the policy year. If three separate incidents each generate $800,000 in claims, the first two would be paid in full ($1,600,000), but the third would be capped at $400,000 (the remaining aggregate).
Apartment properties with high loss frequency, such as properties with older infrastructure or significant amenity exposure, should be mindful of aggregate erosion. If early-in-the-year claims consume a large portion of the aggregate, the property could be left with minimal coverage for the remainder of the term. Monitoring claims against the aggregate throughout the year and maintaining umbrella or excess coverage provides an additional layer of protection.