What do aggregate limits indicate in an insurance policy?

Aggregate limits in an insurance policy refer to the maximum amount an insurer will pay for all claims within a specified policy period, typically one year. This means that regardless of the number of claims or incidents that could occur, the total payout will not exceed the aggregate limit set by the policy.

For instance, if a policy has an aggregate limit of $1 million, the insurer will cover eligible claims up to this total amount throughout the policy year. Once this limit is reached, no further claims will be paid until a new policy period begins, or the policy is renewed. Understanding aggregate limits is crucial for policyholders to manage their risk and ensure they have sufficient coverage for potential losses over time.