Aggregate Limit
Also known as: Annual Aggregate, Policy Aggregate
Once exhausted, no further claims are covered until renewal. Standard small-business GL aggregate is $2M (per-occurrence is $1M). Some umbrella policies extend aggregate; some don't.
Real-world scenario
Consider Cedar & Sons Remodeling LLC, a 9-employee general contractor in Ohio. They buy a general liability policy with a $1,000,000 per-occurrence limit and a $2,000,000 general aggregate limit, carrying an annual premium of $14,800 and a $2,500 per-claim deductible. The aggregate is the most the insurer will pay for all covered claims during the 12-month policy term, no matter how many separate incidents occur.
In March, a subcontractor's ladder cracks a customer's marble floor; the settled claim costs $180,000 plus $35,000 in defense fees. In July, a scaffold collapse injures a passerby, producing a $620,000 bodily-injury payout and $90,000 of legal costs. In October, a water-damage claim from a botched bathroom install settles for $410,000 with $55,000 in defense. Because this surplus-lines contractor form pays defense inside the limits, the running total reaches $1,390,000 against the $2,000,000 ceiling.
When a fourth claim arrives in December for $800,000, only $610,000 of aggregate remains, leaving Cedar & Sons personally exposed for the $190,000 gap. Had they purchased a commercial umbrella with a $5,000,000 limit for roughly $4,200 more per year, that excess layer would have absorbed the shortfall. The lesson: the per-occurrence limit looks generous, but the aggregate is the number that actually caps a bad year.
How it affects your premium
Aggregate limits themselves are a coverage selection rather than a standalone product, but several factors drive how much you pay to raise or protect that ceiling:
- Aggregate-to-occurrence ratio: A policy with a $2M aggregate over a $1M occurrence limit costs more than a 1:1 structure because the insurer is exposed to more total loss.
- Industry and hazard class: High-frequency operations like roofing or demolition erode aggregates faster, so carriers price the same limit higher than for a low-risk office.
- Defense-cost treatment: Policies where defense sits inside limits are cheaper, but a defense-outside-limits form preserves the full aggregate for indemnity and raises premium.
- Separate products-completed-operations aggregate: Adding or increasing this distinct bucket for post-project claims adds cost but protects the general aggregate.
- Per-project aggregate endorsement: Contractors who add a per-project aggregate pay more because each job gets its own dedicated limit.
- Loss history: Prior claims that consumed a large share of past aggregates signal frequency and push renewal pricing up.
- Requested limit size: Moving from a $2M to a $4M aggregate increases premium, though usually at a declining rate per additional million.
Common misconceptions
Myth: My $1 million policy means I have a million dollars available for every claim all year.
Reality:
The per-occurrence limit caps a single claim, but the aggregate caps the total across the whole policy term. Multiple claims share and deplete that aggregate until it is exhausted.
Myth: Once a claim is paid, my aggregate limit resets for the next incident.
Reality:
The aggregate does not refill after each claim. It only restores at renewal when a new policy term begins, so mid-term losses permanently reduce what remains.
Myth: Defense costs never touch my aggregate limit.
Reality:
It depends on the policy form. A standard general liability policy usually pays defense costs outside the limits, so they don't erode your aggregate. But many professional liability, directors and officers, and cyber forms, plus some surplus-lines GL policies, use a defense-inside-limits structure where legal fees are paid from the same aggregate and can exhaust it before any settlement.
Frequently asked questions
What is the difference between the aggregate limit and the per-occurrence limit?
The per-occurrence limit is the most paid for any single claim, while the aggregate is the most paid for all claims combined during the policy period. A common structure is a $1M occurrence limit inside a $2M aggregate.
Does my aggregate limit reset during the policy year?
No. The aggregate applies to the entire term and only resets when the policy renews. If claims exhaust it, you have no remaining coverage until the next term.
What happens if I exceed my aggregate limit?
Any loss beyond the exhausted aggregate becomes your out-of-pocket responsibility unless you carry an umbrella or excess policy that drops down to respond.
Is there a separate aggregate for products and completed operations?
Yes. Most general liability policies carry a distinct products-completed-operations aggregate that applies to claims arising after your work is finished, protecting the general aggregate from those losses.
Can each of my construction projects have its own aggregate?
Yes, by adding a per-project aggregate endorsement, which gives every job site its own dedicated limit so one bad project doesn't drain coverage for the others.
Sources cited
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