What Is an Aggregate Limit?
An aggregate limit is a maximum amount an insurer will reimburse a policyholder for all covered losses during a set time period, usually one year.
Insurance policies typically set caps on both individual claims and the aggregate of claims. For example, if a company's annual aggregate coverage limit is $20 million, and claims totaling $25 million are filed in a policy period, the insurance company will pay only $20 million.
Health insurance plans often carry aggregate limits.
This is a contractual clause and may also be referred to as a general aggregate limit.
Key Takeaways
- An aggregate limit caps the total amount that an insurer will pay a policyholder for a set time period.
- Insurance policies often place limits on both the size of individual claims and the aggregate claims reimbursed.
- Some businesses purchase stop-loss insurance in addition to their regular plans in order to cover any catastrophic losses.
Understanding the Aggregate Limit
As noted, insurance policies often set limits on the amount that is paid on an individual claim and the total paid to the policyholder over a year.
For example, a liability policymay have a $25,000 per claim limit and an aggregate limit of $100,000. If the insured makes a single claim for $50,000, the insurance company pays only $25,000, the per claim limit, even though it is under the aggregate limit. The aggregate limit is now $75,000. A second $50,000 claim in the same period results in another $25,000 payout and a reduced aggregate limit of $50,000. After reaching the aggregate limit, the insurer pays no additional claims during the policy period.
An insurance policy may also have "sub-limits." That is, there might be caps on claims for a specific type of loss, such as flood or earthquake damage.
Health Care Aggregate Limits
As in the example above, health insurance plans often have a cap on per claim payments and a cap on annual claims payments.
A policy may also have sub-limits that cap the amount that will be reimbursed for particular types of loss or damage.
A family dental plan will pay a set amount for each filling, cleaning, or crown claimed by the family. The policy will also hold the family to an annual aggregate limit for payment for claims. If the family exceeds the annual limit, they must pay the expenses out of pocket until the next policy term begins.
Coping with Aggregate Limits
Some policyholders obtain insurance specifically to cover any catastrophic loss that exceeds the aggregate limits on their regular policies. For an additional cost, many insurers offer supplemental plans that provide coverage above the base plan's aggregate limit.These may have a specific but much higher limit or no limit.
Employers that self-fund employee healthcare plans may use similar stop-loss insurance to protect against catastrophic claims. In a self-funded plan, the employer pays the claimspresented by its employees up to an aggregate limit. This standard policy may leave the employer responsible for paying out-of-pocket for costs that exceed the aggregate limit.
Similar stop-loss coverage is available for workers' compensation claims.
The employer may obtain a stop-loss policy that reimburses the employer for the amount that exceeds the aggregate limit.
FAQs
The maximum amount of money your insurer will pay for all the claims you file during the policy period, typically one year, is known as your aggregate limit. Aggregate limits are distinct from per-occurrence (or per-claim) limits. These refer to the maximum amount an insurer will pay for a single claim or incident.
What does in the aggregate mean in an insurance policy? ›
Your aggregate insurance limit is the maximum amount of money your insurance company will pay to cover all of your claims in a given time period. Your per occurrence limit is the highest amount of money insurance will pay to cover a single claim.
What is the aggregate amount limit? ›
An aggregate limit, also referred to as the annual aggregate limit, is the maximum amount of money an insurance company will reimburse a policyholder for all losses covered by the policy over a set period, typically one year. Aggregate limits differ from that of per-occurrence or per-claim limits.
What does aggregate mean in health insurance? ›
An aggregate deductible is when the entire family deductible for a family health care plan must be met to receive a reimbursem*nt from your insurance company. The deductible can be reached by one family member or a combination of members within the family.
What is the limit on insurance? ›
A limit is the highest amount your insurer will pay for a claim that your insurance policy covers. Think of it this way: It's like filling up a fishbowl.
What is an aggregate limit on an insurance policy? ›
The maximum amount of money your insurer will pay for all the claims you file during the policy period, typically one year, is known as your aggregate limit. Aggregate limits are distinct from per-occurrence (or per-claim) limits. These refer to the maximum amount an insurer will pay for a single claim or incident.
What is an aggregate amount? ›
aggregate \AG-rih-gut\ noun. 1 : a mass or body of units or parts somewhat loosely associated with one another. 2 : the whole sum or amount : sum total. Examples: The university's various departments spent an aggregate of 1.2 million dollars in advertising last year.
What is aggregate limitation? ›
The aggregate limitation applies to the total amount of compensation actually received by an employee during the calendar year without regard to when the compensation was earned.
What is the aggregate size limit? ›
The nominal maximum size of coarse aggregate shall not exceed one-fifth the narrowest distance between sides of forms, or three-fourths the clear spacing between reinforcing bars or between a bar and the side of the form.
What is the aggregate indemnity limit? ›
The maximum amount an insurer will pay for all claims over a set time frame.
The general aggregate is the maximum amount of money a liability insurance policy will pay in a given policy term. Unlike a per-occurrence limit, which limits the amount per claim, a general aggregate limit can be exhausted through either two claims, fifty claims, or anywhere in between.
What is a aggregate excess insurance policy? ›
What Is Aggregate Excess Insurance? Aggregate excess insurance limits the amount that a policyholder has to pay out over a specific time period. Also called stop-loss insurance, it is designed to protect policyholders who experience an unusually high level of claims that are considered unexpected.
What is the aggregate premium in insurance? ›
Aggregate Premium means the Premium required for all Members. Aggregate Premiums are shown on all Premium Statements. Application means the Employer enrollment form. It serves as the signature page of this Policy.
What is a policy limit on health insurance? ›
In summary, Policy Limit is the maximum amount of coverage provided under an insurance policy, as determined by the insurance company, and is applicable to a variety of different types of policies.
What is the limit on life insurance policies? ›
This life insurance death benefit limit is typically set at 20 to 30 times your annual income. The insurability limit exists because life insurance is designed to replace your earning power, not to considerably increase the wealth of your beneficiaries.
What is the insured limit? ›
Sum insured or policy limit is the maximum amount your insurance company will pay out to cover an insurance claim. This limit is determined in your insurance policy and can vary depending on the type of coverage you choose to buy.
What does 2000000 aggregate mean? ›
This means that, in this example, individual claims have a limit of $1,000,000 each, while the total policy coverage for all claims made against you within the term of your policy will not exceed $2,000,000 total. If you have 10 claims totally $200,000 or less, for instance, all is well.
What is the difference between any one claim and in the aggregate? ›
Unlike with “in the aggregate” where the cost of each claim is deducted from the total limit available, with “any one claim” policies each claim is allocated 100% of the indemnity limit.
What are aggregators in insurance? ›
Aggregators and Networks.
An insurance aggregator (also known as a agency network or cluster), is a group of independent agencies that band together to combine premiums, giving its members the scale and advantages that are usually only available to the largest agencies.
