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  2. Insurance Terms Starting With A

Aggregate Limit

What is an Aggregate Limit?

The term Aggregate Limit may refer to the maximum amount of financial protection that a Directors and Officers (D&O) insurance policy will provide for all claims made against a policyholder during the policy period. It is usually expressed as a fixed sum, such as a million dollars, and is the total amount of money available to pay all claims, legal fees and other costs associated with defending the insured.

Aggregate Limit in More Detail

The Aggregate Limit is the maximum amount of money that an insurer will pay out to cover claims and related costs arising from a D&O insurance policy during the policy period. This limit is usually specified in the policy and any amount paid out over and above the limit is the responsibility of the insured. In the event of a claim being made against the insured, the Aggregate Limit will be the first amount to be paid and will be used to cover the costs associated with defending the insured.

The Aggregate Limit is an important part of a D&O insurance policy and should be closely monitored. As the policyholder, it is essential to understand the amount of cover available and to plan accordingly. The Aggregate Limit will generally be based on the number of directors and officers, the type of business, and the size of the company. If the limit is not sufficient to cover all claims and related costs, the policyholder may need to purchase additional coverage.

In summary, the Aggregate Limit is a fixed sum of money specified in a D&O insurance policy which provides the maximum financial protection available. It is important to understand the amount of cover available and to plan accordingly in order to ensure that all claims and related costs are covered.