As a provider of professional services, you know that many clients require you to have insurance coverage to cover claims that may arise related to the work that you do. An aggregate is a maximum amount that an insurer will reimburse a policyholder for all covered loss in a specific time period, usually a year:
- Aggregate limits are not the same as claim limits.
- Often, the aggregate is some multiple of a claim limit.
- Some insurers place caps on both claims and aggregates.
Checking Claims vs Aggregates
For example, let’s say your policy has a maximum individual claim of $100,000. The annual aggregate limit in a given year for that policy maybe 4x that amount, or $400,000. In a given year, your insurer won’t pay out more than $400,000 total for covered damages. For a claim of $150,000, your insurer would only pay out $100,000, while the aggregate changes to $300,000 for the year.
Purchasing Additional Aggregate vs Additional Coverage
For contracting purposes, a client may expect you to increase aggregates for a specific project, thinking that this frees up money to cover a claim. Adding a per-project aggregate endorsement to your policy is doable, but this should not be confused with additional coverage. Buy the coverage you need to cover potential claims. Increase aggregates only when required by clients.