What is the aggregate limit in an insurance policy?

The aggregate limit in an insurance policy refers to the total maximum amount the insurer is obligated to pay for all covered losses sustained by the insured during a specified policy period, typically a year. This limit encompasses all claims made under the policy within that timeframe, ensuring that there is a definitive cap on the insurer's liability during that period.

This concept is essential because it allows both the insurer and the insured to understand the extent of coverage available for multiple claims or incidents. If losses exceed this aggregate limit, the insured would not receive additional compensation beyond this specified amount even if further claims arise during that policy period.

The other options describe different aspects of insurance coverage; for example, one option references coverage limits for singular incidents, while another discusses liabilities in the context of bankruptcy. However, they do not accurately capture the overall scope of the aggregate limit, which is concerned specifically with the total payout for all claims during the designated policy duration.