In insurance, what does the term "aggregate limit" refer to?

The term "aggregate limit" specifically refers to the maximum amount an insurer is obligated to pay for all covered losses during a specified policy period. This means that if multiple claims are filed within that time frame, the insurer will cover losses up to the predetermined aggregate limit, but will not exceed this cap regardless of the number of claims made. This limit is crucial for both insurers and policyholders as it helps establish a clear framework for coverage and risk management during the term of the policy.

In contrast to this, the maximum amount an insurer will pay for a single claim refers to a different type of limit typically known as a "per occurrence" limit. The fixed amount paid for specific services by the insured pertains to copays, deductibles, or coinsurance in health insurance contexts and does not relate to aggregate limits. Similarly, the idea of a limit imposed on total claims across all policyholders does not accurately reflect the structure of aggregate limits, which applies specifically to losses incurred by an individual policyholder within the defined policy period.