Aggregate Limit

An aggregate limit is the maximum total dollar amount your insurance policy will pay for all covered claims combined during a single policy period — typically one year. Once that ceiling is reached, the insurer owes nothing more, regardless of how many additional claims arise. Who this is for: Any business owner buying or renewing commercial liability, professional liability, or umbrella coverage.

TL;DR — Key Takeaways

• The aggregate limit is the annual "cap" on total insurer payouts; the per-occurrence limit caps any single event.
• Standard commercial general liability (CGL) policies are commonly written at $1 million per occurrence / $2 million general aggregate.
• Defense costs may or may not erode your aggregate depending on policy language — always verify.
• When the aggregate is exhausted mid-policy, you are uninsured for the rest of that year unless you buy reinstatement or additional coverage.
• Contractors and high-claim-volume trades should consider per-project or per-location aggregates to prevent one large job from depleting coverage for all other work.

What Is an Aggregate Limit in Insurance?

An aggregate limit sets a hard ceiling on what an insurer will pay across all claims during the policy term, most commonly 12 months. It works alongside — but is distinct from — the per-occurrence limit, which caps the insurer's payout for any single event, accident, or claim.

Example of how they interact: A general contractor carries a $1 million per-occurrence / $2 million general aggregate CGL policy. If three separate jobsite incidents result in claims of $600,000, $800,000, and $800,000:

• Claim 1 ($600,000): Paid in full (under the $1M per-occurrence limit). Aggregate remaining: $1.4M.
• Claim 2 ($800,000): Paid in full. Aggregate remaining: $600,000.
• Claim 3 ($800,000): Only $600,000 of aggregate remains, so the insurer pays $600,000 — the business bears the remaining $200,000 out of pocket.

Aggregate Limit vs. Per-Occurrence Limit: What's the Difference?

Both limits appear on the declarations page of most commercial liability policies. They work together to define the outer boundaries of coverage.

Note: The Products-Completed Operations (PCO) aggregate is a separate aggregate from the General Aggregate on ISO CGL forms. Contractors and manufacturers frequently have significant PCO exposure and should confirm both aggregates are adequately funded.

Which Policies Have Aggregate Limits?

Most commercial liability lines carry an aggregate:

• Commercial General Liability (CGL): General aggregate + PCO aggregate are both standard on ISO CG 00 01 forms.
• Professional Liability / E&O: Single aggregate limit is common on claims-made forms.
• Directors & Officers (D&O) / EPLI: Single policy aggregate; defense costs almost always erode the limit.
• Umbrella / Excess Liability: Separate aggregate that sits above underlying limits.
• Cyber Liability: Sub-limits and aggregates within the policy for breach response, business interruption, ransomware, etc.
• Workers' Compensation: Generally no aggregate limit — the policy pays all covered statutory benefits regardless of total cost. (Employers Liability, the companion coverage, does carry per-occurrence and aggregate limits.)
• Commercial Auto: Per-accident limits; no annual aggregate on most personal-injury/property-damage coverages.

Does Defense Cost Erode the Aggregate?

This is one of the most misunderstood mechanics in commercial liability:

• CGL and most occurrence-based policies: Defense costs are paid in addition to (outside) the limits, so they do not erode the aggregate. The insurer defends the insured and also pays damages up to the limit.
• Claims-made E&O, D&O, Cyber, and many professional lines: Defense costs are typically inside the limits (also called "wasting" or "burning" limits). Legal fees and expert costs reduce the amount remaining for damages.
• Umbrella / excess: Varies by form — read the policy.

Practical impact: A $1 million E&O policy with inside defense costs could be almost entirely consumed by a protracted lawsuit even if the ultimate damages award is modest. For high-litigation-risk professions (architects, engineers, IT consultants, healthcare), higher limits or separate defense cost coverage is advisable.

How to Evaluate Whether Your Aggregate Limit Is Adequate — 5 Steps

1. Estimate your claim frequency. Review your loss runs for the past three to five years. If you've had multiple claims in a single year, a low aggregate is a real risk.
2. Assess your maximum probable loss per occurrence. A slip-and-fall at a retail location carries a different severity profile than a structural defect claim on a $10 million commercial build.
3. Review contract requirements. Many project owners, general contractors, and lenders require minimum aggregate limits — often $2 million or $4 million — by contract. Failing to meet these can void a contract.
4. Identify per-project or per-location aggregate endorsements. ISO endorsement CG 25 03 (Designated Construction Project Aggregate Limit) or CG 25 04 (Designated Location General Aggregate Limit) give each project or location its own aggregate, preventing one large claim from wiping out coverage everywhere else.
5. Stack with an umbrella. A $1M/$2M CGL plus a $5 million commercial umbrella gives you an effective $6M per-occurrence / $7M aggregate for most losses, often at a fraction of the cost of doubling the underlying CGL limits.

Real-World Example: Roofing Contractor, Texas

Scenario (illustrative — not a guarantee of coverage or outcome):

A mid-size commercial roofing company in Dallas carries a standard $1 million per-occurrence / $2 million general aggregate CGL policy. In late August, a hailstorm triggers an unusually high volume of work. During a busy stretch:

• September: A worker accidentally punctures a building's HVAC unit while on the roof — resulting in a $420,000 property damage and business interruption settlement.
• October: A subcontractor's fall causes $275,000 in bodily injury damages.
• December: Faulty flashing on a completed project causes interior water damage — a $950,000 PCO claim.

The September and October claims total $695,000 against the general aggregate (leaving $1.305M). The December claim falls under the Products-Completed Operations aggregate (separate $2M bucket), so it is fully within limits.

Without the separate PCO aggregate, the December claim would have been paid from the same $1.305M remaining — leaving just $355,000 of general aggregate to absorb any further claims before renewal, instead of preserving that full $1.305M for other general-liability losses. Understanding which aggregate bucket applies is critical for Texas contractors with high completed-operations exposure.

Frequently Asked Questions

What is an aggregate limit in simple terms?

An aggregate limit is the annual "bucket" of money your insurer sets aside for your claims. Once that bucket is empty, the insurer stops paying — even if new claims arise before your policy renews.

What happens when you hit your aggregate limit?

Your insurer has no further obligation to pay claims for that policy period. You must pay remaining claims out of pocket, negotiate settlements yourself, or seek coverage under a separate umbrella or excess policy (if the umbrella's underlying aggregate hasn't also been exhausted).

Is the aggregate limit per year?

For most commercial policies, yes — the aggregate resets when the policy renews (typically annually). On multi-year policies, the aggregate may apply per year or to the entire policy term; always confirm with your broker.

How is the aggregate limit different from the per-occurrence limit?

The per-occurrence limit caps what the insurer pays for any single claim or event. The aggregate limit caps what the insurer pays in total across all claims during the policy period. You can hit the aggregate limit through many small claims even if no single claim reaches the per-occurrence limit.

Do umbrella policies have their own aggregate limits?

Yes. A commercial umbrella policy carries its own per-occurrence and aggregate limits, separate from underlying policies. The umbrella aggregate typically applies to losses that exceed the underlying policy's per-occurrence limit — it does not replenish an exhausted underlying aggregate.

Can I buy more aggregate mid-policy?

Some insurers offer aggregate reinstatement endorsements, which restore the aggregate once (or in limited amounts) after it is exhausted, for an additional premium. Not all carriers offer this; it must be arranged before the aggregate is depleted.

Are defense costs counted against the aggregate?

It depends on the policy. Most occurrence-based CGL policies pay defense costs outside the limits (not eroding the aggregate). Most professional liability and management liability policies (E&O, D&O, cyber) pay defense costs inside the limits, reducing the amount available for damages.

What is a per-project aggregate and why do contractors need it?

A per-project aggregate (added via endorsement) gives each designated construction project its own aggregate limit, rather than sharing the policy-wide aggregate across all jobs. Without it, a single large claim on one project can exhaust the aggregate and leave all other projects without coverage for the rest of the policy year.

Why Morrow for Aggregate Limit Guidance

1. Independent broker access. Morrow places commercial policies with multiple admitted and specialty carriers [Morrow to confirm current carrier panel], which means we can compare aggregate structures — not just price — to find the right fit for your claim frequency and contract requirements.
2. Contractor and trade expertise. We regularly place per-project and per-location aggregate endorsements for general contractors, roofing companies, and specialty trades where aggregate management is critical, not an afterthought.
3. Contract requirement review. When a project owner demands a $4 million aggregate, we don't just increase a number — we evaluate whether stacking a CGL with an umbrella delivers better coverage at a lower cost than raising the primary limits.
4. Real claims advocacy. When aggregate erosion becomes a concern mid-policy, our team engages directly with your insurer to monitor reserve adequacy and explore reinstatement options before coverage gaps emerge.
5. Fast certificates of insurance (COIs). Need a certificate showing updated aggregate limits for a new project owner? We turn around COIs the same business day so your work doesn't stop.

Get a Quote

Ready to review your aggregate limits or place a new commercial liability policy? Get a free quote from Morrow or call us directly. We'll compare aggregate structures across carriers and make sure your policy keeps up with your contract requirements.

Trust: Morrow (Afthonea Inc, DBA Morrow) is a licensed independent commercial P&C insurance agency. [Morrow to confirm licensed states and NPN.] Rated [Morrow to confirm review platform and rating] by business owners.

Related Pages

• Commercial General Liability Insurance — Overview
• Per-Occurrence Limit — Glossary
• Umbrella & Excess Liability Insurance
• Certificate of Insurance (COI) — What It Is and What It Proves
• General Liability Insurance Cost Guide

Author: Morrow Editorial Team — reviewed by a licensed commercial P&C insurance broker with experience placing CGL, umbrella, and professional liability programs for contractors and small businesses across the US. Published: June 2026 Last updated: June 2026

Sources: - Insurance Services Office (ISO) CGL Form CG 00 01 — standard commercial general liability policy language - National Association of Insurance Commissioners (NAIC) — consumer resources on liability coverage - Insurance Information Institute (III) — commercial liability coverage explainers - ISO Endorsements CG 25 03 and CG 25 04 — per-project and per-location aggregate limit endorsements