What is the definition of an aggregate limit in insurance?

An aggregate limit in insurance refers to the maximum amount that an insurer will pay for all claims within a specific policy period, typically one year. This means that regardless of how many individual claims occur, the total payout cannot exceed this predetermined amount. This limit applies to all covered losses under the policy during that period, providing both the insurer and the policyholder with clarity on the extent of coverage available.

In contrast, the other definitions provided describe different aspects of coverage. The maximum coverage for a single event pertains to per-occurrence limits, which can vary between policies. The maximum payout per individual claim is more specific and doesn't account for overall limits across multiple claims. Lastly, maximum deductible applicable per annum refers to amounts the policyholder must pay out of pocket before the insurance coverage kicks in, which is not related to the aggregate limit of policy payouts. Understanding the aggregate limit is crucial for policyholders to manage their expectations regarding potential payouts throughout the life of the policy.