What is an Aggregate Limit?

An Aggregate Limit is the maximum total amount your insurer will pay for all claims combined during your policy period (typically one year), regardless of how many separate incidents occur.

What you need to know

If your general liability policy has a $2 million aggregate limit and you have three slip-and-fall claims totaling $1.8 million, you only have $200,000 in coverage left for the rest of the year. Once you hit the aggregate, you’re personally responsible for any additional claims.

How aggregate limits work:

• Policy period cap – The aggregate resets annually when your policy renews
• All claims count – Every claim, settlement, and legal defense cost reduces your aggregate
• Separate from per-occurrence limits – You have both a per-claim limit AND a total annual limit
• No rollover – Unused aggregate doesn’t carry over to the next policy period

Common aggregate limit structures:

General Liability:

• Per-occurrence limit: $1 million (max paid per single incident)
• Aggregate limit: $2 million (max paid for all incidents combined per year)
• Most policies follow this 1M/2M structure, though higher limits are available

The relationship between limits: Your aggregate must be at least as high as your per-occurrence limit, typically double. If you have a $1 million per-occurrence limit, you need at least a $2 million aggregate to handle two major claims in one year.

What counts toward your aggregate:

• Claim settlements and judgments – The actual payout to injured parties
• Legal defense costs – Attorney fees, court costs, expert witnesses
• Investigation expenses – Costs to investigate and evaluate claims
• All claims, regardless of size – A $500 claim reduces your aggregate just like a $500,000 claim

Critical distinction – Per-Occurrence vs. Aggregate:

• Per-occurrence limit: Maximum paid for ONE incident (e.g., one slip-and-fall)
• Aggregate limit: Maximum paid for ALL incidents during the policy year

Example scenario: You have $1M per-occurrence / $2M aggregate coverage. Three separate incidents occur:

• Claim 1: $800,000 settlement
• Claim 2: $600,000 settlement
• Claim 3: $400,000 settlement

Result: Claims 1 and 2 are fully covered ($1.4M total). Claim 3 only receives $600,000 (the remaining aggregate), leaving you to pay $400,000 out-of-pocket, even though the claim is under the per-occurrence limit.

Why it matters for restaurant owners

High-traffic restaurants face multiple small claims throughout the year. Your aggregate limit needs to be high enough to cover your realistic exposure based on customer volume, alcohol service, and your claims history.

Factors that increase aggregate risk:

• High customer volume – More customers = more slip-and-fall opportunities
• Alcohol service – Liquor liability claims can be expensive
• Delivery operations – Vehicle accidents add to your aggregate
• Outdoor seating – Sidewalk incidents, weather-related hazards
• Events and catering – Off-premise operations increase exposure
• Multiple locations – More restaurants = more potential claims

The mid-year crisis: If you’re approaching your aggregate limit mid-year, you face a dangerous situation. One more significant claim could exhaust your coverage, leaving you personally liable for any additional incidents for the remainder of your policy period.

What happens when you exhaust your aggregate:

• You’re personally liable – All costs for additional claims come from your pocket
• No coverage for new incidents – Even small claims become your responsibility
• Can’t increase mid-term easily – Most carriers won’t raise limits mid-policy
• Business closure risk – A major claim with no coverage could bankrupt your restaurant

Protecting yourself: Contact your insurer immediately about increasing your aggregate or purchasing umbrella coverage before you’re unprotected. Don’t wait until you’ve exhausted your limit.

Signs you need a higher aggregate:

• Multiple claims per year – If you average 3+ claims annually, consider higher limits
• Large individual claims – Claims approaching your per-occurrence limit
• Growing operations – New locations or expanded catering
• Alcohol-heavy business – Bars and nightclubs face higher aggregate risk
• High-traffic areas – Busy locations increase claim frequency

Essential practices:

• Monitor your aggregate usage – Track claims throughout the year, not just at renewal
• Request aggregate updates quarterly – Ask your agent how much coverage remains
• Consider umbrella coverage – Adds another $1-5M above your primary limits
• Review at renewal – Increase limits as your business grows
• Don’t underinsure to save premium – The cost difference between $2M and $3M aggregate is minimal compared to personal liability exposure
• Document everything – Maintain records of all claims to understand your aggregate usage patterns

Umbrella policies as a solution: An umbrella policy sits above your general liability and provides additional aggregate capacity. If you exhaust your primary aggregate, the umbrella continues providing coverage. This is essential protection for restaurants with significant exposure.

Most restaurant owners should carry at least $2 million aggregate, with $3-5 million for higher-risk operations. The incremental premium cost is small compared to the catastrophic risk of going uninsured mid-policy year.