Here's something that catches many business owners off guard: you can have plenty of coverage left on your general liability policy and still run out of insurance. How? Your aggregate limit. Think of your aggregate limit as a bucket that holds all the money your insurer will pay out during your policy period. Each claim dips into that bucket, and once it's empty, you're on your own—even if your policy hasn't expired yet.
Understanding aggregate limits isn't just insurance jargon—it's critical to protecting your business. Whether you're a contractor worried about claims from completed projects or a retailer concerned about customer slip-and-falls, knowing how these limits work can save you from unexpected financial exposure.
What Is an Aggregate Limit?
Your aggregate limit is the maximum amount your insurance company will pay for all covered claims during your entire policy period. Most business insurance policies run for one year, so your aggregate limit typically represents the total coverage available over those 12 months.
This is different from your per-occurrence limit, which caps what the insurer pays for any single incident. Let's say you have a $1 million per-occurrence limit and a $2 million general aggregate. If a customer sues you for $800,000 after a slip-and-fall, your policy covers it (it's under the per-occurrence limit). But that claim also reduces your aggregate limit to $1.2 million for the rest of the year. If you have two more $600,000 claims before your policy renews, you'll hit your aggregate limit—and any additional claims come out of your pocket.
General Aggregate vs. Products-Completed Operations Aggregate
Most commercial general liability (CGL) policies actually have two separate aggregate limits that work independently. Understanding the difference is crucial, especially if you're in construction, manufacturing, or any business that creates products or completes projects.
The general aggregate covers your day-to-day business operations—things like customer injuries at your location, advertising injury claims, and property damage caused during ongoing work. It's the maximum your insurer will pay during the policy period for all these types of claims combined, excluding anything related to your products or completed work.
The products-completed operations aggregate is specifically for claims arising from your finished work or products you've sold. If you're a plumber and a pipe you installed six months ago bursts and floods a client's home, that claim comes out of your products-completed operations aggregate, not your general aggregate.
Here's the good news: these two aggregates are separate buckets. Claims against one don't reduce coverage available in the other. This structure prevents liability from completed projects from wiping out the coverage you need for your current operations. Your total maximum exposure is actually the sum of both aggregate limits.
When Do Aggregate Limits Reset?
For most business insurance policies, your aggregate limits reset when your policy renews. If you have an occurrence-based policy (the most common type for general liability), you get a fresh aggregate limit at the start of each new policy period—typically annually.
Let's say your policy runs from January 1 to December 31, and you have a tough year with multiple claims that eat up your entire $2 million general aggregate by October. You're essentially uninsured for the last two months of the year for any new claims (beyond what your per-occurrence limit covers). But come January 1 when your policy renews, boom—you've got a fresh $2 million aggregate to work with.
However, there's an important exception: claims-made policies. If you have a claims-made policy (more common in professional liability), your aggregate limit doesn't reset the same way. Once you've exhausted the aggregate, the only way to restore coverage is to increase your limit, not just wait for renewal. This is one reason understanding your policy type matters.
Also watch out for policy extensions. If your insurer extends your policy period instead of issuing a new one, your aggregate doesn't reset at what would have been the 12-month mark. The aggregate continues through the entire extended period, which increases your risk of exhausting it.
How to Monitor Your Aggregate Limits
The biggest mistake business owners make is treating their insurance policy like a set-it-and-forget-it thing. If you're not tracking how much of your aggregate you've used, you could end up dangerously underinsured without realizing it.
Start by requesting regular claims updates from your broker or insurer. After each claim is paid, you should know exactly how much aggregate coverage remains. Some insurers provide online portals where you can check this yourself. Make it a quarterly habit—put a reminder in your calendar to review your remaining aggregate limits.
If you notice your aggregate eroding faster than expected, don't wait until renewal to address it. Talk to your broker about mid-term options. You might be able to add an umbrella policy or excess liability coverage that sits on top of your primary policy, giving you additional protection. Some insurers also allow you to increase your aggregate limits mid-policy, though this typically requires underwriting approval and an additional premium.
It's also smart to stress-test your limits against realistic scenarios. If you're a contractor, what happens if you have two major completed-operations claims in the same year? If you're a retailer with multiple locations, what if you have several slip-and-fall lawsuits? Running through these scenarios helps you understand whether your current limits truly protect you.
Choosing the Right Aggregate Limits
The standard CGL policy structure is often a $1 million per-occurrence limit with a $2 million general aggregate. That's fine for many small businesses, but it's not a one-size-fits-all answer.
Consider these factors when deciding what aggregate limits you need: How large is your business and how many customers do you serve? A busy restaurant serving thousands of customers weekly faces more slip-and-fall risk than a small consulting firm. What does your industry look like from a claims perspective? Construction, manufacturing, and healthcare typically face higher liability exposure than professional services. What's your claims history? If you've had multiple claims in recent years, you're more likely to hit your aggregate again. And finally, what do your contracts require? Many commercial leases and client contracts specify minimum insurance limits—make sure your aggregate meets these requirements.
For contractors and businesses with significant completed-operations exposure, pay special attention to whether you need a per-project aggregate versus a per-policy aggregate. A per-project aggregate applies the limits to each individual job rather than your entire policy, which provides much better protection if you're juggling multiple large projects simultaneously.
What Happens When You Hit Your Aggregate
Once you've exhausted your aggregate limit, your insurance company is no longer obligated to pay for additional claims until your policy renews. This is a scary position to be in because you're essentially operating without liability coverage for the remainder of your policy period.
Some policies offer aggregate limits reinstatement, which allows you to restore your aggregate mid-policy after paying an additional premium. This isn't standard on all policies, so check with your broker about whether this option is available to you and what it would cost.
The better approach is preventing this situation in the first place. If you're tracking your aggregate throughout the year and see it getting low, you have time to take action—whether that's adding umbrella coverage, increasing limits for the next policy period, or implementing additional risk management practices to reduce your exposure.
Getting Started: Next Steps
Understanding aggregate limits gives you control over your business insurance strategy. Start by pulling out your current policy and identifying your aggregate limits—both general aggregate and products-completed operations aggregate if you have both. Then contact your broker and ask for a claims history report showing how much of your aggregate has been used this policy period.
If you're shopping for new coverage or reviewing your limits at renewal, have an honest conversation with your broker about your risk profile. Don't just accept the standard limits because they're standard—make sure they actually reflect your business's exposure. And consider umbrella coverage as a cost-effective way to add an extra layer of protection above your primary aggregate limits.
Your business insurance is only as good as the limits you choose and how well you manage them throughout the year. By understanding aggregate limits, monitoring them actively, and adjusting coverage when needed, you're protecting not just your business assets but your peace of mind.
