What does the term 'aggregate limit' refer to?

The term 'aggregate limit' refers to the total claims limit that an insurer will pay during a specific policy period. This means that regardless of the number of claims made, once the total payouts for all claims reach this limit, the insurer will no longer be liable for any further claims until the policy is renewed or a new policy is taken out.

In motor insurance, this is particularly relevant because it sets a cap on the amount an insurer will pay out for multiple claims arising within the same policy year, thus protecting the insurer from potentially excessive liabilities. Understanding the aggregate limit is crucial for policyholders, as it allows them to evaluate how many claims they could potentially make and what the financial implications might be if they exceed this total cap.