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Understanding Insurance Aggregates

Insurance Aggregates

Purchasing business or event insurance is essential for running a successful business. Chances are your policy tells you how much it covers per claim, but it likely also has an aggregate. You will find your aggregate information with the rest of your policy declarations (the section that tells you how much coverage you have for each type of claim). There are two types of insurance aggregates, which means understanding the difference is important.

Per Policy Aggregates

The most common type of insurance aggregate is per policy. This is the total amount your insurance agency will pay for any claim you make within your term, which typically lasts one year. For example, if your policy has $1 million in coverage, but your claims total $1.5 million, you will be on the hook for $500,000.

Per Project Aggregates

Large companies or those in high-risk industries should consider finding a policy that offers a per project aggregate. Imagine $1 million again. When your aggregate is listed per project, you’ll have $1 million for each one. While this type of aggregate is best for many businesses, keep in mind that the higher risk for the insurer means it is more expensive as well. Additionally, you typically must list each project by name for the policy to cover it.

Regardless of which type of aggregate is best for your business, finding the best insurer to meet your needs is important. Look for a company that is licensed, has excellent reviews, and is experienced within your industry.