Aggregate indemnity is the total payment ceiling for all indemnity losses under a policy period, before any policy exclusions are considered.
Insurance mechanics
The aggregate is usually expressed as a dollar limit on the declarations page. It includes all claims that qualify under the policy terms and can be reached through many separate events.
Under policy wording, some claims can be limited by sublimits, while the aggregate limit tracks the upper payment boundary for all losses combined.
Claims and reserving impact
Claims teams reduce the remaining aggregate after every payment. Once exhausted, additional claims are denied for the period unless the policy has reinstatement features or a separate policy year term.
Reserving teams model probable payment paths against this aggregate to avoid reserve understatement and to flag early exhaustion risk.
Regulatory and policy-structure logic
Health and liability forms that include aggregate indemnity wording often include notice language and reporting obligations. Inadequate disclosure is a common source of complaints and complaint filings.
Practical scenario
Consider a commercial package policy with a $1,000,000 aggregate indemnity. Two separate property incidents and three liability claims settle through the year. The second liability payment pushes cumulative payouts to exactly the limit; any new covered injury in that same year is outside payment limits unless the insurer issues a separate endorsement.