How to Understand an Aggregate in a Certificate of Insurance
Insurance exists to protect you against the risk of loss. Regardless of what type of insurance you have (health, car, home, or disability), you pay premiums to make sure that the cost of loss is paid for or reduced. In defining an insurance policy, the insurance company underwriters need to define what the maximum possible loss they can cover based on your policy period. In doing so, they are defining the aggregate amount your policy will cover. Aggregate limits are most common when dealing with liability policies, such as auto or health insurance, but can also be used in property insurance in the event of catastrophic events.
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Instructions
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Review your insurance policy to find the clause that states what your "aggregate payout" is. Think of this as the maximum amount of money your insurance will pay based on the terms of your policy.
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Examine the clause to determine the term of the aggregate value. For example, health insurance may have a $1,000,000 aggregate value for every 12 month period. This is the total amount of risk the insurance company can financially risk, based on the total amount of premiums they expect to receive in this period.
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Total the dollar amount of all claims within your period to see where you stand. If you exceed the aggregate value, your claim may only be partially paid with the policy dropped shortly after.
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Tips & Warnings
Aggregate value is based on dollar value, not the number of claims in any one period. This means you can have one claim that equals the aggregate value or one hundred claims totaling the value.
