Interpreting Aggregate Limits Key insights for vendor COI review
This guide provides practical insight into interpreting aggregate insurance limits on vendor Certificates of Insurance to ensure they align with your project requirements.
Why should I care about aggregate limits on a COI?
Aggregate limits are critical because they define the total capacity of a vendor's coverage. If multiple claims occur, the aggregate limit can be exhausted, leaving your organization exposed to potential risks. Understanding how to compare these limits against your requirements helps in assessing vendor suitability.
Operational Insight
Distinguishing Per-Project vs. General Aggregate
Many commercial general liability policies include a 'General Aggregate' limit. In construction and facilities management, it is often vital to request a 'Per Project' aggregate endorsement. This ensures that the limit applies specifically to your contract or project, rather than being shared across all of the vendor's work for every client they serve.
Review Workflow
Steps to Review Aggregate Limits
- 1
Define Requirements
Clearly document the minimum aggregate limits required in your vendor contracts.
- 2
Compare Data
Use software to compare the vendor's actual limits against your internal requirement threshold.
- 3
Check for Endorsements
Verify if the policy includes per-project aggregate endorsements to avoid shared limit dilution.
Terminology
Common Limit Definitions
General Aggregate
The total amount the insurer will pay for all claims during the policy period.
Per-Project Aggregate
A limit that applies to each specific project, ensuring dedicated coverage.
Policy Period
The duration of time during which the insurance coverage is in effect.
Comparison
Aggregate vs. Per-Occurrence
| Limit Type | Focus | |
|---|---|---|
| Per-Occurrence | Maximum for a single incident | Resets after claim settlement |
| Aggregate | Maximum for all incidents | Usually resets upon renewal |