Under legal liability insurance policies the limit of indemnity is specified as any one occurrence or in the aggregate but what does this mean and should it affect your decision when purchasing a liability based insurance product such as public liability, product liability or professional indemnity?
What is a limit of indemnity under an any one occurrence basis?
The limit of indemnity under the policy represents the insurer’s maximum liability in respect of any one claim or occurrence under the policy. This means that the limit under the policy is available in full in respect of the first claim in a year and any subsequent claims in the same year.
What is a limit of indemnity on an in the aggregate basis?
The limit of indemnity represents the insurer’s maximum liability under the policy for all claims made in the period of insurance. This means that the limit under the policy is effectively reduced following the first claim by the amount of the first claim and reduced by each subsequent claim.
Which is best for me, any one claim or in the aggregate?
When comparing quotes that are otherwise the same, the any one claim or occurrence basis is certainly preferable as the full limit of indemnity applies to all claims. If you are unfortunate enough to have a significant claim made against you, you may find that your cover is reduced to an unacceptable level on an in the aggregate basis.
Which basis applies to which policies?
- Public liability Insurance policies are generally issued on an any one occurrence basis
- Product liability insurance is generally arranged on an in the aggregate basis
- Employers liability is always issued on an any one occurrence basis as this is a legal requirement
- Professional indemnity insurance is issued on both basis depending upon the provider and the product.
- Directors and Officers liability insurance was traditionally issued in the aggregate but recent trends have seen insurers to move to an any one occurrence basis.
Should you have any questions regarding this information or require any further assistance please contact us directly.