What is the difference between an aggregate limit and a per-claim limit?

Whether the limit applies to each claim separately or to everything in the policy period combined — and the difference determines whether a second claim leaves you with any cover at all.

Per-claim (each and every claim). The limit applies to each claim individually. A £2 million limit means up to £2 million is available for each claim, however many there are.

Aggregate. The limit is the total available across the whole policy period. A £2 million aggregate limit exhausted by one claim leaves nothing for a second claim in the same year.

Why this matters more than the headline figure. Two policies advertising "£2 million cover" can be entirely different products. On an aggregate policy, a sequence of claims — or one large claim plus defence costs — can exhaust the limit, after which you are uninsured for the remainder of the period and cannot simply buy more retrospectively.

Where each is typical: public liability is frequently per-claim; professional indemnity is frequently aggregate, which is worth knowing given that professional claims tend to cluster — a systemic error affects many clients at once, producing multiple claims from a single cause.

Defence costs are the complication. Whether legal costs are within the limit or in addition to it makes an enormous practical difference:

Costs inclusive — defence costs erode the limit available to pay the claim. A vigorously defended claim can consume a substantial proportion of the cover before anything is paid to the claimant.

Costs in addition — the limit is available in full for the claim, with costs met separately. Considerably better, and priced accordingly.

Related terms worth knowing:

Sub-limits, where a lower limit applies to specific perils — and these are the source of many disappointing claims, because a headline limit conceals a much lower one for the particular loss.

Reinstatement, where the limit is restored after a claim, sometimes for an additional premium.

Series claims clause, treating multiple claims arising from one original cause as a single claim — which helps where the excess applies once, and hurts where the limit applies once.

What to check: whether the limit is aggregate or per claim; whether costs are inside or outside; sub-limits; and whether the limit is adequate for the worst realistic claim rather than the typical one.

General information, not advice.