What is the aggregate limit of liability for the quality of products ‘
The aggregate limit of liability for the quality of the products is the maximum payout the insurance company will make during the life or term of the insurance product.
Breaking down the ‘aggregate limit of liability for the quality of products ‘
The aggregate limit of liability for the quality of the products is a fixed amount in U.S. dollars on a property or liability policy the insurance company will not pay higher. This amount remains unchanged regardless of how many claims are made for the period, while neither the amount nor the terms have been exceeded.
This limitation can be based on either the appearance or the life and period of validity of the policy. Once the limit is reached an insured person cannot file claims against the policy, and any additional liabilities or repairs incurred should be made from the pocket of the policyholder. It preventively protects the insurance company from excessive or permanent loss.
The aggregate limit of liability for product quality may also be referred to as an annual aggregate limit.
Example aggregate limit of liability for the quality of products
For example, a homeowner bought a house near a hurricane inclined. The insurance company placed the aggregate limit of liability for product quality at $ 250,000 per year or $500,000 over the life of the policy.
During a particularly bad hurricane season, the property supports a $350,000 in damages. Insurance will sue their insurance company and the homeowner receives a payment to cover $250,000 worth of damage, leaving the homeowner to come up with another 100 000$. It met the limitation of liability policy for the year. If the landlord incurs any additional damages or losses during the policy year, they will be forced to pay for them out of pocket as well.
Now say that next year’s real estate is once again struck by loss and experiences an electrical fire, causing another 100,000 in damages. If the policy already a year has passed, the homeowner can now make a claim for new damages, getting $100 000. However, their remaining limit for life policy claims became closer to the maximum. Leaving them with only 150,000 $for any future losses that they can withstand whatever nature of the claim.
At this time they will have to decide what will be their best option moving forward. They can decide what they want to find a new insurance company homeowners who will demand from the lender, if they still hold a mortgage on the property, which has a higher limit of liability for product quality. Or they can choose to ensure that they have sufficient funds to cover any future claims.
These restrictions not only apply to insurance policies of homeowners, and can be found on many different platforms insurance.