What does the term "aggregate limit" refer to in liability policies?

The term "aggregate limit" in liability policies refers to a total coverage amount for all losses during the policy period. This means that the policy will pay up to a specified maximum sum for all claims made within the coverage period, regardless of how many individual claims are filed. Once that aggregate limit is reached, the insurer will not pay any additional claims made during that period.

This concept is critical for both insurers and insureds, as it defines the extent of the protection offered under the policy. For businesses or individuals with a higher risk of multiple claims, understanding the aggregate limit is essential for managing potential exposures and ensuring that adequate coverage is in place. It's particularly important for liability policies, where costs can accumulate due to multiple incidents or claims.

The other options focus on different aspects of insurance limits, such as limits applying to a single occurrence or minimum legal requirements, which do not accurately capture the comprehensive nature of the aggregate limit definition.