Is it time to move away from the term “in the aggregate”
As you can imagine I field a great number of questions on a daily basis. One that keeps coming up more and more, particularly from lawyers, is: “what does the term ‘in the aggregate’ mean“.
Anyone who has been brought up in insurance knows that when it refers to a Limit or Sub-Limit of Liability it means that the amount shown is the maximum amount payable in any one period of insurance.
When it comes to deductibles it can be a little more difficult to decipher depending on the words around the word ‘aggregate’. To be honest some of the clauses I have read around aggregate deductibles, I have no idea what they mean as they could be interpreted 2 or even 3 different ways.
If so many lawyers are not sure what the term ‘in the aggregate’ means I wonder what clients understand it to mean.
What we see is that in the casualty space some insurers are using terms such as ‘any one period of insurance’ or ‘maximum amount payable under this extension’.
In view of the above, coupled with the constant push to use plain English and the new Unfair Contract Terms legislative changes, when it comes to an aggregate Sub-Limit, I am suggesting a change on ISR slips, schedules, certificates of currency from the term ‘in the aggregate’ to: ‘maximum amount payable in any one period of insurance’.
My reasoning is that this will make it clearer to a non insurance person and overcome the conflict between the desire to have a maximum amount payable in any one period of insurance in a policy that contains an automatic reinstatement clause.
I would welcome readers thoughts on this proposed change including any words that you feel make it ever clearer.
100% agree Allan. We are asked this over & over again by accountants & solicitors.
Excellent point… our industry has way too much jargon, the simpler the better I say. We don’t need to overcomplicate ourselves to clients, staff or third parties.
Absolutely agree, we have to explain it anyway to ensure that clients understand – it would be better to have it stated in plain English to begin with.
I have seen similar terminology used in US Declarations, that is their Declaration (Schedule) may state “annual aggregate” next to an amount.
However, their Forms (Policy) do go a little further to explain the coverage as e.g.: “…for all loss sustained and expense incurred in any one policy year, regardless of the number of interruptions or the number of “covered locations”.
For ‘maximum amount payable in any one period of insurance’, difficulties may arise for ISR policies where the indemnity period starts during the period of insurance and extends beyond the period of insurance. In that instance, payments may be made outside the period of insurance.
Perhaps this could be addressed by using:
1) ‘maximum amount payable in respect of this period of insurance’; or
2) ‘maximum amount payable for this period of insurance’.
The latter is shorter, though the former may be clearer for the indemnity period.
Thanks for this Stephen
Thanks Carl
I can see that aggregate is perhaps not clear to a layman but it is a long held term.
Insurance contracts are built on a lot of historical conventions, precedents etc, thus some of the language isn’t very contemporary but still makes sense legally based the past.
If we paraphrase some of those terms now for modern sensibilities do we leave the new definitions open to challenge?
Hi John,
Thanks for your note.
I do see that casualty underwriters have been moving away from the term for quite some time. If we get the words right and they make plain sense, I see this as a benefit at a time when unfair contract terms and the understandability of contracts by those entering into the contract is so important.