Alberta General Insurance Level 1 Practice Exam

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What is an "aggregate sub-limit" in a policy?

A total coverage limit for all claims under a policy

A specific limit within a broader policy that restricts coverage for certain types of claims

An "aggregate sub-limit" in an insurance policy refers to a specific limit within a broader policy that restricts coverage for certain types of claims. This is an important concept in insurance because while a policy may have an overall coverage limit, the aggregate sub-limit delineates a lower ceiling on the amount that can be claimed for specific categories, such as errors and omissions or liability claims.

For example, a policy might have a general aggregate limit of $1 million, but it could specify that claims related to environmental damages are only covered up to a sub-limit of $250,000. This ensures that the insurer can manage potential high-risk areas more effectively while still offering some level of coverage. Understanding aggregate sub-limits is crucial for both insurers and policyholders to align expectations regarding the extent of coverage available for particular claim types.

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A minimum amount that must be paid out of pocket by the insured

A maximum limit for personal injury claims only

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