How will a claim of $150,000 be handled under ABC Masonry's liability policy with an aggregate limit?

In the context of liability insurance policies with an aggregate limit, the way a claim is handled can significantly impact both the insurer's payout and the remaining limits available for future claims.

When a claim of $150,000 occurs under a liability policy with a specified aggregate limit, the insurer's responsibility is influenced by the structure of the policy. If the aggregate limit is $300,000, it means that the insurer can pay up to that total amount for all claims during the policy period.

In the chosen answer, the insurer pays $100,000, which indicates that there is a retention or deductible that ABC Masonry is responsible for, which amounts to $50,000. Consequently, the aggregate limit is reduced from $300,000 to $200,000 after this claim payment. This approach illustrates a common feature in liability policies where the insured has a deductible or a coinsurance arrangement, meaning they share a portion of the claim.

This scenario reinforces the principle that claims do not always get fully covered by the insurer, especially in policies structured with deductibles or retention limits. The remaining total available for claims becomes critical for the insured, as they must navigate within this reduced aggregate limit for any future claims during that policy period.