Aggregation is often treated as a technical clause buried in the policy. In practice it is one of the terms that most affects how much a professional indemnity policy will actually pay. It decides how several claims sit against the limit of indemnity and how many self-insured excesses fall due. Getting it wrong can leave a firm exposed at exactly the moment cover matters most.
Policies are usually written either on an each-and-every-claim basis or on an aggregate basis, and sometimes a mixture. On an each-and-every-claim basis, a fresh limit is available for every separate claim. On an aggregate basis, one limit answers all claims in the period. Aggregation determines whether related matters count as one claim or many, so it directly drives how far the limit stretches.
The excess is the amount the firm bears on each claim. If ten related matters aggregate into one claim, one excess is payable. If they stay separate, ten excesses are payable. For a firm facing many small related claims, aggregation can save a substantial sum in excesses.
The same feature that helps on excesses can hurt on the limit:
The direction of the effect depends on the limit structure. Where the each-claim limit is lower than the aggregate, aggregation can pull a large loss down to the smaller figure, as Spire Healthcare v RSA illustrated.
Where defence costs erode the limit rather than sitting outside it, aggregation matters even more, because the costs of defending many related claims are also charged against the single limit. A firm reviewing its cover should know whether costs are inside or in addition to the limit, and how aggregation interacts with that.
Because aggregation depends heavily on the facts, a firm's duty of fair presentation at placement and renewal matters. Presenting the nature of the work, and the way a single method or system is applied across clients, helps the insurer and the firm understand how claims would aggregate. Guessing or understating the position stores up trouble.
Firms reviewing accountants' PI insurance and architects' PI insurance should read the aggregation clause, the limit basis and the excess together, and consider how a repeated error in their work would behave. Apex works through these mechanics with professional firms when arranging cover.
Suppose a firm faces ten related claims, each worth a modest sum, with an excess on every claim. If the wording aggregates them, one excess is payable and the claims draw on a single limit. If it does not, ten excesses are payable but each claim has its own limit. The better outcome depends entirely on the size of the claims, the excess and the limit basis — which is why the clause cannot be judged in isolation.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.