What does "aggregate deductibles" refer to in insurance?

Aggregate deductibles in insurance refer to a system where a deductible amount applies to the total of all claims made within a policy year, rather than to individual claims. This means that once the total claims reach a certain threshold, the insurer will begin to cover the costs of additional claims for the remainder of that policy year.

This structure is often used in health insurance and some types of commercial insurance, where policyholders may file multiple claims during a given period. By having an aggregate deductible, an insured party has a clearer understanding of their overall exposure to risk, as they know the total amount they will need to cover before the insurance kicks in, regardless of how many claims they submit.

In contrast, premium calculations tied to single claims or deductibles that focus on specific categories do not fit the definition of aggregate deductibles, as they do not consider the cumulative total of all claims within a policy year. Similarly, reducing premiums during a claim is unrelated to the concept of aggregate deductibles, which specifically addresses how deductibles are structured concerning total claims rather than premium adjustments.