Legal Definitions - aggregation rejection

Aggregation rejection occurs when an insurer or another party refuses to treat multiple related incidents, claims, or losses as a single event for the purpose of applying policy terms or contractual provisions. Instead, they insist on treating each incident separately. This often means that separate deductibles, policy limits, or other conditions will apply to each individual incident, rather than a single set of terms applying to the combined group. The party attempting to aggregate usually seeks to combine events to achieve a more favorable outcome, such as paying only one deductible or meeting a single policy limit.

• Example 1: Property Insurance Claim

  A commercial building sustains damage from three distinct windstorms that occur over a two-week period. Each storm causes separate damage to different parts of the roof and exterior. The building owner submits a single claim to their property insurer, arguing that all the damage should be aggregated as one "occurrence" to trigger only one deductible.

  The insurer issues an aggregation rejection, asserting that each windstorm constitutes a separate and distinct event. Therefore, the insurer requires the building owner to pay three separate deductibles, one for the damage caused by each individual storm, rather than a single deductible for the combined damage.

• Example 2: Professional Liability Insurance Claim

  A consulting firm provides advice to a client over several months. Due to multiple, distinct errors in the advice provided at different times, the client suffers a series of separate financial losses. The consulting firm's professional liability policy has a "per claim" deductible. The firm attempts to aggregate all the errors and losses into a single "claim" to pay only one deductible.

  The insurer issues an aggregation rejection, stating that each instance of negligent advice leading to a distinct loss constitutes a separate "claim" under the policy. Consequently, the consulting firm must pay a separate deductible for each of the distinct errors and resulting losses, rather than a single deductible for the entire series of events.

• Example 3: Product Liability Insurance Claim

  A manufacturer produces a batch of defective components that are incorporated into products sold to 100 different customers. Each customer experiences a separate failure due to the defective component, leading to individual claims for repair or replacement. The manufacturer seeks to aggregate all 100 customer claims into a single "occurrence" under their product liability policy, hoping to apply one policy limit and one deductible.

  The insurer issues an aggregation rejection, arguing that each individual customer's product failure and subsequent claim constitutes a separate "occurrence" or "claim" under the policy. This means the manufacturer might face 100 separate deductibles or have the claims assessed individually against sub-limits, rather than treating them as one large, aggregated event.