What are the policy limits of liability and what does it mean?

Your individual policy limits of liability consist of two amounts. As an example, if you have $1 million/$1 million, the first amount indicates the limit of liability, or the most that will be paid out per claim per policy year. The second amount indicates an annual aggregate, or the most that will be paid out in the policy year regardless of number of claims. In this example, if you have 2 claims that paid out at $100,000 each, you would still have $800,000 left on the annual aggregate. There is also a total policy aggregate for the master policy. This total limit is shared by all agents on the policy for the policy year.