limits under multiple policy (LUMP) years
An approach to structuring limits for insurance programs covering low-frequency
but high-potential-severity exposures, such as excess liability (over
commercial general liability (CGL) policies),
pollution liability, and directors and officers (D&O) liability. Under this approach,
a single aggregate limit remains in effect for multiple years as opposed to
a series of separate policy limits, applicable to single years, as under a traditional
approach. Since a single limit applies over several years, a higher limit than
would typically be purchased in a single policy year can usually be obtained
at a lower cost.