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.