Aggregation and Divisibility of Damage: Insurance Aspects

Abstract

The purpose of aggregation of damage in insurance contracts is to apply a monetary cap in a plurality of losses, as a form of cumulative limit. Thus, on the one hand the deductibles or retentions of the insurance-holder or the insurer, and on the other the sums insured or reinsured, are limited. In both contractual relationships then, both contractual partners must weigh up advantages and disadvantages. Far-reaching consequences are attached to “soft” pre-conditions that can be interpreted in different ways. For example, in liability insurance, the insurer may have a double interest in the aggregation of individual cases of asbestos-related disease: to limit his duty to indemnify claimants and also to bring the reinsurer into the game, should the insurer’s retention only be exceeded when damage is aggregated? And therefore, it may be in the common interest of the insurance-holder, the claimants and the reinsurer that the individual cases not be aggregated.