In commercial businesses, why are aggregate limits commonly used?

Aggregate limits are essential in commercial businesses as they provide structured limits for ongoing operations. These limits define the maximum amount an insurer will pay for all claims during a specified period, typically a policy year. This framework helps businesses manage their potential liability over time by capping their exposure to losses, which is particularly important in environments where a large number of claims can arise, such as in commercial operations.

Having structured limits allows businesses to plan and budget more effectively for insurance needs and allocate resources accordingly. It ensures that there is a clear understanding of the potential maximum payout an insurance company is liable for, which can facilitate better risk management and decision-making in the organization.

While other options suggest benefits such as unlimited damage claims, minimum payouts for injuries, and simplified risk assessments, they do not accurately capture the primary purpose of aggregate limits in providing a safe boundary for coverage in relation to the ongoing activities and risks associated with the business.