What is accident insurance?

Definition and overview

Personal accident insurance, also known as fixed indemnity insurance, provides protection for the policyholder if they get in an accident. In most cases, an accident is an unintended event that leads to injury. In some cases, someone could be partially or fully liable for causing the accident. 

These policies can cover both minor damage and major disabling events. Accident insurance is different from auto, medical, or employment insurance. However, having this other coverage is necessary as well because accident insurance is not a comprehensive policy. For example, it will not cover vehicle damage or liability if you are responsible for an auto accident.

Why do you need accident insurance?

It is crucial to have a backup plan if you cannot work due to an accident and if you are confronted with costs not covered by other insurance plans.

Here are five reasons why an accident insurance policy is important. 

1. It covers things not included in your regular or short-term plans for medical insurance. For example, if you need rehabilitation or equipment like a wheelchair or crutches, you may get medical care.
2. Medical insurance underwriting can be discriminative because it sometimes refuses to cover injuries due to pre-existing conditions. However, accident insurance coverage generally does not involve underwriting, so you are unlikely to be turned down for an accident policy because of pre-existing conditions – but only unforeseeable accidents (not chronic or pre-existing conditions) will typically lead to a payout from accident insurance.
3. If you are self-employed and don’t have sick days or workers’ compensation, a fixed indemnity policy can cover you for the days you are not able to work.
4. With the right coverage, you will not have to worry about injuries keeping you from working. You can live your life as normal knowing you have additional coverage. 
5. Unlike medical insurance, accident insurance can be inexpensive depending on the state and the coverage you need.

How does accident insurance work?

First, you must understand the difference between accident insurance and health insurance. Health insurance covers you for the immediate treatment that you receive after an accident, while accident insurance covers any financial burden that you incur due to the accident. This can include copayments in hospitals, physiotherapy, other services not covered by your health insurance, and any out-of-pocket expense from the accident.

One of the biggest advantages of accident insurance is that payouts come in cash, which can relieve the financial burden you experience after an accident. Furthermore, there isn’t a waiting period, so you get the money immediately.

Accident insurance premiums vary depending on coverage. It is essential to understand what the policy includes and also the types of accidents covered.

The benefits of accident insurance

Financial protection against unforeseen events

Accident insurance provides financial protection in case of unexpected accidents, injuries, or emergencies. If an insured individual experiences an accident covered by the policy, they receive a lump-sum cash benefit. This financial support can help cover various expenses, such as medical bills, transportation costs, and other unforeseen financial burdens resulting from the accident.

Coverage for medical expenses

Accident insurance provides coverage specifically for medical expenses resulting from accidental injuries. While health insurance covers a wide range of medical conditions and preventive care, accident insurance focuses solely on injuries sustained from accidents. It offers additional financial support, helping individuals pay for medical treatment, surgeries, hospital stays, and rehabilitation costs.

Income replacement benefits

Accident insurance may offer income replacement benefits to policyholders who experience temporary or permanent disabilities due to an accident. If an injury prevents the insured from working, income replacement benefits provide a portion of their lost income during the recovery period, helping them meet their financial obligations while unable to work.

Peace of mind for you and your family

Accident insurance offers peace of mind to both policyholders and their families. Knowing that they have financial protection in case of unexpected accidents provides reassurance and a sense of security. Accident insurance complements existing health insurance coverage and can fill gaps in coverage, offering an additional layer of protection against the financial hardships that accidents may bring.

 Understanding coverage options

Types of accidents covered

Accident insurance covers qualifying injuries, which might include a broken limb, loss of a limb, sprains, broken bones, concussions, burns, lacerations, or paralysis. In the event of your accidental death, accident insurance pays out money to your designated beneficiary. While health insurance companies pay your provider or facility, accident insurance pays you directly.

Accident insurance is considered supplemental insurance and is most helpful when it is used in combination with a major medical plan. Your accident coverage will take care of expenses not covered by your medical plan, such as copayments and your deductible. It will also cover non-medical costs like mortgage or rent, utility bills, and other daily expenses.

Exclusions and limitations

Accident insurance covers the policyholder and focuses on the gaps that major medical insurance or critical illness insurance is not able to cover. It is also essential to know the limits of accident policies. Here are some things that are not covered. 

• If you get into an accident because of a disease or illness, such as something that causes heart failure or seizures, you are likely not covered.
• The policy typically excluded injuries due to extreme sports like bungee jumping or scuba diving.
• You will not be covered if the injury occurs while doing illegal or criminal activities.
• If the incident occurred while you were under the influence of alcohol or drugs, you will not get a cash payout. 
• Policies only cover you after becoming active. Therefore, they do not pay for injuries sustained before you activated the policy and paid your first premium. 
• Self-inflicted injuries are never covered by the policies.

Additional riders and enhancements

Adding riders to an accident insurance plan allows individuals to customize their coverage based on their specific needs and activities. For example, if someone enjoys engaging in sports or activities that are considered riskier, like rock climbing or skydiving, they can opt for a rider that provides specific coverage for injuries related to those activities. This ensures that they are adequately protected in case of accidents while participating in those pursuits.

Enhancements or add-ons, also known as endorsements, offer the option to increase the maximum coverage amount for certain injuries beyond the basic plan’s limits. These enhancements provide additional financial support in the event of a severe injury, offering a higher payout than the standard coverage. This can be particularly beneficial for individuals who have higher-risk occupations or engage in hazardous activities, as it provides them with greater peace of mind and financial security in case of unexpected accidents. However, it’s important to note that adding riders or enhancements may come with additional costs, so individuals should carefully review and compare options before making a decision.

 How to choose the right accident insurance plan

Assessing your coverage needs

When choosing the right accident insurance plan, consider the following needs:

• Hobbies and activities: Evaluate if your hobbies or activities involve higher risks and ensure the plan covers injuries related to them. Look for riders or endorsements specific to your interests.
• Affordability: Assess your budget to determine what premium you can comfortably pay. Consider whether you can afford major medical insurance in addition to accident insurance, as they can complement each other.
• Children’s hobbies: If you have children, take into account their hobbies and activities as well. Ensure the plan covers injuries resulting from their interests and provides appropriate financial protection.

Comparing different policies

When comparing accident insurance policies, pay attention to the following differences:

• Coverage limits: Check the maximum coverage amount for various injuries to ensure it meets your needs.
• Exclusions: Review the policy’s exclusions to understand what injuries or circumstances are not covered.
• Deductibles and copayments: Compare the deductible and copayment requirements for each plan to see how they may impact your out-of-pocket expenses.
• Additional riders or endorsements: Compare available riders and enhancements that match your specific needs or activities.

Evaluating insurance providers

It’s crucial to choose a reliable insurance provider. Consider the following factors:

1. Reputation: Research the insurer’s reputation and customer reviews to gauge their reliability and customer service.
2. Financial stability: Ensure the insurance company is financially stable and capable of honoring claims when needed.

As you evaluate accident insurance plans and providers, consider using services like eHealth, which allows you to compare different policies based on your location and specific needs. Always read the policy documents thoroughly and seek professional advice if needed to make an informed decision.

 Frequently asked questions (FAQs) about accident insurance

1. Is accident insurance the same as health insurance?

Accident insurance and health insurance differ in scope and focus. Accident insurance specifically covers injuries resulting from accidents and offers a lump-sum payout in case of accident-related injuries. In contrast, health insurance is more comprehensive, covering a broader range of medical expenses, including preventive care, doctor visits, hospitalization, prescription drugs, and chronic illnesses. While accident insurance provides financial protection for specific accident-related injuries, health insurance offers ongoing coverage for various medical needs and treatments.

2. Who can benefit from accident insurance?

Paying for anything out of pocket puts a strain on your finances, especially if the accident has rendered you unable to work. An accident can happen to anyone, so it is imperative to have all members of the family on your insurance policies. Personal accident insurance can even cover children’s expenses or reimburse a parent if they have to stay home from work to care for an injured child. 

Single people, elderly people, and those who play regular sports or have non-risky hobbies can also benefit from a policy that protects against the drawbacks of injuries.

3. What does accident insurance typically cover?

Accident insurance typically covers injuries resulting from accidents, such as broken bones, sprains, burns, concussions, cuts, and other accidental injuries. It provides financial protection and often offers a lump-sum payout to the insured.

4. How much does accident insurance cost?

The general cost of insurance varies depending on your provider, however premiums start at around $15 monthly.

5. How do I file an accident insurance claim?

To file an accident insurance claim, follow these general steps:

1. Notify the insurance provider: Contact your insurance company as soon as possible after the accident. Inform them about the incident and provide basic information like policy number, date, and location of the accident.
2. Complete claim forms: The insurer will provide you with claim forms to fill out. Provide accurate details about the accident, injuries sustained, and any medical treatments received. Be sure to include any relevant documents or receipts.
3. Gather supporting documents: Gather all necessary documents to support your claim, such as medical records, police reports (if applicable), and any bills or invoices related to medical treatments.
4. Submit the claim: Submit the completed claim forms and supporting documents to the insurance company through the preferred method, which could be online, via email, or by mail. Ensure all information is accurate and complete to avoid processing delays.
5. Review and processing: The insurance company will review your claim and assess its validity based on the policy terms and the provided documents. This may involve communicating with healthcare providers and other parties involved in the accident.
6. Claim decision: After reviewing your claim, the insurance company will make a decision on its approval or denial. If approved, they will inform you of the amount you will receive as a payout.
7. Receive payment: If your claim is approved, the insurance company will issue the payout. The payment method and timeline may vary depending on the insurer and the policy.

 Tips for filing accident insurance claims

Steps to take after an accident

1. Seek medical attention: Prioritize your health and safety by seeking immediate medical attention for any injuries sustained in the accident. Prompt medical treatment can also help strengthen your claim.
2. Notify the authorities: If the accident involves any other parties, such as in a car accident, report the incident to the relevant authorities and obtain a copy of the police report.
3. Gather information: Collect details about the accident, including the date, time, location, and contact information of any witnesses. Take photos of the accident scene and your injuries if possible.
4. Contact your insurer: Inform your insurance company about the accident as soon as possible. They will guide you on the necessary steps to file a claim.
5. Fill out claim forms: Complete the required claim forms accurately and include all relevant information about the accident and your injuries.

Documenting your injuries and expenses

Thoroughly documenting your injuries and expenses is crucial for a successful accident insurance claim. Keep copies of medical reports, bills, prescriptions, and any other relevant documents. This documentation serves as evidence of the extent of your injuries and the medical treatments you received, strengthening your claim’s validity. Additionally, maintaining records of other related expenses, such as transportation to medical appointments or home care costs, can ensure you are appropriately compensated.

Working with your insurance provider

When filing an accident insurance claim, it’s essential to maintain clear communication with your insurance provider. Keep them updated on any developments regarding your injuries and medical treatments. Follow their guidance on the claim process and provide any additional information they request promptly. Cooperation and transparency can help expedite the claim process and ensure you receive the appropriate coverage and benefits based on your policy.