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Personal accident & injury insurance: What you need to know in 2024

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6 mins

The world is a dangerous place. Car accidents. Sports injuries. Falls from stairs, on ice, off ladders, on playground swingsets, off bicycles, and a host of other causes that lead to broken limbs, concussions, sprains, burns, lacerations, and a host of other injuries.

According to the Centers for Disease Control, there were 24.5 million emergency room visits for unintentional injuries in 2018. That’s over 67,000 every day and nearly 2,800 visits in the U.S. every hour of the year.

Health insurance can cover some of the costs of treating those injuries. Disability insurance can provide funds when those injuries are especially serious.

There is also a type of insurance that can supplement your health insurance if you’re injured in an accident. It’s called personal accident insurance.

What is personal accident insurance?

Personal accident insurance — also known as personal injury insurance — is an individual supplemental insurance policy. It’s designed to provide a financial benefit to help cover the costs of being injured in an accident. The policy pays out a benefit if you are injured in a manner listed in the policy.

How does personal accident insurance work?

Getting an accident insurance policy is relatively simple compared with other types of insurance. There is typically no underwriting involved. Companies have different eligibility rules, but you should be able to get a policy as long as you are over the age of 18. Some companies have a maximum age as well, usually around 70. Policies also typically cover dependents if you need to, though there is also usually an age limit, typically in their 20s.

The premium you pay provides a financial benefit if you suffer a defined accident. Depending on the policy, you are either paid in a lump sum or in installments based on the length of your injury. Typically, a personal accident insurance policy pays the benefit directly to you, meaning you can use it for any purpose, whether it’s for injury care or not.

What does personal accident insurance cover?

Your policy will stipulate the type of injuries that are covered. Most injuries that occur during the course of regular daily living will be covered. Common covered injuries include:

  • Dislocations
  • Fractures
  • Lacerations
  • Concussions
  • Eye injuries
  • Burns
  • Dental injuries

Some policies also include accidental death and dismemberment insurance, which covers the unintentional death or dismemberment of the insured. Other policies provide optional hospital indemnity benefits and emergency room coverage.

Accident policies typically don’t pay benefits if injuries occur while the policyholder is under the influence of drugs or alcohol, is injured while committing a crime, or intentionally causes the injury to themselves. Illnesses are also not covered.

If you are considering a personal accident insurance policy and make sure to read the fine print to see what is and is not covered by your insurance policy.

How much does personal accident insurance pay in benefits?

Policies typically vary the payout of benefits based on the type and severity of your injury.

For example, one policy has a payout of around $200 if you incur second-degree burns on less than 10 percent of your body. Third-degree burns provide a benefit of $1,000. Another company offers $5,000 for third-degree burns on one-third or more of your body.

In another example, you could get $600 for a broken rib requiring surgery, but $7,500 for a fractured femur that requires surgery.

Another company offers $800 payments for qualified hospital admissions, $200 per day for hospital stays, and up to $100 for an emergency room visit caused by an accident.

For the most serious injuries, you may receive tens of thousands of dollars. These include being in a coma, loss of sight or hearing, losing the ability to speak, and the loss of one or more limbs.

How much does personal accident insurance cost?

Personal accident insurance is fairly inexpensive. Most policies cost between $6 and $20 a month for people who are young and healthy. It can cost up to $50 a month for older individuals. However, many accident insurance policies also have deductibles before benefits are paid.

Is personal accident insurance worth it for you?

This type of insurance policy may be worthwhile if:

  • You are self-employed and therefore don’t have sick leave. If you’re injured in an accident, a policy can
  • You don’t have a Health Savings Account (HSA). If you have an HSA, you may be able to save enough over time to lessen the need for another supplemental policy. But HSAs are only available to people who are covered by a high-deductible health plan.
  • You have an active lifestyle. If you spend a lot of time bicycling, rock climbing, skiing, or playing sports, you’re more at risk of injury than if you lead a more sedentary lifestyle. Therefore, you have more need for personal accident insurance.
  • You have children. Kids are also prone to accidents. An accident insurance policy can help cover costs beyond what your health insurance will cover.
  • You don’t have or don’t want to use emergency savings for accidents.

What about other types of insurance?

Having personal accident insurance does not replace the need for other types of insurance. It’s a possible supplement that can fill a gap in your other coverage.

It’s another option for people who potentially need a source of funds for co-pays and other out-of-pocket costs not provided by their health insurance. Funds can also be used for prescription drugs, physical therapy, child care, and other expenses that arise when you’re injured.

Accident insurance is also not a replacement for buying disability insurance, which helps replace your income in the event you can’t work due to an illness or injury. Accident insurance wouldn’t begin to cover the benefit amount you’ll receive from a disability insurance policy. However, the accident insurance policy can help supplement disability insurance.

Jack Wolstenholm is the head of content at Breeze.

The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.

— Published April 16, 2021
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