The Insurance Bulletin
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What is Accident Insurance

Man needing accident insurance

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Jennifer G Gregory
Updated December 13, 2021
4 Min Read

Most of us have medical insurance – many of us assume that all expenses are covered in the event of an accident. Unfortunately, this is not entirely true. Even the top “Cadillac” plans may leave you with unexpected costs, medical debt, and the stress that comes with those bills. This is especially true with more and more workplaces switching to high-deductible health plans or if you have a limited or out-of-network plan. Many people are now relying on accident insurance to help fill in the gaps by providing cash benefits for additional expenses while you recover from your injuries.

What is Accident Insurance

Accident insurance is an extra layer of protection that pays you direct cash payment when you suffer an unexpected injury. It is impossible to predict an accident, which is why it can be a great add-on for those who have existing health and disability coverage through an employer or individually. 

Accident insurance is a type of supplemental insurance coverage which provides a one-time, lump-sum payment to help you pay for medical and other out-of-pocket costs that you may incur after an accidental injury covered by the plan. This includes emergency treatment, hospital stays, medical exams, as well as other expenses you may face such as transportation and lodging needs. The payment is designed as a supplemental plan, meaning it’s to be used in conjunction with, but not a replacement for, a regular health insurance plan. While health insurance companies pay your provider or facility, accident insurance pays you directly.

This insurance is most helpful when it is used in combination with existing medical coverage. Accident coverage will take care of expenses not covered, such as copayments and your deductible. It can also cover non-medical costs like mortgage or rent, utility bills, and other daily expenses. In addition, it can be used to protect you outside the Open Enrollment Period when you can’t enroll in a major medical health plan.

Many plans come with additional benefits for limb loss, accidental death, paralysis or blindness. Having that extra protection can keep you and your family from having to take the full financial impact of a devastating accident.

Purchasing accident insurance is just like other types of insurance plans. You pay a premium for your coverage. The cost of the coverage depends upon variables such as accidents covered, amount of coverage, your location, and death benefit.

How does accident insurance work?

If you or your covered family members are injured in a covered or qualified accident, accident insurance pays a lump-sum amount to help take care of unexpected costs and protect your finances. Here's how it works:

  • A set amount is paid directly to you, based on the type of injury you have, the treatment you need, and the coverage you elected.
  • You can use the payment to help pay for doctor visits, ambulance fees, hospital bills and other out-of-pocket expenses your existing health insurance doesn't cover.
  • You can also elect to have the coverage for your spouse and children.

There are two ways to get accident insurance – either a personal policy or through your employer. With a personal policy, you can shop around with different insurance providers to find the best coverage and best price that meets your individual needs.

Many employers offer optional coverage as part of their benefits package. If provided, you can enroll as part of the group coverage. Many times, this is less expensive than a personal policy, and can have broader coverage. Typically, these policies are a “one size fits all” – so you need to check what type of coverage is included before you enroll. In most cases, the premium is deducted directly from your paycheck. 

What does an accident policy cover?

The benefit amount you receive depends on the diagnosis and severity of your injury, how your injury was treated, and the type of coverage you have. For example, if you break your arm falling off the roof while cleaning your gutters, you’ll receive a lump sum to pay for the expenses covered by your plan.

Every accident insurance plan differs based on the injuries covered in your plan, the severity of the injury, and treatments for recovery. Some of the injuries that may be covered by accident insurance:

  •  Accident-related injuries such as broken bones or dislocations, burns, dental and eye injuries.
  • Ambulance or air ambulance to a hospital.
  • Emergency room visits, X-rays, diagnostic exams, physical therapy and follow-up treatment.
  • Diagnostic testing including X-rays and CAT scans.
  • Hospital stays, travel or lodging expenses related to your accident.

Your dependent children can benefit from accident insurance, too. If the plan has a child organized sports benefit, and your child gets hurt playing their favorite organized sport, your accident insurance can help cover the costs.

Each accident insurance plan is different, there are some injuries which may not be covered by your plan. These include:

  • High-risk sports such as skiing, hang gliding, scuba diving or bungee jumping.
  • Injury from sickness or disease.
  • Reckless or dangerous activities.
  • Injuries that occur while under the influence of certain drugs or alcohol.
  • Suicide or self-inflicted injury.
  • Injury incurred while committing a crime.
  • Injuries incurred before you bought your accident insurance plan.

Every accident insurance plan is unique and has its own terms and conditions. 

Is accident insurance worth it?

Whether accident insurance is worth it all depends on your individual situation. First and foremost, it isn’t meant to replace traditional health insurance coverage. It is meant as supplemental coverage to help round out your overall insurance portfolio. This is especially true for those with high deductible health plans.

Accident insurance can also be helpful to use as a supplement for those with disability insurance. If you are injured enough that you have to go to the hospital, but not bad enough to miss work – this could provide some level of financial relief when disability doesn’t kick in.

The monthly premiums of most accident insurance plans are typically low in cost, which make them cost-effective add-ons to your health insurance coverage. If you and your family lead an active lifestyle, and your health insurance offers only limited coverage, or if out-of-pocket expenses from an accident would be costly with your current health insurance plan – accident insurance would be beneficial.

As with all insurance coverage, understanding the details of your plan's coverage and the costs is important. Always defer to a trusted financial/insurance provider to see if accident insurance is the right move for you and your family.