What Is Accident Insurance?

slip-up-709045_1920Simply put, accident insurance is a form of insurance policy which offers a payout when people experience injury or death due to an accident. This type of insurance does not usually cover negligence, acts of God, or natural disasters, and the policy may include restrictions such as caps on total payouts or restrictions on payouts for activities deemed risky. Many insurance companies sell accident insurance, which can be purchased as a standalone policy or bundled in to an existing insurance policy.

Is it a good idea? 

Like other forms of insurance, buying accident insurance is, in a sense, a bet. The consumer pays the insurance company a premium hoping that an accident will not occur, and the insurance company writes a policy hoping that it will not have to pay out.

This type of policy can be a good idea for people who: 

  • Lack adequate health care coverage (ensuring that they will be able to access medical treatment after an accident)
  •  Families who would suffer financially if the sole breadwinner died (offers more financial security).

Accident insurance policies have payouts which vary, depending on the severity of the injuries. Some include very specific language about amounts which will be paid out in the event of losing particular extremities, for example. The payout is designed to cover medical care, along with pain and suffering. If an accident causes permanent disability, the payment may be structured to provide funds for the accident victim to live on. In the event of a death, the benefits are paid out to the listed beneficiary on the policy.

Shopping for Accident Insurance:

  • When shopping for accident insurance, people should ask about premiums and what types of accidents and events are covered. 
  • Get to know the company’s reputation before you buy a policy as some companies cover more than others and some delay payments until they are satisfied that a customer really does meet the terms for a payout. For people who need money to deal with immediate expenses, this can be a problem.

Types of Accident Insurance: 

  • Car accident insurance which is purchased by drivers to protect themselves and other in the event of an accident.
  • Travel accident insurance policies (must be purchased before your trip),  
  • Customizable insurance plans for people who work in particular industries (such insurance can be costly, reflecting the increased risks to the insurance company. A telephone lineman, for example, will be more expensive to insure than a desk worker).

    To be sure you fully understand what your policy does or does not cover, as when considering any insurance policy, it is best to talk with an insurance agent that you know and trust before making any choices about buying accident insurance.