What Is Accident Insurance And How Does It Work?

There are so many types of insurance on the market today. Name just about any sphere of life, and there’s insurance to cover it. Insurance provides a safety net for life’s uncertainties, from health crises to accidents, with insurance policies designed to meet these situations. 

You may already be familiar with health insurance, and what it’s for. But if you’ve recently heard about accident insurance, you could be wondering what accident insurance is and how it works. This guide to accident insurance will give you those answers, plus some pointers on how to know if it’s right for you.

What Is Accident Insurance? 

No matter how carefully we live our lives, accidents happen, and sometimes these accidents result in injury or even death. So, what is an accident insurance policy and what is it used for? 

Accident insurance is a type of insurance that covers people in the case of accidents. An accident insurance policy pays out a predetermined sum, with accidental injury or death. 

Who Benefits From Accident Insurance Payouts?

Accident insurance is always worth considering. You can’t predict if or when you will have a serious accident. You can, however, prepare for it. But who benefits from accident insurance? It depends on the result of your accident. 

  • If it results in injury, you benefit from being able to pay for medical treatment to aid your recovery. This could include medical services and treatments, injuries, hospitalization, and assistive medical devices during your recovery.
  • If, unfortunately, it results in your death, your beneficiaries will receive the benefit. They may choose to use this for your funeral, or to settle any outstanding bills. They may even use it for day-to-day living expenses.

Who Needs Accident Insurance?

Accident insurance is not required by law. However, it’s a good idea for many people. Especially if they don’t have major medical insurance or life insurance coverage.

  • If you have no health insurance and are injured in an accident, you can still access medical treatment with your accident insurance. 
  • If you are the sole breadwinner in your household and have no life insurance, accident insurance can help. If you are involved in a fatal accident, the death benefit payout will be helpful to the family you’ve left behind. 

How To File A Claim

The claims process will differ slightly, depending on the type of accidental insurance you have.

In car accident insurance, you must contact your insurance company as soon as possible after the accident. There may be a limited time in which to submit a claim, so always check these details when signing up for car accident insurance. You must provide a police report, witness statements, and other evidence to your insurer’s claims officer. 

In accidents that are not automobile-related, you’ll provide a report of the circumstances that led to the accident. Your insurance company may request proof of injury too, such as medical records. 

If you sustained fatal injuries, it will be up to your spouse, family, or next-of-kin to provide the information to your insurer, as well as your death certificate. 

How Does Accident Insurance Work?

If you sign up for an accident insurance policy, this is how it will work.

  • In the event of an accident in which you were injured, you will submit a claim. A claims professional will review it and, if your insurance company approves the claim, you will receive the payment directly. You may use this as you see fit while recovering from your accident.
  • In the event of your accidental death, your family may submit the claim. Once reviewed and approved, the insurance company will pay the benefit to your designated beneficiary.

Accident Insurance Features And Benefits

Personal accident insurance is sometimes offered as an optional add-on to a life insurance policy but can be purchased separately. It may cover you for various accidental scenarios, such as:

  • Accidental injuries at work
  • An accident that leads to permanent disability 
  • Injuries caused by a fall
  • Sports-related injuries
  • Injuries caused by violent assault
  • Injuries or death caused by a road accident – as a driver or a pedestrian

The type of accident insurance policy you have, and the insurer who is offering it, will determine the exact terms and conditions of your coverage. For example, some policies may cover you for all the events listed above, while others will only cover you for a few of them.

The Difference Between Personal Accident Insurance And Other Common Insurance Types

While personal accident insurance policies cover you for accidental injuries, they don’t cover you for any other health and medical crises. And although they cover you for accidental death, they rarely offer the larger death benefits of major life insurance policies. 

Then there’s the issue of loss of income while you are incapacitated after an accident. 

There are income protection plans that cover this, but ordinary personal accident insurance pays out a lump sum and not continued monthly payouts. This can be used however you see fit, but you will probably need to use it for medical bills. Thus, personal accident insurance is not ideal for income protection.

Are There Different Types Of Accident Insurance?

Yes, there are various accident insurance policies, and they cover accidents in different settings. 

  • Personal Accident Insurance: This type of insurance provides coverage for bodily injury or death resulting from accidents. 
  • Travel Accident Insurance: Often included as part of travel insurance policies, this coverage provides benefits for accidents that occur while traveling.
  • Accidental Death and Dismemberment (AD&D) Insurance: This type of insurance pays a benefit if the insured dies or suffers a covered injury because of an accident. .

You can also get accident insurance that’s customized to your particular needs. These accident insurance policies are usually designed for specific, high-risk occupations where accidents are more likely.

Is Accident Insurance Right For You?

Is accident insurance right for you? The answer depends on your unique life situation. Your family ties, occupation, lifestyle, and hobbies all play a role in deciding whether accident insurance is right for you. There are also different types of accident insurance, and some may be more relevant to you than others.

What accident insurance costs will also depend on various factors, including the type of accident insurance you have. On average, though, it costs less than $50 per month for an individual personal accident insurance policy. 

If you can’t afford health insurance, you may decide to sign up for a budget-friendly personal accident insurance plan. But if you are considering purchasing an accident insurance policy, consider these factors first to ensure you choose the right one for you.

The Family Breadwinner

If you have a family, and especially if you have young children who are still in school, you probably need accident insurance. This is especially true if you are the sole breadwinner, or contribute the bulk of the household income.

An accident that leaves you injured, permanently disabled, or worse, will seriously impact the family. If you are single, you still need the peace of mind that comes with insurance. However, the financial implications are not as severe.  

Dangerous Or High-Risk Occupations

If your occupation is a high-risk one with a powerful element of danger, accident insurance is a must. Such occupations have specialized accident insurance. The state, county, or city typically insures police officers’ vehicles under group insurance. Police officers have life insurance coverage, too.

This is the norm for other high-risk occupations, too, even in the private sector. However, these policies often offer minimal coverage only. Discuss your needs with your employer, and if they can’t offer you the coverage you need, you may want to consider supplementing with your own accident insurance.

Extreme Sports And Other High-Risk Activities

Perhaps you have a desk job during the week, and get your adrenaline rushing on the weekend by switching to extreme sports. If that sounds like you, accident insurance may be a good idea. But be aware that some policies have exclusions that pertain to extreme sports and life-threatening activities.

The terms and conditions around this can be complex, so always read the fine print. Some policies allow for certain extreme sports as a leisure activity, but not an occupational hazard. Also, the definition of high-risk, extreme, or life-threatening, may differ. 

Do You Have Health Insurance? 

If you have comprehensive health insurance, otherwise known as major medical insurance, you may choose to supplement it with accident insurance. There is nothing prohibiting you from doing that, and if the above factors apply to you, it’s probably in your best interests to do so.

If, however, you do not have health insurance yet, it may be your better option. While it will not cover you for accidental death, it will cover you for medical treatments needed after an accidental injury. Health insurance is also your safety net in the event of chronic illness. 

There are many types of health insurance available to suit different needs and budgets. Insurance experts like Enhance Health can advise you on the right type of health plan for you. 

Conclusion

Accidents happen, and when they do, it’s good to have the peace of mind that comes with having insurance. Accident insurance can give you this security. However, the security offered by accident insurance is limited to accidental injury and death. 

It will not cover you for healthcare and medical emergencies that do not arise from accidents. For that, you need health insurance. But don’t worry, Enhance Health can help, just as we have helped countless other Americans find affordable health plans for themselves and their families.

Call us today to find out more.

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