What is accident insurance and why do you need it?

Let’s face it, our lives are fraught with everyday risks. You could trip, fall, slip or stumble into an accident while doing even the most ordinary tasks. Your medical insurance will usually cover the cost of your care after an accident, but what if it isn’t enough? That’s where accident insurance comes in. It pays cash benefits, up to the policy limit, if the insured is injured in an accident covered by the plan. Think of accident insurance as supplemental coverage to your major medical health insurance, and can be more comprehensive than the personal injury and medical payments provisions in your auto policy.

Understanding accident insurance

When we think about everyday accidents, we often underestimate the risk. Many people may assume that most accidents occur at work, but according to the National Safety Council (NSC)Opens in New Window, the majority happen at home. According to the NSC, about 63 million people, or 1 in 5, sought medical treatment after an accidental injury in 2022. And the leading causes of preventable injury-related death weren’t freak accidents. Instead, they included poisoning, falls, choking, drowning, fire and mechanical suffocation. If you experience an accident, your accident insurance can fill any gaps in your health care insurance by covering injuries like burns, lacerations or broken bones.

Typical expenses covered by accident insurance may include:

• The cost of an ambulance ride
• Hospital and medical expenses not covered by major medical insurance
• Diagnostics exams like CT scans or MRIs
• Rehabilitation or physical therapy
• Accidental death and dismemberment

Benefits of accident insurance

Financial protection

Accidents can be costly, even if you have medical insurance. It’s not just the medical bills; if you’re injured and can’t work, you will lose income while you recover. Accidental injury insurance can help you avoid financial hardship by covering unexpected medical expenses not covered by your primary insurance, as well as other out-of-pocket costs, transportation services and daily living expenses.

Peace of mind

Accidents are unpredictable, that’s what makes them accidents. When a new or unexpected injury occurs, you don’t have time to save up to cover the costs or reallocate funds. But if you have accidental injury insurance, you don’t have to worry about how you’ll pay for care or take care of your family. You can focus on what matters: your health and recovery.

Financial implications of accidents for individuals

If you or a loved one ever experienced a serious accident requiring medical treatment, you know how time-consuming and expensive it can be. According to the NSC, injuries at home and in the community cost more than $668 billion in 2021Opens in New Window, and medical debt is one of the leading causes of bankruptcy in the United States.

After an accident, you may be facing mounting medical bills or a long recovery period that will keep you out of work. Your primary health insurance might not cover all of the costs of your medical care or rehabilitation and physical therapy, and if you aren’t able to work you might have to worry about lost income. A supplemental accident insurance policy can fill any gaps in coverage to help ease the financial burden.

Types of accident insurance coverage

Accident insurance usually falls into one of several categories, and some can be combined.

Individual accidental injury insurance

You can purchase a supplemental accident insurance policy for you or your family on your own, either through your health insurance provider or through another insurance company. You may be able to tailor your coverage for your needs by, for example, adding coverage for a high-risk hobby. If there’s an accident resulting in a covered injury, many plans provide a lump sum payout to you that you can use for whatever you need, instead of paying your medical provider.

Group accidental injury insurance

Often, employers will offer group accident insurance as part of their benefits package for employees. If employees opt in, the premium is conveniently deducted for their paycheck, and usually the rate is lower for a group policy. Group accident insurance can be offered as a supplement to the employer-provided health insurance and can include add-on options like sports coverage for active kids.

Car accident injury insurance

Your auto insurance policy might not include medical coverage in case of an accident, or it might not provide coverage if you’re found to be the driver at fault. A car accident insurance policy can cover medical expenses for you and your passengers if you are in an accident, regardless of who is at fault.

Travel accidental injury insurance

If you’re setting off on a vacation or are away from home frequently, travel accident insurance could give you peace of mind about your trip. Specific coverage from policy to policy, but it could include emergency medical care you need during your travels, in some cases whether they’re related to an accident or not, as well as loss of life or limb. Some policies can ensure you have coverage when traveling abroad. Keep in mind, however, that most policies only cover your expenses while you’re traveling, not after you get home, and many don’t cover injuries caused by extreme sports or similar risky activities.

Customizable insurance coverage for certain careers

Some jobs are more dangerous than others. If you work in a high-risk profession that has an elevated likelihood of accident or injury or a physically demanding or potentially dangerous environment, it could affect what medical insurance you can get or the cost of your premium. Customizable accident coverage lets you tailor your coverage to the specific risks and injuries associated with your career, like burns or injuries after exposure to certain chemicals.

Benefits of accident insurance

One of the biggest benefits of accidental injury insurance is that it can cover everyday accidents that may not be covered by your primary health plan, giving you peace of mind. The policy payout can be used for whatever you need: travel for care, ambulance rides, copays or even high deductibles from your primary health plan. It may also provide extra money, in addition to your separate disability insurance, to help you take care of expenses and replace lost income.

Who should consider accident insurance?

Supplemental accidental injury insurance can be beneficial for various individuals and circumstances. Here are some groups who might consider this type of insurance:

• High-risk occupations: These include construction workers, who are regularly exposed to potential hazards; manual laborers, who perform physically demanding tasks; police officers, firefighters and paramedics; and health care workers frequently exposed to infectious diseases.
  
• Active lifestyles: Both amateur and professional athletes are prone to injuries, while outdoors or extreme sports enthusiasts can get hurt biking, hiking or skiing. Fitness enthusiasts like weightlifters, who frequently engage in strenuous physical activities, also are at a higher risk for injury.
  
• Families with children: Children can be very active and are prone to accidents. They also often participate in extracurriculars like sports where injuries are common.
  
• Individuals without adequate health insurance: If your health coverage doesn’t fully cover certain expenses or if you have a high-deductible plan, you might find yourself facing expensive out-of-pocket expenses. This could include people who are self-employed, who don’t have employer-sponsored insurance and who could be financially devastated if an injury means they can’t work.
  
• Frequent travelers: This is especially true for those who often travel overseas, where their regular health insurance might not provide adequate coverage.
  
• Seniors: Active retirees and older adults may be more prone to falls and other accidents and may benefit from having additional coverage.

Choosing the right accident insurance

To make sure your accident insurance complements your primary health insurance, it can be a good idea to talk with a licensed insurance agent who you know and trust. They can help you assess your risks and help you make an informed decision.

Compare policies

If you’re shopping for an accidental injury insurance policy, it’s important to compare plans to make sure you’re getting the coverage you need at a price that fits your budget. You’ll want to consider:

• Premium costs and any deductibles
• Coverage limits
• What’s covered and what isn’t
• How the plan deals with permanent disability resulting from an accident
• Whether the policy pays out in cases of accidental death

Get quotes

Just like shopping for policies like auto insurance, it’s important to get several quotes from different insurance policies before you choose an accidental injury policy. You’ll also want to choose a reliable insurance provider, so evaluate each company on its:

• Reputation: Research the company and read customer reviews to gauge their reliability and customer service.
  
• Financial stability: Make sure the company will be able to honor claims when needed.

The bottom line

While supplemental accident insurance might not be necessary for everyone, those in high-risk occupations, with active lifestyles, or without comprehensive health insurance coverage might find it particularly valuable. Evaluating your personal risk factors and current insurance coverage is essential in deciding whether to add this type of coverage, but it can be a useful tool in your financial planning toolbox.