Personal Accident Insurance

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What Is A Personal Accident Insurance?

It’s a policy which is designed to cover you and provide compensation if you are injured in an accident or become disabled as a result thereof or have a fatal accident.

You might confuse it with a health insurance policy, but this one is dedicated to accidents only, yet a health insurance policy caters for all health related issues. A personal accident insurance provides you with coverage 24/7 throughout the world.

Who Needs Personal Accident Insurance?

Any USA resident of age 18 – 69 can get a personal accident insurance. It’s a basic insurance so everyone within that age bracket should get it. It is also an ideal coverage for people who work in risky environments with machines or heights, because the possibility of getting an accident in such environments is high.

How Personal Accident Insurance Works?

After signing up for this type of coverage, your insurer expects you to pay a monthly premium to keep the policy active. All insurers have their own rates, so you will have to get a quote from your insurer to see how much you will need to pay per month. However, when you get involved in an accident, the insurer will offer you cash benefits to cater for your medical expenses.

Personal accident insurance gives the policy holder a level of coverage 24/7 and applicable worldwide. It is good to sign up with an international insurer like American International Group (AIG) which provides for its customers in more than 130 countries. This will almost guarantee you with fulltime coverage and protection when you travel to another country. Some insurers will allow you to add your family to this policy. When you do this, your premium will be higher,, however, this will be cheaper than buying each family member their own personal accident insurance.

NOTE: The only way to keep this policy active is by paying for your premiums every month. You can actually make annual payments which will save you the burden of monthly bills. However, if at any stage of your coverage, you stop paying the premiums, you will obviously lose the coverage and any cash benefits that you would otherwise be entitled (for example, when you file for a claim).

Types of Personal Accident Insurance Policies

Accidental Death and Dismemberment insurance which is commonly known as AD&D Insurance will pay a sum of money / benefit if your death is caused by an accident. It will also pay you an amount of money if, for instance, you lose a limb during an accident. However, the extent and nature of injuries and amount of money payable is determined by the insurer. Therefore, please check the policy before signing up so that you know what exactly you’re paying for and make sure you read all the exclusions of the policy.

AD&D has 4 popular types of plans offered in United States and these include:

  • Travel Accident
  • Group Life Supplement
  • Voluntary
  • Dependents

Type of Events Covered Under Personal Accident Insurance

As mentioned above, we have seen that this type of coverage caters for serious injuries & death caused by accidents. This list varies from company to company, so I advise you to check with your insurer and ask them what they actually cover when you sign up a Personal Accident Insurance with them. Below are some events (accidents) which can be covered by this policy:

Events include:

  • Road / Rail and Air Accident.
  • Injuries which might occur due to auto collision / failure.
  • Injuries which might occur when a gas cylinder burst.
  • A snake bite / dog bite or any other related poisonous bite.
  • Injuries which result from poisoning, drowning and fire.

This is a brief list of events covered by this policy, so please check with your insurer about their inclusions and exclusions.

What a Personal Accident Insurance Doesn’t Cover?

We have seen that a personal accident insurance caters for critical / fatal accidents or injuries, but in certain cases, it might not offer you with protection even though you have the policy in place. Examples include:

  • When your injuries are caused by a critical illness: In such a scenario, you will need a health insurance to cater for your medical bills. This is because an illness is not classified as an accident.
  • When you deliberately expose yourself to danger: I guess you have heard of people who try to commit suicide. They fail and instead of dying, they get seriously injured during the process. Injuries which occur as a result of reckless behavior or suicide are not catered for by this coverage.
  • Using Drugs & Alcohol: This policy will not pay you a single dime if you get injured whilst under the influence of drugs or alcohol. That is categorized as a reckless act.
  • Committing Crime: This policy will also not pay you a single dime if get injured whilst involved in criminal activities like stealing or street gun shoots.

In addition to what I have listed above, I suggest you talk with your insurer, ask them questions on what is covered and what is not covered when you sign up for a Personal Accident Insurance policy.

How Does Accidental Death and Dismemberment Insurance – AD&D Work?

An Accidental Death and Dismemberment Insurance will pay your family the full benefit in case you get killed by an accident. The money paid to your family can be used to arrange for your burial or it can be used to sustain the family when you’re gone, especially, if you were the main bread-winner. The amount of money paid to your family will depend on how much your insurance policy was worth, i.e. how much you signed up for. For example, if your total policy amounted to $100,000, your family / relatives will be entitled to $100,000 as benefit.

Let’s look at another scenario: if you don’t die but get hospitalized due to critical injuries caused by an accident. In that case, the amount the insurer will pay is determined by the proportion of compensation based on the loss suffered. Let me give you an example, if the loss of a limb is determined to be 40% of the sum insured, you will receive 40% of the benefit, depending on the insurance policy contract.

Why do I need a Personal Accident Insurance?

Accidents are inevitable, you may be the best driver on the road, but yet, someone may crash into your car or hit you from behind. With that in mind, you can’t predict what happens after getting involved in an accident, for example, you can lose a limb, hand, get a spinal injury or die.

Having a Personal Accident insurance will protect you and your family, it pays full benefits to your family in-case you die of an accident, or it can cater for a percentage % of your medical bills if you get hospitalized due to an accident.

How are Benefits Paid?

In most cases, some policy-holders decide to get paid in cash directly from the insurer. This money can be used to cater for medical / burial expenses. However, it is better to check with your insurer and get to know how benefits are paid; this has to be done before signing an agreement with them.

What is Covered By a Personal Accident Insurance?

This differs from company to company. It is best that you obtain quotes from different companies, read through each quote to see what is / isn’t covered. This will help you in deciding which company you want to deal with. However, I have listed a few coverages you might find in most personal accident insurance quotes.

  • Accidental Death (when you die of an accident, the benefit is paid to your family)
  • Hospital Bills (when you get admitted to the hospital after an accident)
  • Legal Expenses (if you caused the accident and other people got injured as a result: you might face legal charges, so this policy will cater for legal expenses involved.)
  • Partial or Permanent Disablement (this term is self-explanatory)
  • Funeral or Burial Expenses (the money paid following death can be used to cover funeral / burial expenses)

After reading all the information presented above, you should now have good understanding on the meaning and covers for Personal Accident Insurance.

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