What Is Accident Insurance?

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Accident insurance is a supplemental health policy that helps cover costs after you suffer specific injuries in an accident. Commonly covered events include broken bones, burns, trips to the emergency room, ambulance rides, sprained ankles, recreational sporting injuries and diagnostic tests like X-rays.

You can use accident insurance to pay for out-of-pocket medical costs left by your primary health insurance, such as your deductible, copay and coinsurance. It can also help you cover lost wages and living expenses if you can't work. That means it can be valuable if you are the main earner in your family or if you don't have a large emergency fund.

What is accident insurance?

Personal accident insurance is a type of supplemental health coverage that specifically covers certain types of injuries. Policies typically cover broken bones, sprained joints, cuts and burns.

For example, if you hurt yourself while snowboarding, your health insurance might not kick in until you've met your $2,000 deductible. Even after you've paid your deductible, you might still be responsible for additional costs, which could bring your out-of-pocket total to $3,200. An accident insurance policy that pays out $2,500 would pay for the majority of what you owe.

Many policies pay for emergency room visits and ambulance rides. Some plans cover tests like X-rays even if the test shows you're uninjured.

Policies usually exclude injuries from extreme sports like hang gliding and mountain climbing. However, injuries from less dangerous sports like hockey and soccer are often included. Many plans extend coverage to youth activities as well. Before you buy a policy, it's a good idea to closely read your policy and ask your insurance agent to go over the specifics with you.

How does accident insurance work?

Accident insurance pays out a set amount of money based on your injury. For example, a sprained wrist might result in a $500 payout, while the amount for a broken leg could be $3,000. The total payout gets sent directly to you.

Personal accident insurance is often mixed up with accidental death and dismemberment insurance.

  • Personal accident insurance: A kind of health insurance that pays out a specific amount if you suffer certain injuries. This coverage is in addition to your regular health insurance.
  • Accidental death and dismemberment policy: A type of life insurance that pays out if the insured dies in an accident or loses body parts or functions because of an accident.

This means you don't have to worry about whether a doctor will take your accident coverage. You receive a check in the mail regardless of what doctor you see, and you can spend the money however you like. Most commonly people use it to pay for costs you'll have to pay as part of regular health insurance like deductibles, copays and coinsurance. But you can also use the money for everyday living expenses, such as rent or your mortgage payment.

Unlike regular health insurance, personal accident coverage can factor preexisting conditions into your rates or even deny you coverage. An upside is that you can buy a policy any time of year, not just during open enrollment.

Is accident insurance worth it?

You should consider accident insurance if you would have a difficult time covering the out-of-pocket costs associated with an accident, or if you'd like an extra layer of protection on top of your primary health policy.

Depending on your primary health policy, you may face annual out-of-pocket costs of up to $9,100 per year for an individual plan or $18,200 for a family plan. In addition, an injury could leave you on the hook for other related costs, such as lost wages or a hotel room for family members visiting you in the hospital. If you don't have sufficient savings to cover those expenses, you should seriously consider purchasing accident insurance.

Good for

Accident insurance is good for the self-employed. You can use accident insurance to replace lost income while you're recovering.

Unlike regular employees, self-employed workers, such as small business owners, independent contractors and freelancers, often don't have access to paid sick leave. Pairing accident insurance with a high-quality major medical policy can leave you with money left over after you've taken care of your medical bills, acting as a form of temporary income replacement.

If you belong to one of the following groups, you should also strongly consider purchasing accident insurance.

  • People with jobs or hobbies with high injury rates
  • Breadwinners
  • Those with small or nonexistent emergency funds

Keep in mind that not all hobbies are covered by accident insurance. Injuries sustained from extreme sports like bungee jumping and combat sports like boxing are often excluded.

Frequently asked questions

What is accident insurance?

Accident insurance is a form of supplemental health coverage that pays out after you have a qualifying injury. It's intended to help you manage injury-related costs that go above and beyond what your primary health insurance will cover.

Do I need accident insurance?

You aren't required by law to carry accident insurance. However, you should consider purchasing coverage under the following circumstances.

You have low savings You're the breadwinner for your family You engage in hobbies or work with a high likelihood of injury

What is covered under personal accident insurance?

Accident insurance pays after you have a qualifying injury. The qualifying injuries can vary by policy but typically include burns, cuts, broken bones and concussions. Policies may also cover ambulance rides and emergency room visits. Commonly excluded injuries include those related to extreme sports, boxing, mixed martial arts (MMA) and self-harm.

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