What Is Accident Insurance and Is It Worth It?
Key takeaways:
Accident insurance is a supplemental plan that covers costs related to an accident or injury, including nonmedical expenses. This coverage can be very useful for people who are prone to accidents and injuries, such as athletes, and people with high-deductible health plans.
Accident insurance benefits and costs vary, so it’s important to understand the specifics of your plan.
Accident insurance is not a substitute for a health insurance plan.
Table of contents
There are an estimated 38 million injury-related visits to U.S. emergency rooms each year, according to the CDC. If you have health insurance, your coverage will help cover the costs of treating an injury. But it won’t necessarily cover all the expenses related to the incident, including lost income and your share of the medical costs.
Accident insurance can help ease the financial strain of an injury. Learn more about how accident insurance works and the costs of coverage below.
What is accident insurance?
Accident insurance is a type of supplemental insurance policy. It pays cash benefits to help cover your out-of-pocket costs related to a qualifying injury.
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Other names for accident insurance include:
Personal injury insurance
Personal accident insurance
Accidental injury insurance
Life accident insurance
Accident-only insurance
Supplemental accident insurance
You can sign up for accident insurance at any time of year. You don’t need to wait for the Affordable Care Act (ACA) open enrollment period or a qualifying life event. (This type of supplemental insurance isn’t subject to ACA regulations.) The coverage begins promptly — sometimes, in a matter of days — and you can cancel your plan at any time.
Accident insurance vs. health insurance: What’s the difference?
The purpose of accident insurance is to complement — not replace — standard health insurance.
If you’re treated for an injury, your primary health insurance policy typically pays most of the costs once you meet your deductible (if you have one). But you may still face hefty out-of-pocket costs for copays or coinsurance — particularly if you have a high-deductible health plan or another type of plan with a large deductible. The cash payout from an accident insurance plan can help with those expenses.
Another difference is that health plans usually require you to use specific doctors or networks in order to have your care covered with the lowest out-of-pocket costs. Accident insurance will pay the benefits no matter who treats you.
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How does accident insurance work?
Accident insurance policies can be used to cover individuals or families. Every plan has specific injuries that are covered. And the premiums vary depending on policies’ annual benefit limit.
Accident insurance policies have no copays, and the deductibles are typically less than $250.
Benefits are based on the severity of injuries. So payouts can range from less than $100 for minor lacerations to $10,000 or more for major accidents. Policies often cover associated costs, too. For example, your benefits might be set at $350 per day for a hospital stay, $300 for an ambulance ride, and $40 per physical therapy session — services that are typically part of health insurance cost-sharing responsibilities.
Some plans are designed for children who are active in sports. Plans that cover riskier sports, such as football, have higher premiums.
Some accident insurance plans are “guaranteed issue.” This means you can buy the policy without a medical exam. Once you’re enrolled, your policy is renewable for as long as you pay the premium. Age limits may apply, however, and there’s usually a waiting period of a few years before you can access benefits.
Accident insurance is not the same as accidental death and dismemberment (AD&D) insurance, though insurers often bundle AD&D benefits with accident insurance, life insurance, and health insurance plans.
What injuries are commonly covered by accident insurance?
Accident insurance payouts are triggered by qualifying injuries, which often include:
Dental injuries
Dislocations
Eye injuries
Fractures and broken bones
Lacerations
Once your claim has been approved, you can spend the cash on whatever you need. This could be especially useful if your injury keeps you from working. Your financial needs in this case might include:
Rent or mortgage payments
Utilities
Groceries
Child care costs
You can also use your payout for recovery-related expenses, such as:
Ambulance transport
Emergency room charges
Diagnostic tests and procedures, such as X-rays
Post-accident, recovery-related expenses, such as physical therapy
Medical devices, such as prosthetics
What does accident insurance not cover?
An accident insurance plan won’t issue a payout if you get injured while doing something that’s known to be risky. Benefits are not payable if you’re injured because of:
Auto racing
Skydiving
Scuba diving
Professional or semi-professional athletic competitions
Instances of self-harm
Unlawful activities, such as driving under the influence of alcohol or illegal substances
As always, check your plan for specific exclusions.
How much do accident insurance premiums cost?
Accident insurance premiums are far more affordable than health insurance premiums. Typically, accident insurance premiums cost as little as $6 to more than $50 per month for each covered person. The covered person’s age, state of residence, and insurer determines the exact amount of the premium.
Some employers offer accident insurance plans to employees alongside group health insurance. Employers may or may not offer to pay part of the premium. Individuals can also buy accident insurance policies on their own, in which case they are responsible for the entire premium.
How do you make an accident insurance claim?
You would file an accident insurance claim after you — or a covered family member — experience a qualifying injury. This involves completing and submitting a claim form, along with any necessary supporting documents. It’s likely your healthcare provider will have to provide some information to your insurer, too.
Most plans require you to file a claim within a month or two of an incident. But your plan documents will specify your deadline.
Your claim should be processed in a week or two. If approved, your insurance company will send the benefit directly to you.
Do I need accident insurance?
Most people in the U.S. don’t have enough money in their savings account to handle a $1,000 emergency, according to a June 2023 report from Bankrate. When surveyed, 1 in 4 people said they would pay for an unexpected expense of that amount with a credit card.
If you’re not financially prepared to cover the costs of a potential injury, you might seriously consider accident insurance. Having accident insurance to cover copays, coinsurance, and deductibles could help you avoid medical debt.
And, unlike employer-based health insurance plans, accident insurance is typically portable — meaning, you remain eligible regardless of where or whether you are working.
Is accident insurance worth it?
With low premiums and the possibility of a lump sum payout, accident insurance is worth it if you don’t have enough money in savings to cover the costs of an injury and the related expenses.
What are the best supplemental alternatives to accident insurance?
Below are some alternatives to accident insurance that can work as stand-alone plans or to supplement your health insurance.
Fixed-indemnity insurance
Depending on your needs, fixed-indemnity insurance may be a better fit for you than accident insurance. It’s another type of supplemental insurance that pays you a preset sum for specific events, such as a healthcare provider visit or a surgical procedure.
One type of fixed-indemnity insurance is a hospital indemnity plan. Unlike accident insurance, hospital indemnity insurance covers illness as well as injury. But it only pays a lump sum if you are admitted to a hospital for inpatient care. That means you may not be able to file a claim for, say, treatment of a broken bone or lacerations.
Critical illness insurance
A critical illness insurance policy is a supplemental plan that covers serious medical conditions, such as cancer, heart attack, or stroke. This type of plan also offers a lump sum payout, but it excludes many chronic conditions.
Medigap
If you’re enrolled in original Medicare, your best option for covering extra healthcare costs is Medicare supplement insurance, or Medigap. It’s specifically designed to help pay your out-of-pocket costs for Medicare Part A, Part B, and Part D, including deductibles, copays, and coinsurance.
The bottom line
Accident insurance provides you with a payout to help cover the costs associated with a qualifying injury. It shouldn’t replace your health insurance coverage, but it can be a useful supplement to cover out-of-pocket medical costs and other expenses after an accident.
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References
Aflac. (n.d.). Accidental death and dismemberment (AD&D) insurance.
Aflac. (n.d.). Guaranteed issue life insurance.
Centers for Disease Control and Prevention. (2023). Emergency department visits.
Davies, A. (n.d.). 5 reasons an accident insurance policy might be right for you. United Healthcare.
Federal Register. (2015). Amendments to excepted benefits.
Gillespie, L. (2023). Bankrate’s 2023 annual emergency savings report. Bankrate.
Healthinsurance.org. (n.d.). Accident insurance.
MetLife. (n.d.). Hospital indemnity insurance.
Plummer, S. (n.d.). A guide to accident insurance. The Annuity Expert.
Principal. (n.d.). Group accident insurance.
Student Insurance. (n.d.). K-12 accident medical & special risk insurance.
Texas Kids First. (n.d.). Available coverage plans.
UnitedHealthcare. (n.d.). Accident insurance.
Voya Financial. (2017). Accident insurance: Benefits at a glance.
