Personal accident cover

If you’ve ever wondered what might happen if you were to suffer an accident that left you unable to work or earn money, personal accident cover might be of interest to you. So, what exactly is it?

Whilst life insurance might seem as though it covers enough as your family will receive money if you were to pass away, what if you were to suffer a serious accident that leaves you unable to work? This could be equally as financially catastrophic as you’ll be unable to earn an income. 

So, what is personal accident cover and do you need it? Read our guide to find out everything you need to know about personal accident insurance. 

What is personal accident cover? 

Personal accident insurance is a policy that will pay out if you suffer a serious injury or death as a result of an accident. These policies allow you to protect both yourself and your family if you lose earnings due to an unexpected accident. 

According to the Financial Ombudsman, an accident is defined as "an unforeseen or unexpected and unfortunate occurrence".

Personal accident insurance is only for sudden, serious and unexpected incidents that cause you serious physical harm. You won’t be able to claim if you die or are injured through natural causes such as an illness. For cover against natural causes, you will need to take out critical illness insurance and/or life insurance. 

What is covered by personal accident insurance? 

Personal accident payouts are given when a claim is made if you die or are seriously injured or disabled in the following scenarios:

  • Workplace accident 

  • Victim of criminal violence

  • Road accident

  • Slipping over

  • Amputation as a result of an accident or following an accident

  • Total or permanent disability 

Every personal accident policy is different, so make sure you read the terms so you know exactly what is covered by your insurance. 

What doesn’t personal accident insurance cover?

Typically, personal accident insurance won’t cover death, injuries or disabilities in the following scenarios:

  • Self-inflicted due to suicide or recklessness

  • Injuries due to drug use or intoxication (e.g. drunk driving accident)

  • Injury due to sickness or disease

  • Accident due to carrying out criminal activity 

  • Injuries due to nuclear radiation 

  • Accident during training or playing sport if professional

Again, every insurance policy is different, so make sure the one you pick meets everything you want to be covered. 

Personal accident insurance scenarios 

To help you understand which scenarios will grant you a payout with personal accident insurance, let’s take a look at two different situations.

Example 1: A person working on a construction site falls and injures their arm, resulting in the amputation of the arm. 

Example 2: A person with a terminal illness suffers complications that result in the amputation of their arm. 

Only the person in example 1 will receive a payout under personal accident insurance, because it involved "an unforeseen or unexpected and unfortunate occurrence." Whilst the person in example 1 could also have had a terminal illness, this wasn’t related to the accident at all.

However, in example 2, the amputation had to take place solely due to the terminal illness. This wasn’t an unforeseen accident, and so a payout wouldn’t be warranted under personal accident insurance. 

Do I already have personal accident cover?

If you have car, home, life or travel insurance, then the policy could already come with personal accident cover. However, it’s worth double-checking your policy terms to see how comprehensive it is, or if it’s definitely included. 

Should I get personal accident insurance?

If you want comprehensive cover, then it might be worth getting a separate personal accident insurance policy, even if it’s included in your car or life insurance. If you don’t have a separate personal accident policy, it could just be an add-on to car insurance, for example. This add-on will be limited and will only cover accidents that happen in a car. 

So, if you are someone who works in a high-risk environment, such as a construction site where accidents can happen, you might consider getting personal accident insurance. 

Essentially, if you are at risk of being in an accident on a daily basis, you are very likely to appreciate the added peace of mind personal accident cover can give you. 

Also, if you can’t afford to take a considerable earnings cut due to an injury, then it also might be worth it for you.

However, if you feel like personal accident cover that’s included with your car insurance policy is enough, then you might not need to take out a separate personal accident policy. 

How do personal accident payouts work?

Personal accident claim payouts all depend on the severity of your injury: the more severe, the higher the payout. For example, if you lose 50% functionality of a limb, then you might receive a payout of 50%. However, it’s not always as straightforward as this. You will need to be assessed by a doctor and medical evidence provided with your claim for a payout decision to be made. 

If you lost 70% or more functionality of a limb, then your payout will likely be the full amount.

How much does personal accident cover cost? 

Unlike most insurance policies, your age and medical history won’t have an impact on the cost of your personal accident insurance. This is because these factors are unlikely to increase or decrease the likelihood of you having a serious accident.

However, your occupation will affect the price of your personal accident cover. For example, if you work full-time on a construction site, then your monthly premiums will be higher than a receptionist’s. This is because you are more likely to be involved in an accident at work as a builder. 

For cover that ranges from £40,000 to £100,000, you can get personal accident insurance for as little as a few pounds a month. 

A few things to consider when deciding how much cover you would like to take out include: 

  • How much are your monthly bills, mortgage repayments and debt?

  • How much will your family need to live comfortably while you are out of work?

  • How much does your partner earn? 

  • Will you need to hire assistance with your injury? If so, how much will that cost? 

Working out these costs will help you come to a rough figure of the amount of cover you’ll need. 

What is the best personal accident insurance?

In order to find the best personal accident cover for you, there are a few things to keep in mind when comparing policies. We have compiled a list of tips below:

  • Who will be covered? Check whether your personal accident insurers will only cover you, you and your partner, or even your whole family 

  • What am I covered for? You will want to check exactly what scenarios you will be covered for and which ones you won’t. This will help you better prepare if an accident were to occur

  • Am I covered abroad? Before going overseas, you might want to check whether you are just covered in the UK or abroad as well

  • What are the reviews like? Before picking any insurance provider, make sure that you check out their customer reviews and that they are reliable when people claim for payouts 

FAQs

Can I get self-employed accident insurance?

You can take out personal accident insurance when you are self-employed. In fact, this might be a good idea as you won’t be receiving any statutory pay from your work if you are unable to work, as you are your own boss. 

You could also look at self-employed sickness insurance as this will mean you are still paid even if off work seriously ill.

Personal accident insurance vs life insurance: What’s the difference?

Both life insurance and personal accident insurance can pay your family a lump-sum in the event of death. However, personal accident insurance will only pay out if you die or are injured from an accident. 

Whereas, life insurance will pay out if you die from natural causes too. However, life insurance only pays out if you die, personal accidents will pay out if you are injured but survive.

For most people, they will just take out life insurance and that will give them enough peace of mind that their family will be looked after. However, for those with dangerous occupations or lifestyles, they might also consider taking out a separate personal accident policy to ensure that their family is looked after if they are unable to work. 

Life insurance monthly premiums are considerably more expensive than those of personal accident policies. This is because life insurance is more comprehensive and covers many death scenarios. 

Does personal accident insurance include accidental death cover? 

Yes. If you die due to an accident when you have a personal accident policy, then your family will be given a payout if they make a claim. 

You will need to check the terms of your policy to find out what is classed as accidental death, and in which cases a payout wouldn’t be given. 

What’s the difference between personal accident insurance and income protection?

Personal accident insurance can often be confused with income protection insurance. 

Income protection insurance protects your income if you become seriously ill or injured and are unable to work. Whilst personal accident policies pay a one-off lump-sum, income protection will pay a percentage of your salary (up to 65%) each month. 

Income protection insurance also covers you in your own occupation,  meaning that the policy will pay out based upon your inability to perform your normal occupation. This means that it is not limited to the type of illness or injury you have. Income protection often will payout long-term in comparison to personal accidents. 

Does personal accident insurance cover COVID-19?

No. If you were to be unable to work due to COVID-19 or were to die of it, neither of these scenarios would be classed as an accident, but as a natural cause instead. This means that you won’t receive a payout. 

However, as the coronavirus is completely unrelated to this insurance, it means you will easily be able to get a personal accident policy, despite the pandemic.


18th August 2020