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What Does Accident Insurance Cover? Research Team | Posted On Saturday, August 04,2018, 07:17 PM

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What Does Accident Insurance Cover?




An accident is an unexpected event. It may get you partially or totally disabled. This might impact your earning ability.  It would mean a loss of pay and hefty medical bills. However, Accidental Insurance does not cover suicide, self-injury, war, and so on.

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What Does Accident Insurance Cover?

An Accidental Insurance plan covers the insured, if he/she meets with an accident.


Features Of Accidental Insurance Plans

  • Accidental Insurance plans must be renewed each year.
  • The sum assured of an accidental insurance plan depends on income. You may be offered a sum assured amounting to 60-100 times your monthly income or 8 to 10 times the annual income.
  • Some insurers may offer accidental insurance to dependents subject to limitations relating to the sum assured.
  • The premium paid towards accidental insurance has no tax benefits. However, the claim amount is not taxable.


Advantages of Accidental Insurance Plans

  1. A personal accident policy covers the insured for all losses arising due to and including temporary disablement, income loss and hospitalization.
  2. If an insured dies in an accident, an accident insurance policy pays the nominee 100% of the sum assured.
  3. In case of permanent partial disability, the insured receives either a percentage of sum assured for a specific time period or a lump sum. A permanent partial disability may result in loss of speech, eyesight or a toe.
  4. In case of a permanent total disability of the insured, the nominee can make a claim on the total sum assured.
  5. If an insured suffers a temporary total disability like a fracture, they are provided a daily or weekly benefit.


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Eligibility Criteria For Accidental Insurance Plan

1. An individual must be in the age group of 18 to 65 years.

2. An accidental insurance plan can be renewed until the age of 75 years.


Types Of Accidental Insurance Plans

Accidental insurance can be of four types:

  • Basic Accidental Insurance plan
  • Comprehensive Accident Insurance Plan
  • Individual Accidental Policies
  • Group Accident Policies


1. Basic Accidental Insurance plan:


A Basic Accidental Insurance plan pays the sum assured to an insured’s nominee or family if the insured dies in an accident. No coverage is provided for the treatment of injuries related to an accident. Therefore, the premiums of a basic accidental plan are very cheap.


2. Comprehensive Accident Insurance Plan:


Unlike a Basic Accidental Insurance Plan, a Comprehensive Accident plan covers expenses of treatment and/or hospitalization arising due to accidents.


3. Individual Accidental Policy:


Individual Accidental policies cover only an individual in case of any accident.


4. Group Accident Policies:


A Group Accident policy is taken by employers for their employees. A group accident plan is available at a low cost. However, this is a basic cover which may not offer benefits of an individual accidental insurance plan.


Types Of Disabilities

A person can suffer from three types of disabilities due to an accident:

  • Permanent total disability
  • Temporary total disability
  • Permanent partial disability


Based on the type of disability an insured suffers, a Comprehensive Accident Plan pays the entire sum assured or a percentage of the sum assured.

SEE ALSO: How Mutual Funds Work?


What does a Personal Accident Insurance cover?

Personal Accident insurance covers:

  • Accidental death: The insurer pays the sum assured to the insured’s nominee or family if the insured dies in an accident.
  • Accidental disability: The insured may lose income due to disability caused by an accident. A personal accident policy or an individual accident policy covers such loss of income due to partial or complete disability.
  • Accidental dismemberment: If the insured loses income due to mutilation, this will be covered by the policy.
  • Medical expenses: An accidental insurance plan covers medical expenses incurred due to accidental injuries.


Exclusions of a Personal Accident Insurance Plan:

  • Pre-existing disability
  • Pregnancy and child-birth
  • Self-inflicted injuries like suicide, drug abuse, alcohol abuse and so on.
  • Alternative treatment methods
  • Accidents caused due to illegal activities
  • Accidents caused in a war
  • Accidents due to mental disorders
  • Accidents due to involvement in adventure sports and serving in the navy, army, air force and so on.


Who should avail Personal Accidental Insurance?

You should avail an accidental insurance policy if:

  • You have availed loans like Home Loan, Car loan. In this case, the accident insurance policy covers the repayment of EMIs if you happen to meet with an accident.
  • If the nature of your work is risky. The occupational risks are categorized into three classes:


Class 1: Low Risk (Accountants, lawyers, bankers)

Class 2: Moderate Risk (Drivers of heavy vehicles, contract laborers, professional athletes)

Class 3: High Risk (High risk construction laborers, workers in underground mines, people working with explosives)


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