Accident insurance is a type of insurance where the policy holder is paid directly in the event of an accident resulting in injury of the insured. The insured can spend the benefit payment however they choose. Accident insurance is complementary to, not a replacement for, health insurance.
Accidents
While accidents and their causes vary wildly, the general definition of an accident is an unfortunate incident that happens unexpectedly and unintentionally, typically resulting in damage or injury. Accident insurers may define accidents differently in their specific policies.
Common exclusions
Every insurer maintains a list of events and circumstances that void the insured's entitlement to his or her accident benefits. For example, accident insurance policies may exclude coverage for injuries sustained while the insured was intoxicated or committing an illegal act.
Accident insurance complements but does not replace health insurance. In the event of an accident resulting in an injury, a health insurance policyholder may still be responsible for out-of-pocket expenses. These may include copayments, deductibles, and coinsurance charges that must be paid by the insured before the health insurer pays any benefits. In the first half of 2018, almost half of Americans with health insurance had high-deductible plans--defined as plans with a deductible of at least $1,350 for an individual policyholder. Without accident insurance, the insured would be responsible for paying that full amount themselves before a health insurer began paying for care.
Disability insurance
Like accident insurance, disability insurance pays the insured directly if they are injured in a way covered by the policy. However, disability insurance only pays if the injury prevents the insured from working. Accident insurance benefits are paid whether or not the insured misses work as a result of the accident.
Individual plans are designed to cover a single person or family that is not purchasing accident insurance through an organization.
Group policies
Group accident insurance plans are those that are created to be sold through an employer or other incorporated organization. They are typically designed and priced for the group as a whole.
On-demand accident insurance
With on-demand accident insurance, the policyholder receives coverage the same day they apply for it. In addition, on-demand insurance providers may offer episodic insurance policies, which allow the policyholder to customize the term of the policy. The policyholder need only pay for coverage for as long as they need or can afford it. Prices generally correspond to the length of the term, with lower prices for shorter terms.
