Accident insurance is a kind of supplemental insurance, which means it fills in the gaps of your other policies, like your disability insurance or health insurance. It pays out if you’re unexpectedly injured, like if you’re in a car accident or hurt your back falling off a ladder. You can use the payments on medical costs and out-of-pocket expenses that aren’t already covered by your health insurance.
Accident insurance can be worth it, especially if you get it through work, but if you already have both health and disability insurance coverage, there might be other, better uses for your premiums.
How does accident insurance work?
Accident insurance pays out cash benefits that you can use to cover expenses related to an injury or an emergency room visit if you’re unexpectedly injured.
An accident insurance policy pays different amounts of money for different kinds of injuries — the benefit amounts will be spelled out in your policy documents. Generally the more serious the injury, the more money you’ll get.
Accident insurance payouts go directly to you, you can use the money to help cover the cost of any expenses not already covered by health insurance, like:
Transportation to a hospital
X-rays, MRIs, and more
Rehabilitation or physical therapy after an accident
Health insurance deductibles
Day-to-day expenses after an accident
Is accident insurance worth it?
It depends in large part on your health insurance. You might want to consider accident insurance if your health insurance plan has gaps that leave you open to out-of-pocket costs that you can’t afford.
Accident insurance might also be worth it if you have a high-deductible health plan, since you can file a claim with your accident insurance after an injury and then use the benefits to cover your health insurance deductible.
It’s probably not worth getting accident insurance if you:
Have a comprehensive health insurance plan with low deductibles
Have chronic health conditions and get regular medical care
Prefer to put your premiums into an emergency fund
Can afford to pay for expenses related to accidents yourself
→ Read why it might be more worthwhile to get disability insurance
How much does accident insurance cost?
Accident insurance is typically pretty cheap, usually less than $50 a month, and often less than $10 a month if you’re young and healthy.
Many employers offer accident insurance as an employee benefit. You can sign up for coverage during open enrollment or when you start a new job at the same time you opt into your health insurance and group disability insurance.
You can also buy accident insurance coverage yourself — Aflac is probably the best known seller of accident insurance.
What is the difference between accident insurance and disability insurance?
You can use accident insurance to pay for a variety of different expenses after an injury, but it’s a specific kind of supplemental insurance, not a type of disability insurance.
Disability insurance replaces your income if you’re injured or become ill and can’t work. With accident insurance, you can receive benefits while you can still work. Other ways that accident insurance is different are:
Accident insurance pays out a one-time lump-sum benefit, while disability benefits are monthly and can last for years.
Accident insurance pays out set amounts for different types of injuries, while your disability benefits depend on your income.
Accident insurance benefits are a lot lower than what you’d get from disability insurance.
Accident insurance doesn’t have an elimination period, so you can receive your benefits right after an accident.
Examples of accident insurance in action
Let’s say you’re in a bike accident and break your wrist. You have health insurance, but you haven’t met your out-of-pocket max and your deductible for surgery to repair your wrist is $1,500.
To avoid using the money in your health savings account, you can make a claim with your accident insurance. If your policy has a maximum benefit of $500 for broken bones, you can use that to pay part of your health insurance deductible.
Or say instead that you can afford to pay your deductible, but you can’t do your regular job for a month while you recover from the surgery you needed to repair your wrist.
Even if you have short-term disability insurance, you can use your accident insurance benefits to help pay for any necessary expenses while you wait for your disability policy’s elimination period to pass.
