What is a Personal Accident Insurance Policy?

Created on 12 Mar 2022

Wraps up in 5 Min

Read by 2.6k people

Updated on 13 May 2023

Accidents don’t come with a warning. From a stubbed toe to a lost limb, accidents come in all shapes, sizes and severities. While the former just needs some care and maybe a little first aid to help, the latter can be a bit more… inconvenient.

Although health insurance can cover the expenses one incurs when treating the after-effects of an accident, if the severity of the accident is significant, coverage of medical expenses isn’t the only worry people might face.

Grave injuries can often leave people disabled; either temporarily or permanently, or worse, dead. Either way, the injured person’s income is negatively affected during their period of disability.

To mitigate the loss of income for this period, personal accident insurance policies were created. These insurance policies are a mix of life and medical insurances with a few feature differences.

So let’s discover the ins and outs of personal accident insurance and how you can use them in your life.

Personal Accident Insurance Explained

The term accident is defined as, "a sudden, unintended and fortuitous external and visible event".

Personal Accident Insurance, as the name suggests, provides financial protection to the insured or their nominee. The policy covers the event of monetary loss arising out of total or partial, temporary or permanent disability or death.

These events are covered with one condition. These events are considered under the scope of this policy if they occur as a result of an accident. And what constitutes an accident?

Let's find the answer to that question and understand the definition of the term “accident” by segmenting it.

  • A sudden, unintended event: For an event to be called an accident, it needs to be unpredictable, i.e. there couldn’t be any pre-existent warnings or signs otherwise that could inform the insured person of the likelihood of the event’s happening.

When an event is unintended, it means that the insured did not face the mishap as a result of deliberate or intentional action.

  • Fortuitous: An event would be considered as an accident if it’s happening or non-happening is based completely on luck. Fortuitous means the event happens based on chance.

  • External: The source of the event should be external to the insured party for it to be an accident. This means that the event needs to be caused by factors that aren’t a direct consequence of the insured party’s actions.
    The event needs to be caused by forces or parties that are not the insured party themself.

  • Visible: An accident falls in the purview of this insurance only if its effect(s) are visible to others. This is to ensure that the accident is of significant severity. Such that it cannot be hidden from plain sight.

Now that we’ve seen what an “accident” means under the scope of this insurance policy, let’s see what are “disabilities” according to this insurance and which kinds are covered by it.

Types of Disabilities

Personal accident insurance classifies disabilities in the following categories:

  • Partial Disability: A partial disability causes the inability to use a body part or a sensory organ. This renders the victim of the disability to face difficulty in performing everyday tasks. The victim can still perform some occupations, although in a reduced capacity. For example, loss of hearing or sight in one ear or eye, loss of partial parts of or less than all fingers.

  • Total Disability: Total disability renders its victim completely unable to engage in an occupation in any capacity. For example, loss of both eyes or limbs.

These disabilities, based on the duration of the unemployment caused, can be classified as temporary or permanent disabilities. If a disability lasts for up to or less than 104 weeks or 2 years, it is classified as a temporary disability.

Temporary partial disabilities are not covered by personal accident insurance policies.

Coverage of Personal Accident Insurance

Personal accident insurance covers death, permanent (total and partial) disability, and total partial disability. These mishaps need to be accidental in nature to be valid for coverage. We’ve already discussed the requisites of an accident.

Events that are excluded from the purview of this policy are:

  • Natural Death

  • Death or injury/disability caused due to; self-injury or suicide attempts, intoxication or influence of drugs, drug addiction or alcoholism, adventure sports or hazardous activities, criminal activity, and war.

  • Death or injury/disability as a result of pregnancy or any complications in regards to pregnancy.

  • Death or injury/disability caused by participation in naval, military or air force operations.

  • Death or injury/disability suffered during the process of curative treatments.

  • Death or injury/disability arising from sexually transmitted diseases, HIV and related illnesses.

Cover for a Rainy Day

Checking your insurance status online is a very simple process. Most people look for recommendations on the insurance company as well as the cover amount.

The inconvenient part of the whole process is the necessity to supply large amounts of personal information for as little as a simple calculation of the cover amount necessary. The constant calls and the sales pitches that follow just add insult to injury.

Recipe by Finology understands that buying an insurance policy doesn’t need to be such an annoyance. With Recipe, knowing your insurance status is just a few clicks away. Login to your Finology account on the Recipe website, go to the “Prosperity Ingredients” section in your Dashboard and go to Insurance Planner.

Input the necessary data and the status of your insurance is just a click away. What’s more, is that after finding the weaknesses and strengths of your current insurance spend, you can make the necessary changes with Recipe’s recommendations. So swing by Recipe by Finology once you’re done with the blog and rest assured about your insurance game.

The Bottom Line

While personal accident insurance is not the greatest standalone policy due to its dependence on the eventuality of a chance based event, it serves as a great rider to a person’s existing policies. A rider, for those that don’t know, is extra features added to an existing policy to improve its cover.

So a life insurance policy with a personal accident policy rider could cover the risk of death very thoroughly. Similarly, a health insurance policy with a personal accident policy rider would be beneficial to make the hospitalization process hassle-free while securing the payment of the insured person.

Thus based on the insured party’s necessities, a personal accident policy can be very beneficial to have.

That is it for today’s article. Until next time.

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Deb P Samaddar

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If people could be named after idioms, Deb would be called "I'm all ears." His brain is a storehouse, ever overflowing with derelict information. So, while most things he talks about are as useless as occasion-less greeting cards, everything he writes has the potential of bagging you multiple diplomas!

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