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What is Accident Insurance?
David Vogeleer avatar
Written by David Vogeleer
Updated over a week ago

What is Accident Insurance?

Accident insurance provides benefits to the policyholder if they are hurt unexpectedly. In the US, most accident insurance is designed to be sold as supplementary coverage to an existing health insurance plan. Accident insurance is typically considered to be part of the category of insurance products called accident and health.

What is an Accident?

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." If you’re considering accident insurance, it’s important to understand how an insurance company defines an accident.

Typical Accident Insurance Benefits

Most accident insurance provides benefits to the policyholder in the case of certain events like staying in a hospital or in the case of certain injuries or categories of injuries like a broken bone.

The benefits of accident insurance are meant to give a policyholder extra financial protection if they are hurt unexpectedly.

Why Would Someone Buy Accident Insurance?

There are many reasons to consider accident insurance. As with any insurance, the coverage is designed to protect the policyholder if they experience an adverse event.

High Deductible Health Insurance

In the US, it is now common for health insurance plans to have a high deductible. A deductible is the amount that the policyholder is responsible for paying before the insurance company begins to pay any benefits.

High deductible health insurance plans are increasingly provided by both employer-sponsored plans and individual health insurance policies. Many Americans now have health insurance deductibles that are $2,000, $3,000, $4,000 or more. When this amount becomes larger than someone would want to pay in the event of an accident, accident insurance is a way to add extra protection and offset those costs.

Protecting a Budgeted Income

Many of us manage our expenses through responsible budgeting, and when we’ve worked, saved, and invested wisely, regular cash flow is the reward. Accidents can disrupt our finances and our ability to earn.

Accident insurance provides a bite-sized way to create an extra cushion if something unexpected happens. It’s easier to manage the relatively small cost of insurance over time compared to the unknowable burden of accident-related expenses.

Protecting an Active Life

Some activities are more prone to accidents than others. While we do our best to manage the risks of accidents, it’s not always possible to prevent them. Sometimes the very activities that make life interesting and exciting are the same ones that introduce this risk.

For those who are more active than the average person, an accident policy is a worthwhile consideration. The same benefits that pay in the event of a day-to-day accident can also provide extra coverage in the case of a sports or activity-related accident.

Accident insurance can offset the costs associated with an injury.

How Is an Accident Insurance Plan Structured?

There are generally two types of insurance plan structures, and accident insurance adheres to these forms. Plans are typically sold either as individual accident insurance plans or as group accident insurance plans.

Individual Plans

As you might expect from the name, individual plans are designed to cover a single person or family that is not purchasing through an organization. Individual accident insurance plans are able to be purchased in a standalone manner, and they are not beholden to a master group in their rate, term, or design.

Group Plans

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 population of the group, and they take into consideration that the group will have some level of participation in the plan.

On-demand Accident Insurance

On-demand accident insurance is a new way to provide the traditional benefits of an accident insurance plan in a way that can be customized in length of coverage. Buddy has created the first and only on demand accident insurance product available today, and you can read more about it here.

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