Accident Insurance: What It Covers and Is It Worth It?

Accidents happen when you least expect them. A broken bone from a fall, a concussion from a car accident, or a burn from cooking can lead to emergency room visits, follow-up appointments, and time off work. Health insurance covers the medical treatment, but it does not cover the deductibles, copays, and lost wages that come with an unexpected injury. Accident insurance is a supplemental product designed to help with those costs.

What Is Accident Insurance?

Accident insurance is a type of supplemental insurance that pays you a fixed cash benefit when you are injured in a covered accident. It is not health insurance and does not replace it. Instead, it works alongside your health plan to help cover the financial impact of an accidental injury.

The key feature of accident insurance is its benefit schedule. Each type of injury has a fixed dollar amount assigned to it. If you have that injury, you receive that amount, regardless of your actual medical bills. For example, the policy might pay $250 for a fracture, $500 for a dislocation, $100 for an emergency room visit, and $1,000 for a hospital admission due to an accident.

You receive the cash directly and can use it for anything. Many people use it to cover their health insurance deductible, pay for copays, replace lost income from missed work, or pay everyday bills while recovering. Accident insurance is commonly offered as a voluntary benefit through employers, but you can also buy it as an individual policy.

What Accident Insurance Covers

Accident insurance policies list specific covered events and the benefit amount for each. While the exact schedule varies by policy, most accident insurance plans cover the following types of injuries and related expenses.

Common Covered Injuries

• Fractures. Broken bones are one of the most commonly claimed accident benefits. Payouts vary by which bone is broken, typically ranging from $100 to $5,000. A broken finger pays less than a broken femur.
• Dislocations. Joint dislocations such as a dislocated shoulder or knee. Benefits typically range from $100 to $3,000 depending on the joint.
• Concussions. A diagnosed concussion from a blow to the head. Benefits are usually a flat amount, such as $200 to $500.
• Burns. Second-degree and third-degree burns. Benefits often depend on the severity and the percentage of body surface affected.
• Lacerations. Cuts that require stitches or surgical repair. Benefits are typically $50 to $300 depending on the severity.
• Torn ligaments and tendons. Injuries like ACL tears or ruptured Achilles tendons. Some policies pay for the injury itself, and additional benefits may apply if surgery is needed.

Related Covered Events

Beyond the specific injuries, most accident insurance policies also pay benefits for related medical events and services.

• Emergency room visit: $100 to $250 per visit
• Ambulance (ground): $200 to $500
• Ambulance (air): $1,000 to $2,000
• Hospital admission: $500 to $1,500
• Hospital daily stay: $100 to $300 per day
• Surgery: $500 to $2,000
• Follow-up doctor visits: $50 to $100 per visit
• Physical therapy: $25 to $75 per session
• Medical devices (crutches, wheelchair): $50 to $300

Benefits are cumulative. If you break your leg in a fall, you might receive benefits for the fracture, the emergency room visit, the ambulance ride, the hospital stay, the surgery, and the follow-up visits. Each covered event triggers its own separate payment.

How Accident Insurance Pays: The Benefit Schedule

Accident insurance uses a benefit schedule that lists each covered event and its fixed payment amount. This is different from health insurance, which pays based on the cost of your medical care. With accident insurance, the payment is predetermined and does not change based on your actual expenses.

For example, suppose you are playing soccer and twist your knee badly enough to tear your ACL. Your accident insurance benefit schedule might look like this:

• Emergency room visit: $200
• Diagnostic imaging (MRI): $200
• Torn ligament: $400
• Surgery: $1,000
• Follow-up visits (4 visits): $300
• Physical therapy (10 sessions): $500

Total accident insurance payout: $2,600. This money goes directly to you, separate from whatever your health insurance covers for the medical treatment. If your health plan has a $3,000 deductible, the $2,600 accident insurance payout covers most of it.

Accident Insurance vs. Health Insurance

It is important to understand that accident insurance is a supplement to health insurance, not a replacement for it. Here is how they differ.

• Health insurance covers the cost of medical treatment for both injuries and illnesses. It pays doctors, hospitals, and pharmacies. You pay deductibles, copays, and coinsurance.
• Accident insurance pays you a fixed cash amount per injury event. It only covers accidents, not illness. The cash goes to you, not to providers. You use it however you want.

Accident insurance does not cover preventive care, doctor visits for illness, prescriptions for ongoing conditions, hospital stays for non-accident reasons, or any other medical needs unrelated to accidental injuries. You should never rely on accident insurance as your only coverage.

Accident Insurance vs. Disability Insurance

Accident insurance and disability insurance both address the financial impact of an injury, but they work very differently.

Disability insurance replaces a portion of your income, typically 50 to 70 percent, if you are unable to work due to illness or injury. It pays monthly for as long as the disability lasts. It is broader protection for income loss.

Accident insurance pays a one-time, per-event cash benefit for specific injuries. It pays regardless of whether you can work. It is narrower but provides immediate cash after an accident.

Disability insurance is more important for long-term financial protection. Accident insurance is a simpler product that helps with the immediate financial impact of an injury. If you can only choose one, disability insurance provides broader coverage.

Who Should Consider Accident Insurance

Accident insurance is not essential for everyone, but it can be a smart addition for certain people and situations.

• People with high-deductible health plans. If your health plan has a $3,000 to $7,000 deductible, an unexpected accident can create a big out-of-pocket bill. Accident insurance helps cover that gap.
• Active individuals and athletes. If you regularly play sports, exercise, hike, ski, bike, or participate in other physical activities, your risk of accidental injury is higher.
• Families with young children. Kids are active and accident-prone. Broken bones, concussions, and stitches are common childhood events. A family accident plan can help offset the costs.
• People in physically demanding jobs. Construction workers, delivery drivers, warehouse workers, and others with physically active jobs face a higher daily risk of accidental injury.
• People without large emergency savings. If an unexpected $2,000 to $5,000 medical bill would strain your finances, accident insurance provides a cash cushion.

Cost of Accident Insurance

Accident insurance is one of the most affordable supplemental insurance products available. Premiums are relatively low because the benefits are fixed amounts per event, not open-ended medical coverage.

• Employer plans: $5 to $15 per month for individual coverage, $15 to $40 per month for family coverage.
• Individual plans: $10 to $30 per month for individual coverage, $25 to $60 per month for family coverage.

Unlike health insurance, accident insurance premiums do not typically increase significantly with age. A 50-year-old often pays the same or only slightly more than a 30-year-old. This is because accident risk does not rise with age the way illness risk does.

Limitations and Exclusions

Accident insurance has important limitations you should understand before buying.

• Accidents only. No coverage for illnesses, diseases, or medical conditions. If you have a heart attack, that is not an accident.
• Fixed benefit amounts. You get a set amount per event, which may be less than your actual out-of-pocket costs. The benefit schedule determines your payout, not your bills.
• Pre-existing condition exclusions. Injuries related to a pre-existing condition may be excluded. For example, if you have a known knee problem and injure the same knee, the claim could be denied.
• Activity exclusions. Some policies exclude injuries from high-risk activities like skydiving, bungee jumping, or professional sports. Read the exclusions list carefully.
• Intoxication exclusions. Injuries that occur while under the influence of drugs or alcohol are typically not covered.
• Time limits on filing. Most policies require you to seek medical treatment within a certain time frame after the accident, often 24 to 72 hours, and file a claim within a specified period.

Buying Through an Employer vs. Individual Plans

You can get accident insurance in two main ways: through your employer as a voluntary benefit or by purchasing an individual policy directly from an insurance company.

Employer Plans

Employer-offered accident insurance is usually the most convenient and affordable option. Premiums are deducted from your paycheck, often on a pre-tax basis. Enrollment is simple during open enrollment. Many employer plans offer guaranteed acceptance with no health questions. Group rates tend to be lower than individual rates.

The downside is that employer plans may be less flexible. You cannot customize the benefit schedule, and if you leave your job, you may lose the coverage. Some policies are portable, meaning you can keep them after leaving your employer, but this is not always the case.

Individual Plans

Individual accident insurance policies are available directly from insurance carriers. You can buy them at any time, regardless of employment status. Individual plans may offer more flexibility in benefit amounts and coverage options. They are also portable since the policy belongs to you, not your employer.

The trade-off is that individual plans typically cost slightly more than employer group plans. You may also need to answer health questions during the application process.

Is Accident Insurance Worth It?

Whether accident insurance is worth the cost depends on your individual situation. Consider these factors.

• Your health plan deductible. If your deductible is $500 or less, accident insurance may not add much value. If your deductible is $3,000 or more, accident insurance can help cover that gap after an injury.
• Your activity level. Active people and families with children use accident insurance more frequently than sedentary individuals.
• Your savings. If you have a solid emergency fund, you can self-insure against accident costs. If not, accident insurance provides a financial buffer.
• The premium cost. At $5 to $15 per month, the cost is low enough that a single moderate accident can pay back years of premiums.

The most common use case is pairing accident insurance with a high-deductible health plan. The low accident insurance premium offsets the financial risk of the high deductible. One broken bone can generate enough accident insurance benefits to cover most or all of your deductible.

The Bottom Line

Accident insurance is a simple, affordable supplemental product that pays cash when you are injured in an accident. It works alongside your health insurance to help cover deductibles, copays, and non-medical expenses that come with an unexpected injury. It is not a substitute for health insurance, and it does not cover illness.

Accident insurance is most valuable for people with high-deductible health plans, active lifestyles, families with children, and those without large emergency savings. At just $5 to $15 per month for individual coverage, the cost is low relative to the potential benefit. Review the benefit schedule, understand the exclusions, and decide whether the added protection fits your financial plan.