What Is Accident Insurance? Coverage, Cost & Benefits

A broken bone from a weekend hike, a concussion from a bicycle accident, or a burn from a kitchen mishap can all lead to emergency room visits, follow-up appointments, and time away from work. Even with health insurance, you face out-of-pocket costs from deductibles, copays, and coinsurance. Accident insurance is a supplemental product that pays you cash when an accidental injury occurs, helping bridge the gap between what your health plan covers and what you actually owe.

Accident insurance is the most commonly offered supplemental benefit in the workplace, with about 46 percent of employers making it available to employees. This guide explains what accident insurance covers, how it pays, what it costs, who benefits most, and its key limitations.

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 cover illness or disease. Instead, it works alongside your health plan to provide extra money when an accidental injury requires medical attention.

The defining feature of accident insurance is its benefit schedule. Each type of injury or related medical event has a specific dollar amount assigned to it. When you have that injury, you receive that fixed payment regardless of your actual medical bills. For example, a fracture might pay $200 to $5,000 depending on the bone, a concussion might pay $200 to $500, and an emergency room visit might pay $100 to $250.

Accident insurance is classified as an excepted benefit under the Affordable Care Act. This means it is not subject to ACA regulations regarding essential health benefits, pre-existing conditions, or coverage requirements. Benefits are typically tax-free if you pay the premiums with after-tax dollars.

What Does Accident Insurance Cover?

Accident insurance policies include a benefit schedule listing specific injuries and events with their corresponding payment amounts. While the exact amounts vary by policy, most plans cover the following categories.

• Fractures (broken bones). Payouts vary by bone, typically $100 to $5,000. A broken finger pays less than a broken hip or femur. Fractures are the most commonly claimed accident insurance benefit.
• Dislocations. Joint dislocations such as a dislocated shoulder, knee, or hip. Benefits range from $100 to $3,000 depending on the joint involved.
• Burns. Second-degree and third-degree burns. Benefits depend on severity and the percentage of body area affected, typically $100 to $10,000.
• Lacerations. Cuts requiring stitches or surgical repair. Benefits are typically $50 to $400 depending on severity.
• Concussions. A diagnosed concussion from a blow to the head. Benefits are usually a flat amount of $200 to $500.
• Torn ligaments and tendons. Injuries like ACL tears or ruptured Achilles tendons, with additional benefits if surgery is required.

In addition to specific injuries, most policies also pay benefits for related medical events including emergency room visits ($100 to $250), ambulance transportation ($200 to $2,000 for air), 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), and physical therapy sessions ($25 to $75 per session).

Benefits are cumulative. A single accident can trigger multiple benefits. If you break your leg in a fall, you might receive separate payments for the fracture, the ER visit, the ambulance, the surgery, the hospital stay, and the follow-up visits. Each covered event triggers its own payment.

How Accident Insurance Pays: The Benefit Schedule

Accident insurance uses a benefit schedule that assigns a fixed dollar amount to each covered event. This is fundamentally different from health insurance, which pays based on the cost of your treatment. With accident insurance, your payout is predetermined and does not change based on your actual medical bills.

Consider an example. You fall while hiking and break your wrist. Your accident insurance benefit schedule might pay as follows: emergency room visit $200, X-ray $100, fracture (wrist) $500, follow-up visit $75, cast and medical device $100. Your total accident insurance payout would be $975. If your health plan has a $3,000 deductible, this payout covers about a third of it. Combined with whatever your health insurance pays toward treatment, the accident insurance cash helps reduce your net financial impact.

Who Benefits Most from Accident Insurance?

Accident insurance is not essential for everyone, but it is especially useful for certain groups of people.

• People with active lifestyles. If you regularly play sports, exercise, hike, ski, bike, or participate in physical activities, your risk of accidental injury is higher than average. Accident insurance is designed for this kind of exposure.
• People with high-deductible health plans. If your health plan has a $3,000 to $7,000 deductible, an unexpected accident can create a large out-of-pocket bill. Accident insurance helps cover that deductible with minimal premium cost.
• People in physically demanding jobs. Construction workers, delivery drivers, warehouse employees, landscapers, and others in physical jobs face a higher daily risk of accidental injury. According to the Bureau of Labor Statistics, private industry employers reported 2.6 million nonfatal workplace injuries in recent years.
• Families with young children. Children are active and accident-prone. Broken bones, concussions, and stitches are common childhood events. A family accident insurance plan helps offset the costs of these injuries.
• People without large emergency savings. If an unexpected $2,000 to $5,000 medical bill would cause financial strain, accident insurance provides a cash cushion at a very low monthly cost.

How Much Does Accident Insurance Cost?

Accident insurance is one of the most affordable supplemental insurance products available. Premiums are low because the benefits are fixed amounts per event rather than open-ended medical coverage.

• Employer-sponsored plans: $6 to $15 per month for individual coverage. $15 to $40 per month for family coverage.
• Individual policies: $10 to $50 per month for individual coverage. Family coverage ranges from $25 to $60 per month.

Unlike health insurance or life insurance, accident insurance premiums generally do not 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 as predictably as illness risk does. This flat pricing structure makes accident insurance an accessible option for people of all ages.

Limitations and Exclusions

Accident insurance has important limitations that you should understand before purchasing a policy.

• Accidents only, no illness. The most important limitation: accident insurance does not cover any illness, disease, or medical condition. A heart attack, cancer diagnosis, or infection gets no benefit, regardless of how serious it is.
• Fixed benefit amounts. You receive a set dollar amount per injury event, which may be less than your actual costs. The benefit schedule determines your payout, not your medical bills.
• Activity exclusions. Some policies exclude injuries from high-risk activities like skydiving, bungee jumping, hang gliding, or professional competitive sports.
• Intoxication exclusions. Injuries that occur while under the influence of drugs or alcohol are typically excluded from coverage.
• Time limits for seeking treatment. Most policies require you to seek medical treatment within 24 to 72 hours of the accident and file a claim within a specified time frame.

How Accident Insurance Complements Health Insurance

Accident insurance is designed to supplement health insurance, not replace it. When an accident occurs, the two work together. Your health insurance covers the medical treatment, paying doctors, hospitals, and pharmacies. You pay your deductible, copays, and coinsurance. Accident insurance then pays you a separate cash benefit for the injury and related medical events.

The cash from accident insurance can help cover your health insurance deductible, fill the gap until your health plan kicks in, replace lost income from missed work, or cover non-medical costs like transportation and childcare during recovery. The most common strategy is pairing accident insurance with a high-deductible health plan. The low accident insurance premium helps offset the financial risk of the high deductible. One moderate accident can generate enough benefits to cover most or all of your annual deductible.

The Bottom Line

Accident insurance is a simple, affordable supplemental product that pays fixed cash benefits when you are injured in an accident. It covers specific injuries like fractures, dislocations, burns, concussions, and lacerations, plus related medical events like ER visits, surgery, and physical therapy. It does not cover illness of any kind.

At $6 to $50 per month, it is one of the least expensive insurance products available. It is most valuable for people with active lifestyles, high-deductible health plans, physically demanding jobs, families with children, and anyone without substantial emergency savings. Review the benefit schedule, understand the exclusions, and decide whether the added protection fits your budget and lifestyle.