How accident insurance works

What a pain! I crashed on my bike, fell on my hand, and broke my wrist! Now I have to pay the full cost of care because my health insurance deductible is $5,000. If only there was an inexpensive policy I would have known about that would cover the costs of such accidental and unanticipated injuries.

There is just such a policy

Accidental injuries can happen at any time and can be a real pain, not just physically but financially as well. The average deductible on health insurance plans is over $2,000. That means that accidents can cost money that you otherwise might not anticipate having to spend.

Accident insurance can be purchased in many different amounts and usually costs less than $50 a month (usually closer to $30 to $40 a month) for at least $5,000 worth of coverage. You can also adjust the amount of coverage to match your major medical deductible (in $1,000 increments) so you will never have to worry about paying anything for costly accidental injuries.

As with critical illness insurance, there are two different types of insurance policies for accidental injuries: defined treatment and pure reimbursement. This can mean a big difference when it comes to how much you will get paid after an injury. I only write pure reimbursement plans.

Defined treatment plans

The difference is simple: under defined treatment plans you may still have to pay out of pocket depending on the treatment received. Most group accidental injury insurance plans pay out this way. That means the payment you receive may not depend on the type of injury or your costs, but it will pay according to a schedule, which pays fixed amounts depending on the treatment you receive.

For example, under a defined treatment type accident plan, if you get an x-ray you might get $135. The x-ray will likely cost $240 or more. This would mean you would have to pay the difference.

Pure reimbursement plans

Under a pure reimbursement plan, you would simply receive the amount that the treatment ends up costing you out of pocket, up to the coverage amount in place.

Under that type of policy, if the treatment for your broken wrist ends up costing a total of $1,500, the policy will pay that amount as long as you have at least that amount in coverage. This means it is a pure expense reimbursement plan.

Which amount would you rather have after an accident?

What counts as an accidental injury

Not all injuries would be considered accidents. In general, an accident is an unforeseen event that causes a bodily injury wholly independent of disease, illness, or any other physical condition, and an accidental injury is one that happens while your coverage is in force and results in care within 72 hours. Everyday strain from repeating the same activity does not count, but a sudden event does. A strained back or herniated disk from shoveling snow is not an accidental injury, while slipping on ice and breaking an arm is. A pitcher who develops a rotator cuff injury from pitching is not covered as an accident, while a batter hit on the wrist by a pitch who fractures it is. A jogger with ligament strain from the running routine has not had an accident, while one who misses a curb and fractures an ankle has.

If you want to talk through a specific situation, use the button below to send me a note through the contact form and I will give you a straight answer.