Personal accident insurance can provide valuable financial protection if you are injured in a car accident. Many comprehensive car insurance policies include some level of personal accident insurance as standard, but you can also purchase standalone policies.
Here, we explain exactly how personal accident auto insurance works and why you might need it.
What is personal accident car insurance?
Personal accident auto insurance will pay if you, your partner, or a named driver sustains a serious injury, becomes permanently disabled, or is killed in a car accident.
Money received from the payout can be used to cover medical expenses, as well as to replace any income you lose due to your inability to work due to your injury. Compensation can be paid to your family if the accident results in your death.
Policies will only pay up to a fixed amount which is tax free and usually paid out in one lump sum. However, in some cases, it can also be paid in regular installments over a fixed period.
What does personal accident car insurance cover?
The exact coverage of car insurance in the event of a personal accident depends on the policy and the insurer. But you will usually be able to make a claim for one of the following:
- Loss of fingers, thumbs or toes, hands or feet
- Loss of one or more limbs
- Loss of an eye or eyes
- Hearing or speech loss
- Permanent total disability
- Accidental death
Some policies will also cover you for broken bones, scars and burns.
Is personal accident cover included in my car insurance?
Personal accident auto insurance is included as standard in most, but not all, comprehensive auto insurance policies. However, coverage levels can be very limited, so you may prefer to pay extra to increase it.
Very few liability, fire and theft insurance policies will include personal accident cover as standard, and you will be hard-pressed to find third-party car insurance policies that include it.
What are the limits of personal accident auto insurance?
The amount you will receive from a personal accident insurance policy depends on the insurer. Many policies will offer a payout of around £5,000 as standard, others will offer up to £10,000. If you want a higher level of cover up to £100,000 you will need to pay extra.
Individual compensation will then vary depending on the severity of the injury – for example you could receive £6,000 for the loss of a finger, £30,000 for the loss of a hand or foot and up to £100,000 for hearing loss. or speech or accidental death.
Your policy documents will define the levels of coverage for different injuries.
What are the exclusions?
It is important to check the fine print of your font carefully to make sure you know what is included and what is not included. Although exclusions vary from policy to policy, relatively minor injuries such as sprains will generally not be covered, nor will physiotherapy or psychological trauma.
Some policies also have higher age restrictions, so you might not be covered if you’re over 80, for example.
Other exclusions are more likely to be related to your driving behavior. This means that you will not be covered if:
- You were driving without a valid license
- You were driving without wearing your seat belt
- You were driving under the influence of drugs or alcohol
- You were driving recklessly
- You participated in sports or running activities
- The injuries were self-inflicted – for example, if you crashed your car on purpose.
Finally, most personal accident insurance policies specify that the injury must be “solely and directly” caused by the accident. This means that if the death or injury was caused by an underlying illness, disease or medical condition, the policy is unlikely to pay out.
How important is personal accident insurance?
Individual accident insurance is not compulsory. But – especially if you’re on the road often – it can give you peace of mind that you’ll have a financial safety net if you need specialist medical treatment or are unable to work due to a car accident.
But it’s worth checking that you won’t double coverage first. For example, you may already have appropriate coverage in place, such as income protection (which pays if you were off work for an extended period) or life insurance (which would provide your family with a lump sum if you die prematurely).
You might even have enough savings to cover your expenses if you can no longer work.
What type of personal accident insurance policy?
If you think personal accident insurance would be helpful, check out what your existing car insurance policy provides — and how much it would cost to get more coverage.
It is also possible to purchase a stand-alone personal accident insurance policy which offers higher payouts, as well as a higher level of cover.
Compare what you would get with a standalone policy versus the coverage offered by your existing car insurance policy. In doing so, the following points should be checked:
- Who will be covered by each policy – some stand-alone policies may cover the whole family, for example
- The type of injuries for which you are covered
- What compensation you could receive
- If you will be covered for driving abroad as well as in the UK. This will be more important if you regularly travel in Europe with your car.
Once you’ve compared coverage levels, compare the price of each policy to determine which is best for you.