Accident Insurance
A supplemental insurance policy that provides cash benefits for medical expenses, lost income, and other costs resulting from accidental injuries. Unlike health insurance, it pays predetermined amounts directly to the policyholder regardless of other coverage they may have.
Example
“After breaking her leg skiing, Maria received $1,500 from her accident insurance policy to help cover her deductible and lost wages during recovery.”
Memory Tip
Think 'CASH for CRASH' - accident insurance gives you cash when you crash or get hurt accidentally.
Why It Matters
Accident insurance helps fill the gaps left by health insurance deductibles, copays, and lost income during recovery from injuries. With high-deductible health plans becoming more common, accident insurance provides immediate cash to help families manage unexpected expenses without depleting emergency savings.
Common Misconception
Many people believe accident insurance replaces the need for health insurance, but it's actually supplemental coverage that works alongside existing health benefits. Others think it covers illnesses, when it specifically excludes sickness and only covers accidental injuries.
In Practice
A teacher with a $3,000 health insurance deductible purchases accident insurance for $25 monthly. When she fractures her wrist in a bicycle accident, her accident policy pays $250 for the emergency room visit, $100 per day for 3 days of hospitalization ($300 total), and $150 for the required surgery. She receives $700 directly to help offset her health insurance deductible and missed work days, while her health insurance covers the remaining medical costs after she meets her deductible.
Etymology
First offered in the United States in 1864 by the Travelers Insurance Company, the term combines 'accident' from Latin 'accidere' (to happen) with 'insurance' from Latin 'securus' (secure).
Common Misspellings
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Related Terms
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See Also
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