Every day we read of accidents in the newspapers and thank our stars that we are not the victims. We do not pause to think of the repercussions, if we were ever to be in that situation. Accidental death or injury of a breadwinner can create serious financial problems for the family. Such an event could affect ones income completely or reduce the same by a great extent, either permanently or temporarily. Personal accident insurance helps to protect the insured from financial losses that would arise as a result of a sudden death or disablement due to accident.
Let us first understand the term “accident” and its meaning in the insurance context.
Accident usually denotes a sudden, unforeseen and an unexpected event caused by external, violent and visible means (but does not include any illness or disease), which results in physical bodily injury but does not include mental, nervous or emotional disorders, depression or anxiety.
What does a Personal Accident Policy cover?
Generally Personal Accident (P.A.) policies cover:
It provides for payment of compensation on the insured person’s death caused by bodily injury arising out of accidental, violent, external and visible means and resulting in death
Permanent Total Disability covers totally disabled for lifetime viz paralysis of all four limbs, comatose condition, loss of both eyes/both hands/both limbs or one hand and one eye and one leg or one hand and one leg.
Permanent partial disability cover means partially disable for lifetime e.g. loss of fingers, toes, phalanges etc.
Temporary Total Disability cover means totally disable for temporary period of time. This section of cover is intended to cover the loss of income during the disability period.
Generally, insurers devise tables [Premium rates] or plans [Details of coverage/benefits] covering a set of commonly needed contingencies and the amounts that are payable for such contingencies. Hence, it is not necessary for the proposer to ask for specific covers in respect of all these contingencies. There are some „add on‟ covers that some people may need while some may not. One can get these additional covers by paying additional premiums that are fixed by the insurance company. Examples for such covers are ambulance charges, education fund for kids, medical expenses, family transportation, imported medicines and funeral expenses.
There are certain other covers that are suitable for certain customer segments.
Normally, Personal Accident policies offer worldwide cover available on 24 hour basis. The entry age of insured may vary from 5 to 80 years or more as per company norms, with or without loading of premium for higher age brackets.
Some provisions which clarify the intent of the policy:
- If the same accident results in loss of hand as well as loss of life, the insurer will pay for the loss of life and not for loss of hand.
- If an accident causes a Temporary Total Disablement (TTD) as well as a Permanent Partial Disablement (PPD), the insurer will pay for the higher of the two benefits and not for both.
- Even if payment of compensation is possible under more than one claim involving different accidents under the same policy, the company‟s total liability is restricted to the sum insured.
- In respect of temporary total disablement, after the claim is admitted, the amount is usually paid in one lumpsum, rather than every week