Personal accident insurance is often overlooked. In fact, many people have never even heard of it. And yet arguably, personal accident insurance covers the most important asset that your business has.
Most people know that they need to get motor insurance if they use a car or a van. They realise that they need to insure their property against accidental damage or losses due to theft. They understand that they need to get liability insurance to cover them in case compensation claims are made against them. They’re aware that motor insurance and employer’s liability insurance are required by law.
All of these types of insurance are important because they protect you against unexpected losses. Without them, a business could struggle if something went wrong, and some businesses might not even survive some unexpected losses.
But none of these types of insurance cover the most important thing. And that “most important thing” is you.
What does personal accident insurance cover?
Personal accident insurance covers you if you are unable to work because you’ve been injured as a result of an accident. If you are unable to work you are unable to earn. Personal accident insurance replaces that lost income until you have recovered from your injury and are able to return to work.
Although this type of insurance is called “personal accident insurance”, it can be extended to include claims for income that you have lost because you were unable to work due to sickness, so it’s often called “personal accident & sickness insurance”.
If you’re only temporarily incapacitated, personal accident insurance pays a weekly benefit until you’re able to return to work. This replaces the wages that you’d have been able to earn had you been able to work. The weekly benefit means you are able to cover your regular outgoings without having to dip into your savings.
If your injury or illness means that you’ll never be able to return to work, personal accident insurance pays a lump sum. This could fund any retraining you need to enable you to take up a different occupation. It could also be used to adapt your house if you have been disabled as a result of an accident.
The cover operates on a 24-hour basis. This means that your injury or illness doesn’t have to be work-related. Even if you injure yourself when you’re not working, a personal accident insurance policy will still protect you against any resultant loss of income during your recovery period.
Personal accident insurance also pays a lump sum if your injury results in your death.
Why do you need personal accident insurance?
Unlike people in conventional employment, people who are self-employed don’t get sick pay. If they are unable to work, they are unable to earn.
Taking a couple of days off because you’ve got a bad cold is one thing. Although it’s never great to miss out on a day’s pay, most people could afford to go for a day or two without earning. If you’re self-employed it’s quite likely that you’re used to having the occasional day where you don’t earn anything anyway.
It’s an entirely different matter if you need to take a couple of months off because you’ve broken an arm or a leg, though. Even if you have savings, having to use those to pay the bills rather than using them to pay for a once-in-a-lifetime holiday or to buy something as a treat to yourself or your family is less than ideal.
Personal accident insurance doesn’t pay for your medical costs in the way that private medical insurance would. But knowing that the bills can be paid even though you’re unable to earn lifts a great weight from your shoulders at a time when you have other things to worry about.