Minor accidents can result in major consequences
On average, an estimated 1.3 million business trips occur each day in the U.S.—a number that is only expected to grow1. These work-related trips are often the motive behind purchasing Personal Accident insurance. And for good reason; 20-50 million people are injured or disabled in road crashes alone each year2. Accidents, whether at work, play or even while mowing the lawn, can happen in an instant, but the consequences can last a lifetime.
After suffering a debilitating injury, or accidental death, accident victims may have difficulty earning an income or paying off costly medical bills—placing a heavy financial burden on their family. A comprehensive Personal Accident policy can limit a client’s exposure and ensure that they, and their families, can get through the challenge of an injury or loss of a loved one.
Personal Accident insurance defined
Lalita Mohabir, National Product Leader, Personal Accident/Special Risks Manager, Burns & Wilcox Canada, Toronto, Ont., defines Personal Accident insurance as policies that encompass a broad range of coverage, including death, dismemberment, paralysis, brain death, and loss of faculties such as speech or sight due to an accident. Mohabir notes that the insurance industry clearly defines an accident as any sudden, unexpected event that results in bodily injury at the time the event occurs, arises from an external source and occurs at an identifiable time and place.
“Personal Accident insurance is quite different from health insurance in that it does not focus as much on why an event occurred to dictate coverage,” said Mohabir. “Certain life insurance policies only issue reimbursement if death was of natural causes, and will not cover an accidental death.”
Perhaps one of the most significant differences for clients to note between Personal Accident insurance and other similar policies is how coverage is provided.
“A stand-alone Personal Accident policy will cover a claim regardless of the existence of any other policy covering the same loss,” said Mohabir. “Often times, life, health, or auto insurance policies only cover certain portions of the cost of a loss.”
Business need to protect vital employees
Personal Accident insurance can be purchased by an individual or an organization. Typically, an organization or employer offers it to key stakeholders such as employees, volunteers, media personnel, key persons, sports stars, or high-net-worth business professionals, to protect them in the event of an accident.
Personal Accident insurance is also used to protect human investments bound by contracts. The U.S. sports industry, for example, depends on the health and performance of its athletes and is a perfect example of the necessity of Personal Accident insurance. Personal Accident policies are often sought out by sports teams, sports clubs, or sponsors in order to protect the investment made on an athlete’s pre-paid contract with them. However, athletes can purchase coverage on their own as well.
Recently, professional golfer Dustin Johnson had an accident, slipping on the stairs at his rental home in Augusta, Georgia prior to the Masters golf tournament3. Unfortunately, Johnson had to withdraw from the competition due to back problems that persisted from the fall. In cases such as this, Personal Accident insurance would cover related medical expenses, contractual obligations, and protection for future income if the injury was career ending.
Know where clients are traveling
It is not enough for brokers and agents to simply know that a client’s business requires travel.
“Frequently, clients have Personal Accident coverage because of the likelihood of travel, but brokers are not always aware of where their clients travel to,” said Mohabir. “There may be exclusions in the current policy that prohibit or limit coverage depending on the place.”
Unfortunately, at least 48 journalists worldwide lost their lives on the job in 2016. Twenty-six of these journalists were covering conflicts in war-torn countries when this happened4.
A frequent gap occurring with Personal Accident insurance occurs when individuals are traveling to high-risk countries and they do not have war risk protection. Many Personal Accident insurance policies exclude travel to high-risk countries.
Brokers can play an important role by being aware of their client’s travel intentions and needs. Understanding travel exposure is important as it allows underwriters to assess whether individuals are traveling to volatile places and require war risk protection.
Brokers can customize policies
Brokers and agents often inquire whether it is possible to customize a plan to a client’s specific needs and budgets.
“Insurance companies are able to review a broad range of risks and occupations to design plans to suit the specific requirements of a client’s needs, and they have the potential to provide coverage on a multitude of circumstances,” said Mohabir.
Most Personal Accident policies can be purchased according to when the client wants to cover its stakeholders. Brokers and agents can cover their clients’ stakeholders in a multitude of ways including but not limited to: 24-hour business and pleasure; 24-hour business travel only; occupationally (during business hours), and; by adding war risk coverage within these time frames or as a stand-alone option.
Additionally, clients can determine varying types of coverage and limits they want to offer based on the hierarchical level their stakeholders have within their organization—they are not pigeon-holed into a one-size-fits-all policy. Brokers must simply help them understand that they need to justify some decisions, for example, high limits on lower level employees.
Guiding clients in understanding why Personal Accident insurance is necessary provides them with an added financial security in sudden and tragic circumstances. For businesses, this coverage is a relatively inexpensive, mutually beneficial option in the event of an accident that may take place on business travel.