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Personal accident cover

Personal accident cover

Personal accident cover could provide compensation to the policy holder or their partner if either are injured or killed as a result of a car accident.

Some level of personal accident cover is usually included in comprehensive car insurance. Where it isn’t included, the additional cover can be bought as an optional extra as part of your car insurance policy or taken out as a separate policy entirely.

Daniel Hutson
From the Motor team
minute read
posted 24 JANUARY 2020

What does personal accident insurance cover me for?

Personal accident insurance doesn’t usually compensate for minor sprains and breaks. Generally speaking, payments are for ‘loss of' or 'loss of use of’ a part of your body and the payment amount depends on the type of injury sustained. Insurance providers offer different levels of personal accident cover. Some will cover multiple injuries, while others have larger amounts for single injuries. One thing almost all policies have in common though, is that they’ll only pay up to a certain amount.

What should I look for when taking out personal accident cover

Before taking out personal accident cover, you need to consider who the policy covers, whether or not the cover extends to injuries that may occur outside of the UK, as well as the scope of the cover.

  • Who will the policy cover? Personal accident insurance may cover an individual, a couple or the whole family
  • Where will I be covered? Will the policy only cover accidents that occur in the UK? Or will the insurance provider compensate for accidents that happen abroad as well?
  • What exactly am I covered for? Are you covered for accidents that occur while waiting for help to arrive? Does the insurance also cover accidents that happen on public transport?

What can invalidate personal accident cover?

Personal accident cover can be invalidated if accidents have occurred as a result of the policy holder driving while under an influence of drugs or alcohol, driving without a valid licence, driving without wearing a seatbelt, taking part in rallies, races or speed tests, or if the accident or injury has been self-inflicted.  

In these instances, the insurance provider does not have to pay out any compensation.

Do I already have personal accident cover?

If you have car, home or travel insurance, it may already come with personal accident cover. You can check this by reading through your insurance documents or contacting your insurance provider directly.

Should I consider taking out a separate personal accident insurance policy?

For the most comprehensive cover, it might be worth taking out a stand-alone personal accident insurance policy. 

If you don't have a separate policy, any cover you do have will potentially be an add-on or optional extra to a car insurance or travel policy for example. Because of this, it may be more limited about when the cover applies and potential exclusions. For example, your travel insurance will only offer you cover while you’re on holiday and not year-round, or your car policy will cover you in a car accident, but not any other kind of accident.

Add-ons can be also restrictive when it comes to who is covered. Some policies may only cover the policy holder and their partner, and it might not be as comprehensive as a stand-alone policy.

How much does personal accident cover cost?

Premiums for personal accident insurance depend on the level of cover chosen so, ultimately, it’s up to the policy holder to decide what’s important and how much they’re willing to pay.

When you compare car insurance quotes with Compare the Market, our easy to read tables will show you whether personal accident cover is included. So, be prepared and compare car insurance in minutes.

What is the personal injury discount rate and how does it affect personal injury claims?

Compensation paid out in personal injury claims is intended to ensure that the person making the claim (the claimant) is put in the same financial position they would have been in if they hadn't had a life-changing injury, to help people get their lives back on track. It’s calculated to cover any costs involved in the recovery from the injury and any long-term care. It includes loss of earnings, treatment and future care costs.

If the claimant's personal injury claim succeeds, they’re usually paid a lump sum in nine out of ten cases. The claimant is expected to invest and receive a return. The discount rate adjusts the amount of compensation paid out to take account of the expected return from the investment over time. The discount rate is also known as the Ogden rate. It’s set by the justice system – the Lord Chancellor and Ministry of Justice - and is applied consistently across personal injury claim calculations.

The discount rate is linked by law to the lowest rate investments, on the assumption that claimants wouldn't want to put their compensation at risk.  

The rate was changed in March 2017 and reduced from 2.5% to -0.75%. This means that insurance providers are having to pay out more in compensation claims, which in turn has potentially made personal injury and accident claims more expensive. According to the Association of British Insurers, this has implications for around 36 million motor insurance policies for both personal and commercial use, as well as employer's liability cover, by potentially pushing up the cost of premiums.

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