Personal accident cover

It’s the last thing anyone wants to dwell on when we get behind the wheel. But personal accident cover could provide compensation to you, your partner or even your passengers if they’re injured or killed in a car accident.

Some level of personal accident cover is usually included in comprehensive car insurance. If it’s not, you should be able to add it on to your car insurance policy or take out a separate policy.

Kate Hughes

Insurance expert

minute read

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Last Updated 8 SEPTEMBER 2022

What does personal accident insurance cover me for?

Personal accident insurance is all about dealing with the financial fall-out after a serious injury. We’re not talking about claiming for something you could shrug off with a stretch and a couple of paracetamol. It won’t compensate you for minor sprains, for example, or even some broken bones. And it won’t usually cover you for any psychological trauma you suffer as a result of an accident.

Personal accident payouts are normally for ‘loss of life’ or ‘loss of use of’ a part of your body, and the payment amount depends on the type and severity of the injury sustained.

The payment is designed to cover the expenses incurred as a result of an accident - like specialist medical treatment and physical therapy. Crucially, it can also help cover any lost future earnings if you or your partner are no longer able to work as a direct result of the injury you’ve sustained.

Insurance providers offer different levels of personal accident cover – also called personal injury 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

The first things to think about when it comes to personal accident cover are who the policy covers, whether the cover extends to injuries that may occur outside of the UK, and the scope of the cover.

Who will the policy cover? Many people don’t realise that personal accident insurance may cover an individual, a couple or even the whole family.
Where will I be covered? Will the policy only cover accidents that happen in the UK? Or will the insurance provider compensate for accidents that happen abroad as well?
What injuries will be covered? Will you get compensation if you lose your hearing? Or if you lose a finger or toe? Grizzly as it is, make sure you read the fine print.
What situations am I covered for? This might seem straightforward, but it could really trip you up. Are you covered for accidents that happen while waiting for help to arrive, for example? Or getting in and out of your car?
How much am I covered for? Personal injury policies usually pay out a fixed lump sum for specific injuries – for example £8,000 for the loss of an eye. But the lump sum amount offered can vary a lot between providers, so it’s worth comparing a few options.

Top tip:

We’re infamously rubbish at estimating the value of our health, care and rehabilitation costs and the effect on future earnings when it comes to insurance. So when trying to work out how much you want your cover to be worth, go through the consequences of an accident systematically to come up with a number. Start with the direct implications and immediate financial consequences of each serious injury, from that lost eye, hand or limb right up to passing away, before moving on to the longer term knock-ons. Don’t forget that you may have other policies that could impact your circumstances or those of your family, such as life insurance provided by your employer.

What can invalidate personal accident cover?

Your personal accident cover can be invalidated, under certain circumstances, for example, if:

You have an accident while driving while under the influence of drugs or alcohol.
You’re driving without a valid licence.
You’re driving without wearing your seatbelt.
You’re taking part in rallies, races or speed tests.
The accident or injury has been self-inflicted or is death by suicide.

In these instances, the insurance provider does not have to pay out any compensation, and probably won’t.

Most personal accident policies specify that the injury must be “solely and directly” caused by an accident. They will typically have an exclusion for death or injury that’s been caused by sickness, disease or any naturally occurring condition. For example, a lower limb amputation resulting from diabetes would not count as an accident.

Top tip:

If you’re concerned about broader risks to your or your family’s health, wellbeing and finances as a result of sickness or disease, it’s worth considering other kinds of personal protection policies, like critical illness and/or health or life insurance.

Do I get personal accident cover with my car insurance?

If you have comprehensive car insurance 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 standalone 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. In which case, watch out because it may be more limited. For example, your travel insurance may only offer you cover while you’re on holiday and not year-round, or your car policy might cover you in a car accident but not any other kind of accident.

If you work in a risky occupation – maybe you’re a farmer who uses heavy machinery or you work in construction – or you enjoy fun but risky hobbies, such as rock climbing, sailing, mountaineering or horse-riding, having a standalone personal accident policy that covers these activities could give you peace of mind.

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

How much does personal accident cover cost?

As you might have guessed, premiums for personal accident insurance depend on the level of cover you choose and other factors – such as your age, where you live and your claims history. Ultimately, that means it’s up to you to decide what’s important and how much you’re willing to pay – whether you opt for a standalone policy or an add-on to a vehicle or travel policy.

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

How much will I receive if I have to make a claim?

Remember that ‘£8,000 for an eye’ chat? Your personal accident policy will set out exactly how much you should get in a particular set of circumstances or for a particular type of injury. You could be paid £10,000 for the loss of a leg in an accident, for example. That’s why it’s so important to consider the level of cover when choosing your policy. You can see why some claim payouts can and do quickly run into hundreds of thousands of pounds.

Meanwhile, if the accident was caused by someone, you may also be able to take them to court and sue them for compensation for the injury caused to you. That’s a completely separate action to your insurance claim though.

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

Right, this is the other important bit.

As we know, compensation paid out in personal injury claims is intended to make sure that the person making the claim (the claimant) is put in the same financial position they would’ve been in if they hadn’t had a life-changing injury.

It’s calculated to cover any costs involved in the recovery, from the injury to any long-term care – including loss of future earnings, treatment and future care costs.

If the claimant’s personal injury claim succeeds, they’re usually paid a lump sum. The claimant is expected to invest that amount to cover their future needs and it’s their responsibility to manage the pay out appropriately.

The discount rate is also known as the Ogden rate. It’s set by the UK Government, specifically the Lord Chancellor and Ministry of Justice, and is applied consistently across personal injury claim calculations.

But the cost of goods, services and everyday life changes over time, so the discount rate adjusts the amount of compensation paid out to take account of inflation and interest rates that could affect the investment over time.

The discount rate is also known as the Ogden rate. The good news, though, is that this is one thing that doesn’t vary between providers. In fact, the rate set by the UK Government - specifically the Lord Chancellor and Ministry of Justice - and is applied consistently across personal injury claim calculations.

The discount rate in 2022 is -0.25% in England and Wales, -0.75% in Scotland and -1.75% in Northern Ireland.

If the discount rate is set too high, a claimant could lose out because the value of their compensation would not keep up with inflation. On the other hand, if the discount rate is set too low, the claimant could end up with a larger compensation payout over time than intended.

Before March 2017, the discount rate was much higher, at 2.5%, but it was lowered to reflect falling interest rates. This lower discount rate benefits claimants, but it means that insurance providers are having to pay out more in compensation claims, which in turn may mean higher car insurance personal accident premiums.

How do I make a personal accident car insurance claim?

Like any insurance claim, it’s important to follow a series of prescribed steps to make the process as straightforward as possible and to give you the best chance of your claim being successful.

First, you or your representative should notify your insurance provider about the accident as soon as possible.

Your insurance provider will advise you about the next steps in the claims process, but it’s important to keep copies of any evidence or documentation you may need to support your claim from the start, even if they don’t ask for them. You should also keep any receipts for expenses you’ve incurred as a result of the accident.

Top tip:

It’s also worth putting together a document for your own use listing every call, letter or email exchanged between you and your insurance provider, including a few notes on the details of that communication, so you can quickly see where you’re up to and what’s happened so far. The claims process can be complex and involve a lot of paperwork, so a document like this could help avoid confusion.

Your insurance provider will check to make sure that the claim is valid under the terms and conditions of the policy, for example, you weren’t driving under the influence of drink or drugs and that you were wearing a seatbelt. If you’ve broken these terms then your insurance provider won’t pay your claim.

Remember, if you want to make a claim for compensation against whoever caused the accident, this is a separate matter and you’ll need to take specialist legal advice. If you have legal expenses cover talk to your provider and explain your situation.

Read our guide to find out more about the car insurance claims process or find out what you can do if your claim is rejected.

Frequently asked questions

Will I get personal accident compensation if a car accident was my fault?

If the car accident wasn’t your fault, then the driver at fault’s car insurance policy should pay out for any personal injury compensation claims. If you were at fault for the accident and you have personal accident cover with your car insurance policy, you should be able to claim for the policy benefit amount – so long as your injury or loss qualifies under the terms of your insurance and you didn’t break any of the conditions of your cover by, for example, driving while under the influence or not wearing your seatbelt.

Do I need personal accident cover on my car insurance policy?

It’s not mandatory, but it could provide peace of mind that you have financial backup to help take care of your family should the worst happen or an injury prevents you from returning to work. It could help pay for sophisticated prosthetics if you lose a limb or adaptions to your home if you become a wheelchair user, for example.

In the UK, we’re lucky to have the free healthcare provided by the NHS, as well as an Employment and Support Allowance (ESA) to help those with illness and disabilities who are unable to work. However, you’ll currently get a maximum ESA of £117.60 per week. The compensation from a personal accident insurance claim could help with a cash payout, typically in the range of £2,500 to £10,000 – but you can opt for higher levels of cover up to £100,000, however you’d probably be paying higher premiums for this higher level of cover.

To decide if personal accident cover is a good choice for you, ask yourself:

Do you have any income protection or life insurance policies already in place that could help you cope financially if an accident prevented you from returning to work for an extended period of time, or if you or your partner were killed in an accident?
Have you got enough savings in place to cover expenses and outgoings if you’re unable to work because of an injury sustained in a car accident?
Can you afford to pay for a standalone personal accident policy? Could you add on personal accident cover to your car insurance? Or would you get a better deal if you opted for comprehensive car cover instead?

What types of injuries will car personal accident insurance cover?

It depends on your policy, but most personal accidents will cover the following:

Losing one or more of your limbs (if they have to be amputated)
Losing the use of your limbs (due to paralysis)
Total disableme
Permanent blindness in one or both eyes
Death.

Some car personal accident policies may also offer a higher level of cover for injuries, such as:

Losing your hearing
Losing your speech
Losing fingers or toes
Burn damage and scarring.

However, this level of cover doesn’t come as standard and will likely come at a higher cost. Read the terms of any policy carefully before you buy and compare what’s out there to find the right cover for you.

If I don’t have car personal accident cover can I still claim compensation for injuries sustained in a car accident?

Yes, even if you don’t have personal accident cover, you still have the right to claim compensation for personal injury through legal action –if the accident wasn’t your fault . You’ll need to get legal advice as soon as possible after the accident as there are strict time limits in place for claims. Pursuing a personal injury claim through the courts can be expensive though, which is why some people prefer to make sure they’re covered in advance. Legal expenses insurance could help you here if you have it included in your car policy.