Is Accident Insurance Different Than Health Insurance?

Insurance provides a safety net in the event something occurs that puts you out of commission. There are several fundamental differences between accident coverage and health coverage. Knowing the differences between the two policies will help you choose the best one for your current situation.

How They Pay

• A primary difference between health insurance and accident insurance is the method by which they pay out when a claim is filed. With accident insurance, you pay premiums each month and if you have an accident, you call your agent and file a claim. The insurance company quickly evaluates the claim and if it is found to be valid, you are issued a check for a predetermined amount of money. Health insurance, on the other hand, typically provides ongoing payments paid directly to various health providers in the event you have a covered accident or illness.

What They Cover

• Health insurance is generally more broad-based than accident insurance. It covers most situations in which you would see a health care provider. Examples of situations covered by health insurance include illness, injury due to accidents, prenatal care, and in some cases, mental health coverage. Accident insurance only goes into effect in the event of an accident. Examples of what accident insurance covers include falling down the stairs, cutting oneself while cooking, losing a limb in a farm machine and accidentally falling through a plate glass window. Illnesses are not covered under accident insurance; however, accident injury care is typically covered under health insurance.

Exclusions

• The two types of insurance differ in many of their exclusionary policies, in that health insurance generally has more exclusions. An accident policy usually includes a rider excluding coverage if you are injured while you are committing a crime, take part in extremely high risk behavior in which a reasonable person would not take part in or commit suicide. Suicide exclusions are sometimes limited to the first two years of the policy. Health insurance policies usually exclude all of the same things accident policies exclude but if state law allows, also exclude pre-existing health conditions. Pre-existing conditions mean you had the disorder or issue before signing on to the policy. Heart disease, diabetes, cancer, pregnancy and other physical problems are examples of pre-existing conditions.

Cost

• Health insurance is almost always more expensive than accident coverage because health insurance covers so much more. With accident insurance you get a one time, pre-determined payout following a qualifying event. Health insurance, though it may have a lifetime cap, usually pays out over time and covers illness as well as accidents. Lifetime caps on many policies are between $1 million and $5 million. The risk is much higher to the insurance company; therefore, they charge more for your coverage.