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How Accident Insurance Supports Your Financial Wellness

Natalie Burg

You’ve heard it said from an early age: Accidents happen. It means something different when you’re a kid spilling milk than it does as an adult with a financial future to protect.

Stephani Victor, shared her story with The Council for Disability Awareness (CDA). At 26, the healthy, active film-school graduate was in a car accident. To save her life, doctors amputated both of her legs. After three years and 11 surgeries, she had $250,000 in medical bills—even with health insurance.

While Victor’s case may be extreme, costly accidents happen every day.

Average costs of injuries requiring medical attention: Work injury cost $41,000. Outside of work cost $12,700.

The National Safety Council

The risk and cost of accidents may be high, but Accident insurance can help ease the financial burden. It covers accident-related expenses that may not be covered by your Health or Disability insurance. Here’s how Accident insurance can play an important role in your financial wellness.

The Cost of Accidents

Even with Health insurance, being injured in an accident can be expensive—sometimes catastrophic.

66.5% of U.S. bankruptcies were due to a medical issue.

2018 American Journal of Public Health study

One reason why those expenses are high is that people are paying higher deductibles for their Health insurance.

“Employees often need to pay a large deductible before their health insurance begins paying,” says Liz Supinski, director of research projects and insights for the Society for Human Resource Management (SHRM). “With Accident insurance, the money paid to the individual can be used to help pay for the deductible, thus limiting the impact to their savings and personal finances. Without Accident insurance, they would need to pay that large deductible out-of-pocket, not to mention all the other potential expenses that often accompany an injury.”

An Accident insurance policy is only based on your risk of being in an accident. That’s much easier to determine because it’s not based on your health history.

“The premiums are also very low, so it is inexpensive for workers,” she says. “It is usually a voluntary benefit that employees can select if they desire additional coverage to help fill potential gaps in their other medical plans.”

How Accident Insurance Supports Financial Wellness

For a relatively low cost, Accident insurance can have a big role to play in your financial well-being.

Think of your financial security as a house.

Your Health insurance might be the roof, and your Disability insurance might be the walls. They are designed to do most of the work to keep you sheltered. But during certain weather, it’s important to have strong windows in place too. Accident insurance is like your windows. It protects you from the financial risks that aren’t covered by other insurance policies.

Accident insurance covers things outside of medical costs, too, as long as they’re related to your injury, such as:

  • alternate transportation
  • childcare during your medical appointments
  • a hotel if your hospital is far from your home

If you’ve never had a serious injury, you might not realize how many extra expenses it can create. Isaiah Goodman, chief financial advocate for Becoming Financial in Minneapolis, says his clients sometimes assume they’re covered by their Disability or Health insurance for these costs when they’re not.

“If you’ve had this traumatic experience and now you need a bunch of cash to cover these medical bills, Accident insurance can be something that provides a cushion,” he says

How to Make Accident Insurance Part of Your Financial Plan

Here are a few ways to know how much Accident insurance coverage you need to protect your financial wellness:

Examine Your Other Insurance Policies

Supinski recommends that everyone review their existing insurance policies. What gaps exist? Think about what expenses you might have if an accident happens and whether your current policies will cover them.

  • Will your Disability insurance benefit cover both your everyday expenses and the extra costs of having an injury?
  • How high is your Health insurance deductible?
  • Could you afford multiple copays from many doctor visits if needed?
  • How much would it cost to get to the nearest hospital for regular appointments if you couldn’t drive?
  • What childcare expenses might you have if injured?

Consider How Far Your Savings Will Go

A surprise expense is a job for our savings accounts, right? Not for many people. If your savings couldn’t cover a serious accident, you’re not alone.

53% of respondents didn’t have enough savings to cover three months of income.
2020 Pew Research Poll

41% of people surveyed in 2020 said they could use savings to cover an unexpected $1,000 bill.
Bankrate Poll

Think About Your Financial Risk Today

Goodman says there’s a reason financial advisors like to meet with clients every six months or so—it’s because life changes. When life changes, your financial risks change. Your financial risk might look very different when you’re 18 and supported by parents than it does when you’re a parent with a mortgage. When other people depend on you for financial security, it’s important to reevaluate your need for insurance coverage.

“I would say every time that something changes, or you’re reaching some sort of milestone, take another refresher on your entire financial picture,” Goodman says.

Once you’re aware of how much coverage you need, talk to your employer about what options are available. Accident insurance, can play a key role in your financial wellness when costly injuries happen.

When it comes to your financial wellness, what are you interested in hearing more about? Let us know in the comments below.

This informational material shall not be considered financial advice. The Hartford assumes no responsibility for any financial, investment, or tax-related decisions. Those seeking resolution of specific financial, legal, tax, or business issues, questions, or concerns regarding this topic should consult their own financial, investment, tax, legal, or other business consultants, advisors, or other professionals.

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