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As far as insurance goes, Accident insurance is relatively new. Insurance to cover accident expenses “virtually did not exist before about the middle of the nineteenth century,” according to the book, “Introduction to Life Insurance Volume III” by Joseph B. Maclean.

It’s not that accidents didn’t happen earlier, but they became much more common when the Industrial Revolution arrived in the 1830s and 1840s. The new way of life made costly and debilitating accidents something to prepare for.

“Life, in general, was much simpler than it has become,” Maclean wrote in the 1950 book. “Many of the things which cause accidents today, such as electricity and the automobile, as well as other forms of rapid travel, were either unknown or little used, and the average person rarely traveled beyond the immediate vicinity of his home.”

Here’s how Accident insurance grew from an incentive to take a risk on railroad travel to the valuable benefit it is today.

The Early Days

Dangerous travel jump-started Accident insurance as we know it today. The Railway Passengers Assurance Company of London sold the first policy in 1848. Travelers bought the insurance along with their ticket to cover injuries from derailments and other train-related accidents. The stub served as the contract. Such Accident insurance premiums might be 15 cents, and when injured, the travelers would receive $200 to $400.

Accident insurance evolved, it began to cover more than travel. Daniel D. Skwire, principal and consulting actuary for consulting firm Milliman, gave a speech on Accident insurance to the Society of Actuaries. In it, he shared the details of a 1919 Accident insurance policy that hangs framed in his office. The coverage was for $5,000.

“It covered accidents due to travel, fire, or elevators, which probably tells us more than we wanted to know about elevators in 1919, and the cost of the policy was $1 for a term of 12 months,” he said. “You can see from those terms why the policy might be appealing. It was certainly low cost, $1 a year … Finally, it was a product that was simple to understand. ”

“Although basically starting out as what we understand as a type of Disability insurance, [Accident insurance] has evolved to be more of a complement or supplement to other types of insurance, offering additional financial coverage for injuries that may or may not be covered by other insurance,” says Liz Supinski, director of research projects and insights for the Society for Human Resource Management (SHRM).

Today’s Accident Insurance Explained

Today, Accident insurance has evolved—as Americans’ risk of accidents has evolved.

Private employers reported 2.8 million nonfatal workplace injuries and illnesses in 2018.

–U.S. Bureau of Labor Statistics

It’s no wonder why Accident insurance is now a common voluntary benefit offered by employers during open enrollment. Its important role is to:

• Help pay for the costs associated with accidental injury.
• Fill in the financial gaps other policies don’t cover (such as deductibles, annual out of pockets expenses, copays and coinsurance).

For example, Short- and Long-term Disability insurance covers lost income. It kicks in when you can’t work because of an illness or injury. The benefit is around 60% of someone’s income for a set period. But when you’re injured in an accident, you have more than your regular expenses to pay. You have medical bills and other related costs. Health insurance often pays some, but not all of them.

That’s where Accident insurance comes in. Modern Accident insurance pays cash benefits to cover accident-related expenses like:

• costs incurred for specific treatment of the injury
• having a family member fly out to help take care of you or your family
• making physical updates to your home so it’s more accessible for you to get around with your injury

Even if you can keep working with your injury, Accident insurance covers expenses related to treating it.

Accident insurance has become even more important as medical costs have increased. Having extra help with out-of-pocket costs makes this an attractive benefit.

A Growing Benefit

Supinski says the growth of Accident insurance today is attributed to several factors:

• Newer Accident insurance plans tend to cover more injuries and include more benefits than they previously did.
• Some plans are now more flexible, offering coverage as needed.
• Many plans are customizable for different types of employees, like those who are more active or have jobs that place them at a high risk for injury.
• Coverage is expanding to include family plans.

There’s also a higher need. “American workers often have increasingly limited financial means to pay for unexpected expenses,” says Supinski. “With the increase in the number of high-deductible health plans, which require employees to pay a large deductible prior to their health insurance beginning to cover expenses, many Americans need help to cover this initial cost.”

It’s easy to see why. Accident insurance makes injuries less financially stressful, so people can focus on recovery. That’s something everyone can value.

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.