Guide to personal accident car insurance cover

Personal accident cover is usually offered as an add-on with your car insurance, but is it something you actually need? Here, we look at what is and isn’t covered, why it might be worth considering, and your alternatives.

What is car insurance personal accident cover?

Policies pay out compensation to you or your beneficiaries if you’re seriously injured or die in a car accident. It’s also known as car insurance personal injury cover.

The amount of money you or your loved ones receive will depend on the level of cover you’ve taken out – usually, you’ll be given a choice, ranging from £5,000 up to £100,000.

Personal accident cover is typically sold alongside your car insurance for a small fee, but it can sometimes be bought as a standalone policy.

What types of accident does personal injury insurance cover?

Policies cover injury or death as a result of a car accident. The injuries you sustain must be considered serious for a claim to succeed. Fundamentally, you receive compensation to ensure you can access specialist treatment and minimise your financial losses after a potentially life-changing incident.

Although policies vary, you can expect most policies to cover:

Death
Loss of one or more limbs
Partial or total paralysis
Permanent blindness (one or both eyes)

More extensive policies may also cover:

Hearing loss (one or both ears)
Loss of fingers or toes
Loss of speech
Severe burns

What types of accident aren’t covered by personal injury cover?

Personal accident cover isn’t something you can use to claim for minor injuries. Payouts are typically restricted to serious cases where the policyholder has died or suffered injuries that stop them from working, or that need ongoing care.

Policies will vary depending on the insurer, but you won’t usually be covered for bruising, sprains or pulled muscles. As personal accident cover also tends to focus on physical injury, you may not be able to claim for emotional trauma either.

Bear in mind that personal accident cover will also come with exclusions and won’t pay out under certain circumstances. For instance, if you have an accident because of negligence or breaking the law, you won’t be able to make a claim. Examples include driving without a seatbelt, driving while under the influence of drugs or alcohol and not abiding by traffic rules.

Does personal accident cover pay out if the accident was my fault?

Personal accident policies pay out even if you’re at fault. However, your claim will only be approved if you haven’t broken any of the conditions in your policy and your injury is covered.

What are the benefits of personal accident insurance?

The main benefit of personal accident cover is that you’ll receive a lump sum payment if you’re involved in a car accident. The money can be used to cover additional medical treatment outside of NHS care or your expenses if you can’t return to work.

If you’re killed in a car accident, the payout your loved ones receive can help them cover any immediate household outgoings and funeral costs.

Also, remember that personal accident cover isn’t just about making sure there’s enough money to cover lost income. If you play a vital part in your family’s life, for example, caring for children or older relatives, being incapacitated can have a big financial impact on you all.

How much does personal accident cover cost?

Personal accident cover is usually bought as an add-on to your car insurance policy, with pricing affected by factors such as the level of cover. Most policies are reasonably priced, around £20-£30 for the year.

Remember that some comprehensive car insurance policies already include personal accident cover.

What should I look for when taking out personal accident cover?

Any insurance product you buy should give you the cover you need; personal accident cover is no different. Before you commit to a policy, think about:

The levels of cover available and what amount would realistically cover your immediate costs if you couldn’t work.
What incidents does the policy cover, for example, hearing loss or paralysis?
What scenarios are covered? For example, are you only covered if you’re in the car?

How do I make a personal injury claim?

You should speak to your insurer in the first instance; most will have a clear process for making a claim, and they’ll let you know what you need to do.

You can expect them to ask you what happened, and for details of any witnesses.

When they’ve got all the information they need and checked that your claim is valid under the terms of your policy, they’ll usually outline your options. Based on your discussion, you can then decide what to do.

What is the personal injury discount rate?

If you decide to pursue a personal injury claim in court against the other driver, any compensation you receive will take into account the personal injury discount rate (PIDR), also known as the Ogden rate.

The PIDR is shown as a percentage and is designed to reflect inflation, interest, and the cost of living. It’s based on the idea that the compensation you receive will be invested, and any interest you earn will go towards your long-term living expenses.

Working out the PIDR is complex, but essentially, the higher the percentage, the lower the compensation amount. This is because in theory, a high PIDR means potentially higher returns if your compensation is invested.

If the discount rate is low, you can expect more compensation because returns through investment are likely to be lower.

If you’re interested in finding out more, you can take a look at our in-depth guide to the personal injury discount rate.

How do I make a claim for personal injury in court?

If you have legal expenses cover with your car insurance, you can use this to cover the cost of pursuing the other driver in court.

Are there any alternatives to personal accident cover?

If you’re worried about what might happen to your finances after an accident, there are alternatives to car insurance personal accident cover. Depending on the level of cover you need and your family situation, you may also want to consider:

Income protection insurance

If you cannot work because of an illness, injury or disability, income protection will provide you with a monthly payment. Payments will continue until you go back to work or retire.

The money you receive will usually be slightly less than your normal monthly salary. This is because you should receive some compensation from your employer, and you’re likely to qualify for state benefits, too. Income protection insurance payouts are also tax-free.

Find out more in our guide to income protection insurance.

Critical illness insurance

These policies typically pay you a tax-free lump sum if you’re diagnosed with a critical illness listed in your policy, such as cancer.

You can choose the level of cover to suit your needs, so you should consider your outgoings or what you intend to use the money for, for example, paying your mortgage.

The level of cover as well as your age, lifestyle, and overall health, will affect your premium. The greater the amount, the more you can expect your policy to cost.

Find out more in our guide to critical illness cover.

Life insurance

Life insurance pays out to your beneficiaries when you pass away. The money can be used to cover outstanding debts, childcare costs, school and university fees, as well as other everyday expenses.

You can choose the amount of money that would be paid out to suit your circumstances, but as a guide, ten times your annual salary is considered a good starting point.

As with other types of insurance, the greater the value of the policy (in this case, the sum assured), the higher your premium will likely be.

Find out more in our guide to life insurance.

Group personal accident insurance

These policies are usually taken out by your employer and pays them if you become sick and cannot work. It’s then up to them how that money is spent. Usually, employers will use it to provide you with income while you’re off sick. Others will use the compensation to fund a replacement until you get back on your feet (or both).

Is it worth taking out personal accident cover?

Personal accident cover isn’t something you need by law and you’re under no obligation to buy it as an add-on.

Nevertheless, knowing that you have a policy can give you and your loved ones peace of mind, knowing there’s some financial help if you’re involved in a serious accident.

Need help with your insurance?

If you’re considering your car insurance options and would like tailored advice, you can speak to one of our experts at . We’ll be able to take you through what’s available so you can get a good idea of what might best suit your needs.

Speak to us: 01603 216399

FAQs

Will I get compensation if the accident is my fault?

As long as your claim meets your policy’s conditions, you can make a claim even if an accident was your fault.

Does fully comprehensive car insurance cover personal injury?

Some fully comprehensive car insurance policies include personal accident cover, but not all. If you’re unsure, double check your policy documents; never assume you’re covered (just in case).

What is the difference between personal injury and personal accident cover?

Personal injury and personal accident are often used to mean the same thing. However, in the context of car insurance, personal accident cover only relates to serious car accidents.

Does a personal injury claim affect my no claims discount?

Making a claim could affect your car insurance no claims discount and reduce your discount at renewal.