KEY TAKEWAYS
- Personal accident insurance is also known as personal accident cover.
- Your insurer could pay out if an injury prevents you from being able to do your job.
- You can extend your cover to employees and business partners.
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As a small business owner, you’re involved in every aspect of your business.
You’re not the kind of person who likes to watch from the sidelines. If you were, you’d never have taken the decision to start your own business in the first place.
But what happens if you’re forced to take a step back? What if you have an accident, and the resulting injury puts you out of action? Where would that leave you?
Naturally, lots of small business owners worry about getting injured and no longer being able to do their job. But personal accident insurance could take away some of that stress and provide financial support when you need it most. Read on for everything you need to know.
What is personal accident insurance?
Personal accident insurance – also known as personal accident cover – is a type of small business insurance policy.
It’s there to protect you from the financial impact of being unable to work if you have an accident and injure yourself.
If an injury gets in the way of you doing your job (and earning money), personal accident insurance could pay out to bridge the gap until you’re well enough to work again.
You can also take out personal accident cover for your employees, business partners and other company directors. In some cases, personal accident insurance is included as an employee benefit.
What does personal accident insurance cover?
Personal accident insurance gives you direct financial assistance if you’re injured because of an accident.
Your policy could pay out for lost income, medical expenses or the cost of any training required to return to work.
Crucially, with personal accident insurance, you’re covered for injuries caused by accidents both at work and outside the workplace.
So even if the accident happens on your own time (or that of a covered employee), your insurer can still pay out. That means that if you hurt yourself gardening at the weekend, or cut yourself while cooking one evening, you could still be covered for loss of income – even if the injury is completely unrelated to your work.
Personal accident insurance isn’t just for trips, slips and sprains. It can also cover death and permanent disablement, providing peace of mind and financial security for your dependents.
In the event of an accidental death or another major, permanent injury or disability, your personal accident insurance could provide you with a lump-sump payment – typically tens of thousands of pounds.
For temporary injuries, personal accident insurance could cover your net weekly earnings until you can return to work, although your insurer may place a cap on how much they’ll pay (and for how long).
What isn’t covered by personal accident insurance?
It’s worth noting that although there are some similarities, personal accident insurance isn’t the same thing as income protection insurance – and doesn’t provide quite the same cover.
Income protection insurance can pay out to cover your lost income if a long-term illness means you can’t work. An insurer will likely want to know about your health history and lifestyle before you take out income protection insurance, and it’s unlikely you’ll be able to extend income protection insurance to your employees.
Personal accident insurance, on the other hand, won’t pay out for illnesses but will pay out if you’re injured because of an accident. If you get a group policy, you can extend personal accident cover to your employees.
As with all business insurance policies, your insurer will have their own terms, conditions and exceptions – so make sure you scrutinise the small print before taking out a policy.
For example, insurers will generally only pay out for personal accident claims where the claimant has suffered a bodily injury following an accident (typically including cases of sight and hearing loss).
Your personal accident insurance provider may also place age limits on who they’ll cover, which could prevent elderly people from claiming under the policy.
You also shouldn’t expect an insurer to pay out where the accident occurred as a result of recklessness or deliberate involvement in anything illegal.
Additionally, some specific trades may not be covered, and there may be exclusions for certain hazardous activities.
Personal accident insurance vs employers’ liability insurance
On the surface, employers’ liability insurance may also seem similar to personal accident insurance. However, there are important differences between the two.
Firstly, employers’ liability insurance is a legal requirement for any business with employees, except for those employing immediate family members or people based outside the UK. Although it’s advisable in many cases, personal accident insurance is not mandatory.
The two policies also cover different things. Employers’ liability insurance covers compensation and legal fees arising from employee claims of work-related illness or injury.
Meanwhile, personal accident insurance provides direct financial assistance to employees who are injured as a result of an accident. Think lost wages, medical rehabilitation or retraining.
Additionally, personal accident insurance does not cover illnesses – only injuries caused by an accident. On the other hand, employers’ liability insurance does extend to work-related illness.
Finally, personal accident insurance provides coverage for incidents outside the workplace, while employers’ liability is purely for work-related events.
» MORE: Business Interruption Insurance Explained
Do I need personal accident insurance?
Personal accident insurance isn’t a legal requirement, but that doesn’t mean you can afford to overlook the benefits of being covered.
At first thought, you might assume that personal accident insurance is for tradespeople and manual workers. After all, you’re more likely to injure yourself on a construction site than you are sitting in an office (although that’s not to say that there’s any line of work which is completely risk-free).
However, personal accident insurance doesn’t just cover accidents at work. Since you’re also covered for mishaps and injuries unrelated to your job, it could be more relevant than you might think.
If you run a small business or work for yourself, you should think carefully about what would happen if you couldn’t do your job because of an accident – work-related or otherwise.
Ask yourself whether you could afford to go without earning for a period of weeks, months or years while you recover from an injury. And as bleak (and unlikely) as it may be, consider what would happen to the people you love if you were to die as a result of an accident.
If you’re worried about any of these scenarios, then personal accident insurance could be a good idea.
Either way, it’s on you – as the business owner – to decide what insurance policies you need to protect your livelihood and provide security for your dependents.
» MORE: Do I need small business insurance?
How much does personal accident insurance cost?
With some insurers, personal accident insurance is an optional extra which can be bundled in as part of your business insurance package.
And as with any business insurance policy, the cost of personal accident cover is likely to vary based on the specifics of your situation.
However, personal accident insurance isn’t bank-breakingly expensive, with cover starting from around £5 per month.
If you think it’ll be worth it for the peace of mind, then consider adding personal accident cover to your business insurance package.
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