Insurance Guide
Personal Accident Insurance: What Does It Cover?
What personal accident insurance covers — accidental death, permanent and partial disability, weekly benefits, add-ons and exclusions, explained simply.
In short: health insurance pays medical bills, a term plan secures the family after death. But if limbs are lost in an accident and work is lost — that is, income stops while the person is still alive — neither of these two policies compensates for it. That exact gap is filled by personal accident insurance, and its premium is usually very low — lakh-based cover for a few hundred rupees. Below: what is covered, where it does not apply — everything in simple English.
What Does a Personal Accident Policy Cover?
This policy applies only to accidental events (not illness-related problems). The main covers:
- Accidental Death: on death in an accident, the family receives 100% of the sum insured.
- Permanent Total Disability: on losing both limbs in an accident, complete loss of eyesight etc. — usually 100%; some policies also carry a weekly/monthly benefit equal to income alongside.
- Permanent Partial Disability: on losing one hand or one leg, a finger, sight in one eye etc. — a specified percentage of the sum insured according to the injury schedule.
- Temporary Total Disability: if you cannot go to work for some days due to a problem like a broken bone — a weekly benefit compensates the loss of income for some weeks.
Common Benefit Structure — At a Glance
| Event | Benefit Usually Paid |
|---|---|
| Accidental death | 100% of sum insured |
| Permanent total disability | 100% of sum insured |
| Loss of two limbs / one eye + one limb | 100% |
| Loss of one hand or one leg | 50–60% of sum insured |
| Complete loss of sight in one eye | 50% of sum insured |
| Loss of a finger / part of a hand | 5–30% depending on the injury |
| Temporary total disability | Weekly benefit (up to a specified number of weeks) |
The actual percentages differ by the company’‘s “compensation scale” — match the policy’’s schedule before buying.
Why Are Health or Term Policies Inadequate Here?
- Health insurance pays hospital bills — but after becoming disabled, the lost monthly income, house rent, children’’s education costs — it pays nothing.
- A term plan pays only on death — a person surviving with disability or their family gets nothing from it.
- After an accident, treatment, physiotherapy and rehabilitation costs run for a long time — and income stops too; this double pressure creates the most dangerous financial situation.
Popular Add-Ons
- Education grant: extra money for children’‘s education on the parent’’s accidental death/permanent disability.
- Hospital cash: a daily cash benefit for each day in hospital after an accident.
- Road ambulance: ambulance cost from the accident site to the hospital.
- Transportation cost (Ambulance/Transport): cost of transporting the body or special medical transport.
Where the Claim Does Not Apply (Common Exclusions)
- Suicide or intentional self-inflicted injury
- Injury in war, insurgency or such conflict
- Driving or accident under the influence of alcohol, intoxicants or drugs (drunk driving)
- Professional risky sports (racing, adventure sports) — excluded in many policies, addable in some via add-on
- Occupational injuries if the athlete/risky profession was not declared in advance
Who Needs This Policy Most?
- Regular two-wheeler passengers/riders: two-wheeler riders are the biggest victims of road accidents in India. A motor policy’’s personal accident cover is only for the driver and limited — think about a separate policy for the whole family.
- Self-employed/freelancers: there is no corporate group accident policy or paid-leave benefit — income stopping means the household stops running.
- Sole earner of the family: when income stops, the whole family’’s wheels grind to a halt — set up this cheap income-protection layer early.
Remember: the correct layering strategy is — a health policy for bills, a term plan for death, and a personal accident policy for “losing income while surviving”. The three are not substitutes for one another; they complement one another.
To learn how to arrange a term plan and investment together for the family’’s long-term protection, see our term + SIP combination strategy article.
What to Read Next?
- Term Insurance + SIP Combination Strategy — planning cover and wealth together
- Complete Insurance Guide — all articles on life, health, motor and business insurance
Author: Santanu Samanta, AMFI-certified mutual fund distributor — About the author
Frequently Asked Questions
What does personal accident insurance provide?
On accidental death, the family gets 100% of the sum insured; on permanent total disability usually 100% as well; on partial disability a percentage as per the schedule; and on temporary disability a weekly benefit — so that some of the income lost during the accident is made up.
If you have health insurance, is personal accident insurance still needed?
Yes. Health insurance only pays medical bills. But if limbs are lost in an accident or you cannot work, the income that stops is compensated not at all by a health policy — that is exactly the gap a personal accident policy fills.
How much is its premium?
Usually very low — lakh-based cover is available for a few hundred rupees. The premium depends on the cover amount, occupation (whether the work is risky) and add-ons. Get the insurer's quotation for the exact premium.
In which cases does the claim not apply?
Suicide or intentional self-injury, war-conflict, accidents under the influence of alcohol or drugs, injuries in professional sports or risky adventure sports — such cases usually do not qualify for a claim. Read your policy's exclusion list in advance.