Accident and hospital cover

What if I had an accident?

Accident and Hospitalisation Cover Explained: A UK Guide

By
Pirashanth
Published
Last reviewed
Reading time
4 min read

This guide provides general information only. It is not financial advice or a personal recommendation and does not take account of your individual circumstances.

Quick answer

Accident and hospitalisation cover pays fixed amounts for specific events: a set sum for a broken bone, a daily amount for time spent in hospital, or a larger lump sum for a serious permanent injury or accidental death. It pays because the event happened, not because you lost income. It is usually cheaper and simpler to apply for than income protection or critical illness cover, but it covers much less and isn't designed to replace them.

What accident and hospitalisation cover is

Accident and hospitalisation cover, sometimes called personal accident insurance, pays fixed amounts when specific things happen. The policy lists the events it covers and how much it pays for each one.

Common benefits include:

  • Broken bones and specified injuries: a set amount for each qualifying injury.
  • Hospital stays: a daily amount for each day you are admitted to hospital.
  • Serious permanent injuries: a larger lump sum for life-changing injuries, such as loss of sight or a limb.
  • Accidental death or total permanent disability: a lump sum if an accident causes death or leaves you permanently unable to look after yourself.

Some policies add options, such as cover for children, or for sports injuries like ligament tears and dislocations. Many also include extras like a virtual GP or physiotherapy sessions.

How it pays

The key feature is that payments are fixed and event-based. If the policy pays a set amount for a broken wrist, it pays that amount whether you are off work for a day or for two months, and whatever you earn.

That makes it different from most other protection:

  • It doesn't depend on being unable to work.
  • It doesn't depend on your income, so there is no need to evidence earnings.
  • It usually pays from the event itself, with no deferred period for accident benefits.

How it compares with other cover

| | Accident and hospitalisation cover | Income protection | Critical illness cover | Life insurance | |---|---|---|---|---| | What triggers a payment | A listed injury, hospital stay or accidental death | Being unable to work through illness or injury | Diagnosis of a listed serious illness | Death from any cause, subject to the terms | | How it pays | Fixed amounts per event | A monthly income | A lump sum | A lump sum, or an income with family income benefit | | When it starts | Usually from the event | After the deferred period | After diagnosis and any survival period | On death | | Linked to your income? | No | Yes | No | No | | Covers illness? | Mostly not, apart from some hospital stays | Yes | Listed illnesses only | Yes |

What it doesn't do

This type of cover is narrow by design, and it is worth being clear about its limits.

  • Most benefits are for accidents only. A long illness, such as depression or a back condition that develops over time, usually isn't covered.
  • Illness may only count for hospital stays, and often only after the policy has been held for a set time, such as 12 months.
  • Death from natural causes usually pays much less than accidental death, if anything.
  • Fixed amounts may be small compared with lost income. A few thousand pounds for a fracture helps, but it won't replace months of earnings.
  • Exclusions apply, such as injuries from some hazardous activities, or those linked to alcohol or drugs.

For these reasons, it isn't a substitute for income protection, critical illness cover or life insurance. It is usually considered alongside them, or where they aren't available.

When people consider it

People commonly look at accident and hospitalisation cover when:

  • they have no sick pay, for example self-employed people and many contractors, and want something that pays from the event itself
  • they have income protection with a long deferred period, and want something that pays in the meantime
  • they have an active lifestyle or a physical job, where injuries are more likely
  • they find other cover hard to get. Applications are often simpler, sometimes with few or no health questions
  • they want to cover children, as some policies offer cover for children as an option

A hypothetical example

Leon is a self-employed software tester. He has income protection with a 13-week deferred period, and an accident and hospitalisation policy.

He breaks his wrist cycling, spends two nights in hospital and can't work for six weeks.

  • Income protection doesn't pay. Leon is back at work before the 13-week deferred period ends.
  • The accident and hospitalisation policy pays a fixed amount for the fracture and a daily amount for each night in hospital, even though the absence was short.

A year later, Leon is off work for five months with a back condition that developed gradually.

  • The accident and hospitalisation policy doesn't pay, because there was no accident and no hospital stay.
  • Income protection starts paying after 13 weeks and continues until he returns to work.

The two policies cover different situations, which is why they are often thought about together rather than as alternatives.

Questions worth considering

  • Which events does the policy cover, and how much does it pay for each?
  • Does it cover any illness, and if so, after how long?
  • How much would it pay for death from natural causes, compared with accidental death?
  • How would it fit with any sick pay, income protection or critical illness cover I already have?
  • Are there exclusions for activities I do regularly?

Frequently asked questions

Sources

Related questions

Need advice about your own circumstances?

General information can't take account of your individual circumstances. If you'd like personalised advice, you can speak to an adviser.

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Pirashanth, who writes What If Guides, also works as a protection adviser. If you use this link you may be directed to Pirashanth's adviser page, and Pirashanth may benefit commercially if you become a client. What If Guides itself does not provide financial advice.