Accident Insurance: What is it?

Accidental insurance is a type of insurance that covers you if you are legally responsible for injuring someone else or damaging their property, such as in a car accident or an incident in your home. Below, we will take a deep dive into what accidental insurance is, how it works, who makes the claim, and whether it’s worth obtaining or increasing your coverage.

What is accidental insurance?

Accidental insurance protects you when you are responsible for someone’s injury or damage to their property. The situations covered depend on the details of your policy. For example, car insurance may pay for the repair of your neighbor’s fence after you ran into it.

Accidental insurance is often bundled with property insurance and is referred to as “property and casualty insurance.” While the accidental part of the insurance protects you from the costs associated with injuries and damages to other people or their property, the property part covers damages to your own belongings.

Note: Accidental insurance does not cover your personal injuries or damage to your property, or those listed under others on your policy.

How does accidental insurance work?

Accidental insurance is usually bundled into your insurance policy, so you pay for it when your insurance bill is due. Your policy and quotes may specify how much you pay for each coverage, making it easy to adjust limits to fit your budget and needs.

When looking at your policy, you’ll typically find accidental insurance under coverage for others when you are at fault. For a homeowners insurance policy, these coverages may appear as “personal liability” and “personal injury liability” and “medical payments to others.” Your insurance policy includes this type of insurance under “bodily injury liability” and “property damage liability.”

Business owners can purchase accidental insurance coverages such as workers’ compensation, general liability, and employment practices liability insurance (EPLI).

There are many scenarios where accidental insurance could step in to cover costs. For example, homeowners insurance might pay for expenses and legal fees related to:

• Slip and fall accidents: A guest trips over their own feet while in your home and breaks their wrist.
• Dog bites: Your dog escapes during your morning walk and bites another dog.
• Falling trees: A stormy day causes a branch from a tree on your property to break and create a hole in your neighbor’s roof.

Accidental auto insurance can be useful in a number of situations, such as when someone is injured in another vehicle in an accident you caused or if you accidentally hit your neighbor’s mailbox while backing up.

How do I file an accidental insurance claim?

Each insurance company handles the claims process differently. Generally, the other party files the claim with your insurance company if you are at fault for the damage or injury. Liability claims in home and auto insurance typically do not have a deductible, so your insurance covers all approved costs for approved claims up to your limits.

If you are the person who suffered an injury or property damage, you are likely to deal with the other party’s claims representative or their insurance investigator. Their insurance company may pay the claim directly to you or another party, such as a collision repair shop.

Auto insurance companies use police reports, photos, and details gathered from you, the policyholder, and others to determine who is at fault and whether liability payments are due. For any insurance claims involving injury, it’s important to gather as much evidence as possible to support your claim, such as immediate medical evaluations, photos and videos of what caused your injury, and witness statements.

If

The matter was about the homeowner who has no-fault medical coverage, you may be able to submit the bills directly to their insurance company without having to file a claim first.

Note: After a car accident, it is essential to contact your insurance company, regardless of who was at fault. Your insurance company can then work on your behalf to help you file a liability claim with the other insurance company.

How much liability insurance should I have?

Liability limits are the maximum amount your insurance company will pay for a claim. Standard homeowners policies typically provide $300,000 in personal liability for property damage and injuries and $1,000 to $5,000 in medical payments to others. If your personal liability limits are sufficient to protect your assets in claims and lawsuits, your insurance is likely adequate. If not, consider raising the coverage to the highest level you can reasonably afford.

It’s important to understand the difference between liability coverage and medical payments to others. Liability concerns medical care costs if you are deemed responsible for someone else’s injury. Medical payments are a more limited type of coverage that pays regardless of fault (and only for guests you invite into your home in the case of homeowners policies).

Minimum liability limits for auto insurance are set by each state, although these amounts may not be sufficient to cover costs in a serious accident. Just as with homeowners insurance, consider purchasing liability coverage as much as you can afford.

Note: Umbrella policies are sold separately and can cover liability claims that exceed your homeowners and auto insurance policies. Costs depend on factors like your current liability coverage and your risk profile. Generally, an umbrella policy costs about $150 to $300 annually for a $1 million umbrella policy.

Do I need liability insurance?

The only insurance you are typically legally required to carry is bodily injury and property damage liability under your auto insurance policy. Many states also require personal injury protection, with varying amounts from state to state. There are no state-mandated requirements for personal liability in homeowners insurance policies, but standard insurance policies usually come with some coverage and your mortgage lender will have its own requirements.

Regardless of whether the law requires it, having sufficient liability insurance protects you financially from paying costly legal fees, lawsuits, other people’s medical expenses, and lost wages. The minimum legal limits for personal liability in your auto insurance may not be enough to cover the costs of a serious accident.

Key takeaways

Liability insurance pays for the costs of injury to another person and damage to their property when you are found legally responsible. Insurance companies will only pay up to your liability limits, so you are responsible for costs that exceed those amounts. An umbrella policy can help cover excess amounts. You are only required to carry the minimum legal liability limits on your auto insurance policy, but you should consider getting as much liability insurance for your home and auto as you can reasonably afford for greater financial protection.

Sources

The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts in our articles. Read our editorial process to learn more about how we fact-check and ensure the accuracy, reliability, and quality of our content.

RMIIA. “Your Guide to Understanding Insurance.”

Institute

Insurance Information. “What is car insurance?”.

Source: https://www.thebalancemoney.com/casualty-insurance-what-is-it-5094701