Personal accident insurance is regarded as one of the most important insurance policies for self-employed tradies. This insurance policy safeguards you when you are unable to carry out your duties in the event of an injury or sickness. Despite the policy having different names, its sole purpose remains to safeguard your source of income when incapacitated by providing personal injury compensation.
We at PK Simpson are based at Sydney Australia, and specialise in assisting tradies to file their personal injury claims. Our no win no fee personal injury lawyers Sydney pay special attention to personal injury insurance. The no win no fee policy makes our firm dedicated to putting our clients first. Below is a guide that will provide extensive insight into personal injury compensation for tradies.
The other names by which personal accident insurance is known by include:
- Accident and Sickness Insurance
- Sickness and Injury Insurance.
- Accident and Illness Insurance
- Injury and Illness Insurance
By now you will have noticed that these terms mention the words sickness/illness while the phrase “personal accident insurance” does not. This may make you doubt whether the policy provides compensation during sickness. Rest assured that as long as the sickness option is available, you will be safeguarded.
What is Personal Accident Insurance?
It refers to a type of insurance commonly taken up tradies as it safeguards them against losses incurred when incapacitated as a result of an accident or illness. Upon filing for claims, policyholders stand to receive weekly compensation for a specific time frame. Despite the policy being popular amongst subcontractors and other business owners, it can still be of benefit amongst those earning salaries or wages. It is vital that you comprehend the different options making up the coverage.
This refers to the duration you must be incapacitated for you to be able to make personal injury claims. There are a variety of options available depending on the insurer. The common ones include:
- 7 days
- 14 days
- 21 days
- 28 days
Longer waiting periods are normally associated with lower premium rates. You would, however, have to wait for a significantly longer period before you can file personal injury claims. For instance, if you opt for the 28 day waiting period, any incapacitation that falls under 4 weeks does not result in a claim. You will be able to file your claim sooner if you opt for a shorter waiting period but will have to pay a higher premium.
It is also referred to as the benefit amount. It is the amount of money you will receive weekly as compensation during your incapacitation. It is important to note that evidence may be necessary when filing for personal injury claims. Personal injury lawyers Sydney may find it difficult to prove that you need a $2,000 weekly benefit when you only have evidence for a $1,500 weekly income. The benefits you receive are taxable and must, therefore, be reported to the ATO. You should thus be covering your pre-tax earnings and not your post-tax earnings.
This refers to the duration of time during which you will be receiving compensation upon successfully filing your claims. Depending on the insurer, there is an array of options available with the main ones being:
- 6 months
- 1 year
- 2 years
- 3 years
A short benefit duration is associated with a lower premium rate which, however, also limits your cover. In the unfortunate event that you are unable to resume your work after the expiry of the benefit period, you will be all on your own.
There are two policy options available. One that covers accidents only while the covers both accidents and sickness. The former is usually cheaper but does not safeguard you in case you are incapacitated due to sickness. Other policy options have coverage options linked to accidents from which you can select. The policy options include:
- Work only cover
- Commuting and work cover
- 24/7 cover
Selecting lesser cover options makes the insurance cheaper but you limit the scope of insurance cover. For instance, a work only cover will not benefit you in case you injure your leg during the weekend and are unable to work for an entire month. We, therefore, advise you to select the 24/7 cover for proper coverage. It is important to note that every personal injury insurance policy differs in its benefits and features, and you should, therefore, look beyond the cost when comparing each policy.
Income Protection Vs Personal Injury Insurance
Personal accident insurance is often confused as being similar to income protection. This might be true as its main objective is to also substitute your income when you are unable to work. However, their key difference between the two that will be highlighted below.
- Benefit Period Extension
A personal accident policy covers a benefit period of up to 3 to 5 years (dependent on the insurer) while an income protection policy covers up to the age of 65. Despite being a bit costly having a benefit period of up to the age of 65 years, it could be beneficial to you than the personal accident option.
- Cancellation option
A personal injury policy is cancellable while income protection is not. What I mean is that the insurer has the power to cancel your policy while you don’t. The insurer can simply refuse to renew your policy. Income protection forces the insurer to continuously provide cover provided you pay your premiums even with a rise in your risk. On the other hand, an insurer of personal accident insurance can opt to stop renewing your policy upon expiry. This occurs especially when your risk increases or you start making numerous claims. This feature is often ignored by tradesmen despite having a lot of implications while comparing your options.
Benefits of Personal Injury Compensation
- Receive regular benefits during the period in which you are incapacitated or unable to work.
- Gain capital benefits in the occurrence of permanent disability or death
- No medical tests or questions
- Lower premiums when compared to income protection
- A great option for people not qualified for a traditional income protection policy
- Medical issues do not affect the policy
TPD insurance vs Capital Benefits
The capital benefits feature is the key advantage personal accident coverage has over income protection. It refers to a lump sum personal injury insurance will pay when you suffer permanent injury leaving you incapacitated. This option is normally not available in a standard income protection. You can, however, opt to package TPD insurance along with income protection. For further insight into TPD insurance follow the link to our dedicated tutorial. The benefit amount in TPD insurance is considerably more comprehensive than the personal injury policy.