Compare and Find the Best Personal Accident Insurance in Australia

Published: May 2, 2018

If you’re self-employed or a contractor you might not be covered under workers compensation, and with no sick leave to fall back on, it is your responsibility to protect your income.

Personal accident insurance covers you against injury, caused by an accident, which renders you unable to work. This gives you peace of mind knowing your income will be protected should an accident keep you off work for an extended period. Many Australians who work in high-risk occupations or have pre-existing medical conditions are not able to find affordable income protection insurance, and thus accident only income protection might be a suitable alternative.

If you’re self-employed or have a health issue that prevents you from getting income protection insurance, and need protection against home and work-related injuries, then an individual accident insurance policy might be for you.

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What is personal accident insurance?

The Australian personal accident insurance definition usually refers to a type of policy that pays a monthly benefit, up to 75% of your income, if an accident keeps you off work for longer than the insurer’s specified waiting period. This is an accident only insurance policy and will not pay out if injury or disablement is due to natural causes, like a heart attack, stroke or cancer.

Take note; Accident Only Income Protection from life insurance companies differ from Personal Injury Insurance offered by general insurers.

Personal injury policies from general insurers

Generally, accidental injury insurers pay a lump sum benefit if you suffer from one of the injuries listed in their product disclosure statement (PDS). For example, a fractured arm, severe burns or a broken skull. The lump sum benefit amount differs depending on the type and severity of your injury.

This policy type is usually more difficult to claim for because you'll need to meet precise definitions.

Benefits of personal accident Insurance

Accident only income protection covers up to 75% of your income and usually offers benefit periods for either 2 to 5 years, or until your age 65, depending on the insurer. The type of insurance usually offers the following benefits:

  • Continue to pay your bills, mortgage and other day-to-day expenses.
  • Premiums are fully tax deductible just like income protection insurance.
  • More cost effective. Generally, these types of policies are a lot cheaper than a full sickness and accident insurance policy as it only covers accidents.
  • Guaranteed acceptance is possible because accident only income protection insurance is not typically medically underwritten.
  • Worldwide cover, 24/7.

Read your insurers PDS, as above benefits will vary from company to company.

Who needs individual accident insurance?

Personal accident cover is usually designed for self-employed people, between the ages of 18 and 65, and those in high-risk occupations or with pre-existing medical conditions that can't get traditional income protection policies.

Accident only insurance protection for your income is usually purchased by:

  • Contract workers,
  • Small business owners,
  • Sole traders,
  • People that do not qualify for income protection insurance.

Unlike life insurance, accident only insurance pays you as the individual, not your beneficiaries. While it is a policy benefiting the insured person, personal accident insurance also helps you to continue to provide for your family, covering up to 75% of your earnings.

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What does personal accident insurance cover?

While each policy is different, personal accident insurance in Australia usually covers you for any bodily injury which is caused solely and directly by an accident. Injuries should be externally visible and independent of any other cause. This means that it generally covers you for genuine accidents that may cause you to suffer an injury which stops you from working.

The accident must render you unable to work for a specific period, indicated by the waiting period in your policy documents, this can be 14, 30, 60, 90 or 180 days, depending on the insurer.

Take note that people with dangerous occupations might pay a higher premium because of their increased risk of injury.

Indemnity or agreed value accident insurance

Personal accident insurance policies usually only offer indemnity cover, where you provide proof of income at claim time.

The following is a list of the most common exclusions from an accident only policy:

  • Injuries that are self-inflicted, or because of attempted suicide.
  • Some policies exclude persons being in an aircraft if not as a passenger.
  • All sicknesses and pre-existing conditions are excluded.
  • Acts of war and terrorism.
  • Being under the influence of drugs or alcohol.
  • Participating in professional sports.
  • Some insurers will exclude dental injuries.

Please note: It is essential you check the product disclosure statement (PDS) and determine exactly what is and is not covered.

How much personal accident insurance should you have?

The amount of individual accident insurance you need is dependent on your annual salary and what you expect your future to look like:

  • Do you have a family or are you planning to get married and start a family?
  • Are you currently paying a mortgage or want to invest in property?
  • How much money do you need every month to maintain your current lifestyle?
  • Do you have savings that you can easily access in times of need?

After answering these questions, you should have a pretty good idea of the amount of cover you need. However, it’s best to check with your broker and what their calculations reveal.

The best personal accident insurance policies in Australia

If you are involved in such a severe accident that you are unable to work for a period, then the best individual accident insurance policy is one that will help replace your lost income, so you and your family do not have to suffer financially while you focus on recovering.

Some Australian insurers offering accident only income protection, include:

  • AIA accident only income protection provides a monthly benefit if you become disabled due to an accidental injury only.
  • CommInsure Essential Cover offers income protection for accidents only if you do not qualify for full income protection because of your health.
  • Asteron Life income protection accident only cover offers benefit periods of 2 years, 5 years and to your age 65.
  • ClearView accidental income protection cover provides a monthly benefit of up to 75% of your regular income.

The average cost of personal accident insurance

The average price of an accident only policy that covers your income depends on various factors, including your age, gender, how dangerous your occupations is, and your chosen waiting and benefit period. The longer you want your benefit to pay out and the quicker you want it to start paying will influence the cost of your premium.

Accident insurance frequently asked questions

Is personal accident insurance the same as life insurance?

No. Life insurance pays a once-off lump sum amount if you die due to both natural and accidental causes. Individual accident insurance cover is like income protection insurance, providing a monthly benefit, up to 75% of your regular income, if you are injured and unable to work because of an accident and does not include coverage for natural causes, like cancer or stroke.

Is personal accident insurance tax deductible?

Yes, generally, premiums paid for personal accident cover are tax-deductible because the policy serves to replace your income, which ATO deems to be tax assessable. Make sure you are listed as the policy owner and pay the premiums with your own money. Take note; as with income protection insurance, the monthly benefit paid for individual accident insurance cover will be taxed. 

Does accident only insurance cover accidental death?

No, an accidental death insurance policy provides you with a lump sum payment should you suffer an accident which solely causes your death. This type of insurance is like a life insurance policy in that a lump sum benefit is paid upon death. Accident only insurance pays you as an individual, whereas accidental death insurance pays your beneficiaries or your estate.

Should I buy personal accident insurance?

If you are self-employed, a contractor, work in a dangerous occupation or were unable to get income protection insurance because of your health, then buying a personal accident policy might be a good way for you to protect your income should an accident cause you to be off work for a specified period.

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