Personal Accident insurance pays out if one or more of your employees becomes permanently disabled or dies. There is also an optional cover for temporary employee disability. Personal Accident covers external physical incidents and does not cover injury or death from natural causes (e.g., diseases). This cover is not available for individuals above the age of 70.
You probably need Personal Accident insurance if your employees are at risk of death, injury or disability. Employers usually get this insurance if they want to give their employees’ dependants a payout if a bread-winner of the family is no longer able to work.
Your insurance policy will have its own specific list of insured events and exclusions. It is best to check with your insurer or the policy wording to confirm the details of your Personal Accident insurance policy.
Some commonly covered and not covered items include:
Total Permanent Disability/Death:
Businesses usually enter a multiple of the employee’s annual salary, typically between 0.5 times and 4 times. For example, if an employee’s annual salary is R100 000, then a business will take out cover for R200 000 (2X).
Total Temporary Disability:
Most businesses select the weekly wages of the employee.
Time that cover is active:
There is usually an option to select if you would like cover during working hours, during working hours including commutes, or 24 hours a day.
In a business that lasts for at least a few years, there is a good chance that an employee will pass away or be disabled. This is a relevant cover for businesses that want to protect their employees’ dependants from having no income after the death or disability of a bread-winner.
For total permanent disability or death you cannot over- or under-insure, but a higher level of cover will result in a higher premium. Finding a balance between how much the business can afford to pay and how much would be good for the beneficiaries’ dependants can be difficult.
For temporary total disability, businesses enter the employees’ weekly wages. If the business enters a value that is too low, the payout will be lower than the employee’s actual wages. If the business enters a value above the normal wages, the premium will be higher but the payout will be the same as the employee’s normal wages.
Generally, the higher the level of risk that your business is exposed to, the higher the cost of the premium.
Yes, Personal accident is not a replacement for medical aid.
Personal accident covers injuries, death or illness during the period of insurance, which are independent of any other cause.
Yes, in some cases the employee may suffer several injuries, if the loss is a consequence due to any one accident to any one insured person, the maximum amount payable shall not exceed 100% in total of the sum insured stated in the policy schedule.
