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Trade Insurance Reviews

One of the most important forms of cover for self-employed tradies is personal accident insurance, with optional cover for sickness.

This insurance will cover you if you’re unable to work due to an injury, and you can also add an option to cover sickness.

It goes by a few different names, but it’s all about protecting your income whilst you’re unable to work.

At Trade Risk we specialise in helping tradies with their insurance needs, and personal accident is a big part of this.

We’ve put together the ultimate guide on personal accident insurance for tradies.

Also known as…

Personal accident insurance is known by a few different names, and broadly speaking, they all mean the same thing.

Some of the other names you may have heard include the following:

  • Sickness and accident insurance
  • Accident and illness insurance
  • Accident and sickness insurance
  • Injury and illness insurance

And the list goes on! One thing to keep in mind however is that each of the names above specifically mention illness/sickness, whilst “personal accident insurance” doesn’t.

Does that mean personal accident insurance won’t cover time off work for illness?

No. As long as the illness option is included you will be covered. Provided of course that you meet the other criteria for a successful claim.

What is Personal Accident Insurance?

Personal accident is a form of insurance for tradies which can pay you a weekly benefit for a period of time whilst you cannot work.

To be eligible to claim on the policy, you must have suffered an injury (or illness if the option is selected) that has left you unable to work.

Whilst the insurance is more popular with tradies who work as subcontractors or for their own business, it still has benefits for those who work on wages or salary.

It’s important to understand the different options that make up a personal accident policy, as they will have a major impact on your claim.

Waiting Period

This is the amount of time you must be unable to work for until you are able to make a claim.

The options will vary depending on the insurer, but typically the options will include the following:

  • 7 days
  • 14 days
  • 21 days
  • 28 days

Selecting a longer waiting period will result in a lower cost of the insurance, but it also means waiting longer before you can claim.

For example if you select a 28 day waiting period, any time off work less than four weeks will result in no claim.

A shorter waiting period will get you on claim much sooner, but the cost of the cover will be higher.

Weekly Benefit

Also known as the benefit amount, this is the amount that will be paid to you each week whilst you are unable to work.

When selecting a weekly benefit it’s important to note that you may have to provide evidence in the event of a claim. There is no point insuring yourself for $2,000 a week if you can only prove $1,500 a week in income.

You should also note that benefits paid must be declared to the ATO and will be taxable. So you should be covering your pre-tax income, not your after-tax income.

Benefit Period

This is the length of time you will continue to receive benefits for once you’re on claim.

The options vary from one insurer to the next, but a typical set of options will be as follows:

  • 6 months
  • 1 year
  • 2 years
  • 3 years

A shorter benefit period will result in a lower cost for the insurance, but of course that is also limiting your cover.

What happens if you get to the end of your 6 month benefit period and you still can’t return to work? You’ll be on your own sadly.

Coverage Options

Some policies allow you to select whether you want to be covered for accident only, or for accident as well as sickness.

Selecting accident-only will be cheaper, but it leaves you exposed if you’re unable to work due to any illness.

Some policies also allow you to select from the following coverage options with regards to accidents:

  • Covered at work only
  • Covered at work and whilst commuting
  • Covered 24 hours, 7 days a week

The lesser cover you select, the cheaper the insurance will be, but again you will be limiting your cover.

Being covered for work only isn’t going to help you if you break your leg on the weekend and can’t work for a month.

We strongly suggest covering yourself properly, which means the 24/7 coverage.

Each personal accident insurance policy will be different in terms of the features and benefits, so if you are considering this form of cover it is important to compare each policy carefully beyond just looking at the cost.

Is it the same as Income Protection?

One of the most common questions about personal accident insurance is if it’s the same as income protection insurance.

It is somewhat similar to income protection, in that its main aim is to replace your income when you cannot work.

But there are some important differences…

Extended benefit period

Personal accident policies will generally provide a benefit period of up to 3 or 5 years (depending on the insurer) whilst an income protection policy can provide benefits up to age 65.

It can be a lot more expensive to have a benefit period running through to age 65, but if this is important to you, you should be looking at income protection rather than personal accident

Cancellable

One of the most important differences is that personal accident is cancellable, whilst income protection is non-cancellable.

This has nothing to do with you being able to cancel the policy, but the insurer being able to cancel it. Or more to the point, not having to offer a renewal.

With income protection, the insurer must continue providing cover as long as you keep paying your premiums. They can’t refuse to renew your policy regardless of how much of a risk you become.

But with personal accident insurance the insurer can decide not to renew your policy. If you start to become more of a risk or make a lot of claims, the insurer can simply not offer a renewal when your policy expires.

This can be a very big deal, but is often overlooked by tradies when weighing up their options.

Advantages of Personal Accident

The single most important advantage of personal accident insurance for a tradesman is that it will pay you a regular benefit for period of time if you are injured and cannot work.

Other advantages of personal accident include the following:

  • No medical questions or tests
  • Capital benefits in the event of permanent disability or death
  • Premiums are generally lower than income protection

Another benefit of personal accident insurance is that it fills a need for people who do not qualify for a traditional income protection policy.

Tradesmen with a particularly poor medical history may find that they are unable to obtain normal income protection, but with personal accident insurance this is not a problem since the policy is not impacted upon by medical issues.

If you are simply looking for the cheapest form of income insurance to get onto the worksite and you aren’t particularly concerned about the comprehensiveness of the cover, personal accident may be a good option.

Capital Benefits Vs TPD Insurance

One of the advantages that personal accident has over income protection is the capital benefits feature.

The ‘capital benefit’ is the lump sum that a personal injury policy can pay you if you suffer a permanent injury that leaves you unable to work.

Whilst this option is generally not available within a standard income protection policy, you can package TPD insurance with your income protection.

You can learn more about TPD insurance by following the link to our dedicated guide, but basically it will payout if you suffer an injury or illness that leaves you unable or unlikely to ever return to work.

The benefit amounts available on TPD insurance compared with the capital benefits from a personal injury policy are far more comprehensive, and it will also cover you for injury and illness rather than just injury.

Quotes and More Information

At Trade Risk we can help you directly with personal accident insurance (including the sickness option).

If you prefer the idea of income protection insurance, we also have a specialist we can refer you to.

If you would like a quote on either form (or both forms) of insurance, please complete our online quote request or call our experts on 1800 808 800.

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In 2017 Trade Risk was awarded a Gold Trusted Service Award for the amazing service we offer to thousands of tradies from around Australia.

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