Personal accident and sickness insurance is designed to replace part of your income when injury or illness stops you working. For a self-employed operator, such as an owner-driver, a sole-trader tradesperson or a working director running their own plant, that can be the difference between a hard month and losing the business. The mechanics are straightforward once you know the moving parts. Our personal accident insurance page sets out the cover options.
Who It Is Designed For
Employees are generally protected by workers compensation for work injuries. Sole traders, partners and many working directors may sit outside workers compensation for their own injuries, and the arrangements vary by state. Check the current requirement for your structure with your state scheme. Personal accident and sickness cover is how many self-employed operators fill that gap, and unlike workers compensation it can respond to injuries outside work and to illness, depending on the policy. For tradespeople, it usually sits alongside the liability and tools covers on our insurance for tradies page.
Accident Only or Accident and Sickness
Some policies respond to accidental injury only. Others add sickness, which costs more but responds to illnesses such as a heart condition, a serious infection or a cancer diagnosis that keeps you off work. For a business that depends on one person, illness can stop the income just as surely as a fall from a truck deck.
If you choose accident only to reduce the premium, be clear about what that leaves out. Gradual onset conditions such as back problems may be treated as sickness rather than injury, so an accident-only policy may not respond to some of the conditions that keep physical workers off the job.
The Weekly Benefit
The core of the cover is a weekly benefit paid while you are unable to work. You nominate the amount when you take out the policy, within limits the insurer sets relative to your income.
- Insure an amount your income can support. At claim time, insurers commonly ask for tax returns, activity statements or financial accounts to confirm earnings. If the benefit you insured is higher than your records support, you may have paid for a benefit you cannot fully claim.
- Understand what “income” means in the wording. For a business owner, it may be defined as earnings after business expenses, which can be well below turnover.
- Partial disability. Some policies pay a reduced benefit if you can do part of your work or return on lighter duties. Check whether yours does and how it is calculated.
- Offsets. Benefits may be reduced by other income you receive for the same disability, such as workers compensation or another policy.
Waiting Periods
The waiting period is the time you must be off work before the weekly benefit starts. It works like an excess measured in days rather than dollars. Our explainer on what an insurance excess is covers the more familiar version.
Shorter waiting periods cost more because they catch more small claims. A longer waiting period lowers the premium but means funding the first stretch yourself. The right choice depends on how much cash the business holds and how long you could meet personal and business costs without income. Some policies also apply a longer waiting period to sickness than to injury, and a qualifying period after the policy starts before any sickness claim can be made.
Benefit Periods
The benefit period is the longest time the weekly benefit will be paid for any one injury or illness. Personal accident and sickness policies generally offer limited benefit periods, measured in weeks, rather than paying until a set age. That makes them well suited to injuries you recover from, such as a broken leg or a shoulder reconstruction. It makes them less suited to long-term illness, which is one reason some operators hold income protection as well.
Lump-Sum Injury Benefits
Many policies also pay a capital benefit for accidental death or serious permanent injury, such as loss of sight or permanent loss of use of a limb. The amounts are usually set out in a table of events, each paying a proportion of the capital sum insured. Read the table carefully: the definitions are precise, and “permanent loss of use” has a specific meaning that may not match how you would describe an injury.
How Occupation Classes Shape Personal Accident and Sickness Insurance
This cover is priced heavily on what you do. Insurers group occupations into classes, from office-based work through supervisory roles to heavy manual work, and some occupations attract loadings or special terms.
Two things matter. First, describe your actual duties, not your title. “Company director” and “director who operates an excavator most days” are rated very differently. Second, tell your broker if your duties change during the policy period. An injury suffered doing work outside the declared occupation can become a dispute.
Common Exclusions
- Pre-existing conditions. Injuries or illnesses you had, or had symptoms of, before cover started are commonly excluded or limited.
- Gradual onset injuries. Back and joint problems that develop over time may be treated as sickness rather than accidental injury, which can change the waiting period and benefit.
- Intentional self-injury.
- Pregnancy and childbirth, in many policies.
- Mental health conditions, which some policies exclude or limit.
- Hazardous activities, such as certain sports, or injuries sustained under the influence of alcohol or drugs.
- War and related events.
Exclusions vary between products, so the wording matters more than the brochure.
How It Differs from Income Protection and Workers Compensation
- Workers compensation is a statutory scheme for employees, run under state and territory laws that each have their own rules. It generally responds to work-related injury and illness only.
- Personal accident and sickness is a general insurance product, usually renewed each year, with shorter benefit periods. It can respond to injury and illness whether or not they happened at work, depending on the policy.
- Income protection is generally a life insurance product, typically with longer benefit periods, more detailed underwriting of your health and different renewal terms.
Our comparison of workers compensation and income protection goes further on the difference. Ask your accountant about the tax treatment of premiums and benefits for your business structure.
Cover for a Team
If you engage contractors, or want protection for staff beyond workers compensation, group cover can respond to a defined group of people under one policy. Our article on group personal accident insurance explains how it works.
Common Questions
Can I claim if I am hurt on the weekend?
Many personal accident and sickness policies can respond to injuries outside work, but check the wording and any exclusions for specific activities.
What if I am a director on a salary?
Your workers compensation position depends on your structure and your state, so check the current requirement. Personal accident and sickness cover can fill the gaps that remain.
How quickly are claims paid?
Payments start after the waiting period, once the insurer has the medical and income evidence it needs. Sending complete records early is the practical way to avoid delays.
Talk It Through
Request a personal accident and sickness quote or call 1300 983 940 and we will match your personal accident insurance to your income and the work you actually do.
General advice only. This article does not take your objectives, financial situation or needs into account. Consider the relevant PDS and Target Market Determination before deciding on a policy.