Understanding Personal Accident & Illness Insurance

Unexpected injuries and illnesses can stop you from working without warning. If your income depends on your ability to work, time away from your business or job can quickly create financial pressure.

Personal Accident & Illness insurance is designed to provide financial support if you’re unable to work because of a covered injury or illness. Depending on the policy, it can provide weekly income benefits while you recover, along with lump sum benefits for certain serious events.

Personal Accident & Illness insurance is available in different forms depending on the policy you choose. Some policies provide cover for accidental injuries only, while others include cover for both accidental injuries and illness. Where illness cover is available, it may be included automatically or offered as an optional benefit, depending on the insurer and policy. Understanding whether you’re considering accident-only cover or Personal Accident & Illness insurance that includes illness is an important first step when comparing policies.

What is Personal Accident & Illness insurance?

Personal Accident & Illness insurance can provide cover should you become permanently disabled or pass away as a result of an accident. Cover can also include a weekly benefit for loss of income if you are unable to work due to an unexpected injury or illness (even if it occurs outside of your employment).

Depending on the policy, it can provide weekly income benefits (typically up to 85% of your pre-injury income) paid for an agreed period while you recover, along with lump sum benefits for certain serious events.

Unlike private health insurance, Personal Accident & Illness insurance doesn’t pay your medical or hospital bills. Instead, it’s designed to help support your finances while you’re unable to earn an income.

Why do I need Personal Accident & Illness insurance?

Many self-employed people, sole traders and contractors don’t have access to paid sick leave through an employer.

If an unexpected injury or illness prevents them from working, their income may stop while many of their regular expenses continue.

People often consider Personal Accident & Illness insurance to help manage everyday costs during a recovery period, including mortgage repayments, rent, bills and other living expenses, subject to the terms, conditions and limits of the policy.

What does Personal Accident & Illness insurance typically cover?

Cover differs between insurers and policies, but Personal Accident & Illness insurance commonly includes:

• Weekly benefits if you’re unable to work because of a covered injury or illness.
• Lump sum benefits for specified serious injuries or permanent disablement.
• Accidental death benefits.
• Illness cover, where included under the policy or selected as an optional benefit, depending on the insurer.

The amount payable, waiting periods, benefit periods and eligibility requirements vary between policies, so it’s important to read the Product Disclosure Statement (PDS) before purchasing cover.

Common exclusions and policy limits

Like most insurance products, Personal Accident & Illness insurance includes exclusions and policy limits. Depending on the insurer and policy, common exclusions may include:

• Pre-existing medical conditions.
• Self-inflicted injuries.
• Injuries sustained while under the influence of drugs or alcohol.
• Injuries arising from excluded hazardous activities.
• Illness, where you have selected an accident-only policy or where illness is not included under your cover.

Policies also include waiting periods, maximum benefit periods, benefit limits and other conditions that affect when benefits are payable.

Personal Accident insurance vs. income protection insurance

Although they both help protect your income if you’re unable to work, Personal Accident & Illness insurance and income protection insurance are different insurance products with different purposes, features and eligibility requirements.

Personal Accident & Illness insurance is designed to provide benefits if you’re unable to work because of a covered accidental injury and, where included under the policy, a covered illness.

Income protection insurance is generally designed to replace part of your income if you’re unable to work due to illness or injury. Unlike many Personal Accident & Illness insurance policies, it typically focuses on ongoing income replacement rather than providing lump sum benefits for accidental death or permanent disablement.

Benefit periods, waiting periods, income replacement amounts, exclusions and optional benefits also vary between products and insurers. For this reason, the two types of insurance shouldn’t be considered interchangeable, even though both can help reduce the financial impact of being unable to work.

Although they both help protect your income, they are designed for different situations.

Personal Accident insurance vs workers’ compensation

Workers’ compensation and Personal Accident & Illness insurance serve different purposes.

Workers’ compensation is generally compulsory for employers and covers eligible work-related injuries or illnesses suffered by employees while performing their work duties. Workers’ compensation schemes are regulated by each Australian state and territory, so it’s important to understand the requirements where your business operates.

Personal Accident & Illness insurance is voluntary. Depending on the policy, it can provide benefits if you’re unable to work because of a covered accidental injury or, where included, a covered illness that occurs either at work or outside work.

Because the two products cover different situations, they shouldn’t be viewed as interchangeable.

Who commonly considers Personal Accident and Illness insurance?

Personal Accident and Illness insurance is often considered by people whose income depends on their ability to work, including:

• Sole traders
• Self-employed professionals
• Contractors
• Tradespeople
• Rideshare and delivery drivers
• Freelancers 

It may also be relevant for business owners who don’t have access to employer-funded leave benefits.

What can affect your cover?

Several factors may influence the cover available and the cost of your policy.

These can include:

• Your occupation and the level of occupational risk.
• Your age.
• Your income.
• Whether you choose accident-only cover or accident and illness cover.
• Your selected waiting period and benefit period.
• Whether you choose accident-only cover or Personal Accident & Illness insurance that includes illness cover.

Understanding these factors can help you compare policies and understand how different cover options work.

Ready to compare Personal Accident and Illness insurance?

Personal Accident and Illness insurance is designed to provide financial support if you’re unable to work because of a covered injury or illness. While cover varies between insurers, it can help reduce financial pressure during a recovery period by providing weekly benefits and, in some cases, lump sum payments for specified events.

When comparing Personal Accident & Illness insurance policies, consider the waiting period, benefit period, weekly benefit amount, exclusions and whether the policy covers illness as well as accidental injury. It’s also worth checking whether illness cover is automatically included or available as an optional benefit, as this differs between insurers and policies.

BizCover allows you to compare multiple policies from selected leading Australian insurers. You can compare quotes and purchase insurance in moments through our online platform. The number of quotes provided varies between products, occupations and other underwriting factors determined by the insurers.