Personal Accident Insurance

ACCIDENT INSURANCE, PERSONAL. This class of insurance dates from the industrial revolution of the last century and was introduced in consequence of the frequency of railway accidents. Under English law, in insurance there are certain pri mary principles to be observed. First, there is the principle of "the utmost good faith" (uberrima fides), which must always exist if the contract as between the insured and the insurers is to be maintained. The proposer must not withhold from the insurers any fact or circumstance which in anyway affects the risk to be undertaken and, to emphasize this principle, an exact copy of the proposal form completed by the applicant is endorsed on the policy. Whilst it is impossible strictly to apply the prin ciple of indemnity to personal accident insurance, it being ob viously impossible to indemnify for loss of life or limbs or eyesight, nevertheless it is not permissible for an insured to provide for weekly benefits greatly in excess of his normal weekly earnings, as this might prove an incentive to lengthen a period of disability. It is a condition of a personal accident policy that the insured shall not, without the consent of the insurers, effect further policies with other companies and at the outset any such additional insur ances must be disclosed, though this restriction does not apply to coupon insurances. Prior to the passing of the Fatal Accidents (Damages) Act, 1908, payments under accident policies were generally applied to the reduction of damages payable by a negli gent third party, but this is no longer the case.

In all classes of insurance the insurers have to contend both with the physical and moral hazards. By the former, in personal accident insurance, is meant the abnormal risk of accident due to physical defects of the individual, whilst the moral hazard relates to the individual's moral character in so far as he may endeavour to defraud the insurers either by misstatement of facts or by presenting fraudulent claims.

Accidents-only Policies.

The commonest form of policy is that which covers accidents only, and for this class of insurance the occupation of the proposer is of the utmost importance. Preferential rates are quoted for professional men, whilst occupa tions involving manual employment with only slightly greater hazards warrant an increased premium, as do persons engaged in manual labour and using tools. The proposal form also requires particulars, inter alia, as to the height and weight of the proposer, as these factors, together with previous accident experience, must influence an underwriter in his estimation of the risk. Abnor mality in these directions may render it necessary to refuse the proposal.

The policy states that the insurers will pay the benefits specified following "accidental bodily injury caused solely and directly by violent external and visible means." These words are used in their ordinary meaning, and when it has been necessary to refer cases to the courts it has always been shown that, provided the occurrence causing the accident has been something which was neither expected nor designed, then the expression "accidental" has been fulfilled. There must, however, be some sign of violence and there must also be a visible effect produced upon the person concerned. The benefits provided by such a policy are in the event of :— (I) Death . . . . The capital sum.

(2) Total loss by actual physical separation at or above the ankle or wrist of two limbs, or the loss of sight of both eyes, or the loss of one limb and the loss of sight of one eye ...... . . . The capital sum.

(3) Total loss as in (2) of one limb or the sight of one eye . . . . . . One-half of the capital sum.

The above misfortunes must occur within three calendar months of the happening of the accident.

(4) Temporary total disablement from engaging in or giving atten tion to the insured's occupation. Corresponding weekly benefit.

(5) Temporary partial disablement in similar circumstances. . . . One-third or one-quarter of benefit under (4).

The liability for the weekly payments is limited to 26 or 52 weeks, as the case may be, in respect of any one year of insurance. When one of the capital sums is payable no claim can be made for weekly compensation and if a payment has already been made for weekly compensation which is followed by a misfortune warrant ing a capital payment the total liability of the insurers cannot exceed the latter sum.

Accidents and Specified Diseases Policies.—Accidents-only policies were soon followed by a demand for policies covering diseases and insurances are freely issued covering certain specified diseases, for which weekly benefits are provided. The accident benefits are similar to those mentioned above, though the insured is given the advantage of double benefits if he is killed or injured in an accident to a passenger lift, train, tramcar, omnibus or other licensed vehicle plying in the streets for public hire in which he is travelling as a passenger. If the injury, whilst not warranting the payment of one of the capital sums, results in total disable ment for a period of not less than 12 months an annuity is payable so long as the disability continues. A similar annuity is provided should the insured lose completely and irrecoverably the sight of both eyes by disease, or should he contract paralysis involving per manent loss of power in at least two limbs, and provided that this condition has existed for at least six months. Such policies remain in force wherever the insured may reside in the world as regards the accidents cover, but so far as the diseases are con cerned the cover is restricted to civilized regions.

Many insurers offer bonus additions to the capital sums insured without additional premium and such sums are increased annually by 5% during the continuance of the policy till the original sums are increased by 5o%. Reductions from the renewal premiums are often allowed up to io%, whilst in addition bonuses are given to life policy holders and sometimes to total abstainers. On the payment of an additional premium, usually io%, medical expenses, including operation fees and hospital charges, may be covered, sub ject to a reasonable limit.

Accidents and All Sickness Policies.

Such policies are similar to those previously described, but in addition weekly pay ments are made to the insured if, as a result of any illness neces sitating treatment by a qualified medical practitioner giving a cer tificate specifying the disease, he is confined to the house for a period of not less than seven days and is totally disabled and prevented from attending to any part of his business. The in sured does not actually receive payment till the total liability of the insurers has been ascertained. The period during which com pensation may be payable varies between 26 and 104 weeks, though most insurers limit their liability to 52 weeks. Temporary par tial disablement benefits are provided whilst the insured is con valescent, but the weekly payments are reduced to one-quarter of those payable for total incapacity by illness and the period is usually limited to four weeks. Such policies are terminated when the insured reaches the age of 6o and no payment is made for any illness contracted within four weeks after the commence ment of the insurance. The illness risk is limited to the country in which the policy is issued, subject to the consent of the insurers should the insured propose to travel. A few insurers issue non cancellable accidents and illnesses policies. Such insurances are uncommon, but provided that the renewal premiums are paid the policy continues till the age of 55, when the insurance terminates. Premiums are calculated on an actuarial basis.

General Policy Conditions.

Apart from those conditions which it has been necessary to discuss in passing, policies provide that, apart from the death benefit, no assignment of the policy shall be valid. In the event of an accident the insured must, within 21 days of its occurrence, notify the insurers and send them full particulars, accompanied by satisfactory medical evidence. The insured must, if required by the insurers, submit to a medical examination by the insurers' doctor and in the event of death the insurers are entitled to order a post-mortem examination at their own expense. If the insured changes his occupation he must notify the insurers and he must also advise them should he suffer any disease, physical defect or infirmity, thus giving the insurers an opportunity of reconsidering the risk. A cancellation clause is provided and the insurers may, by giving seven days' written notice to the insured, terminate their liability without prejudice to any claim which may arise prior to the termination of such notice. All differences arising out of the contract must be referred to arbitration.

Sickness Indemnities.

The benefits under such policies are similar to those provided by the accidents-only policy and in addition a weekly indemnity is provided for periods of continu ous disability not exceeding 52 consecutive weeks. If as the result of a disease or illness the insured loses the use of two limbs or the sight of both eyes the insurers will pay him, in lieu of any other indemnity, excepting surgical or hospital fees, the weekly indemnity specified in the policy during the period in which the insured is disabled up to a maximum of a ioo weeks. No payment is made for any disease for which the insured is not treated by a physician nor for any disease in respect of which disability commences whilst the policy is not in force.

Coupon Insurance.

In recent times there has been a con siderable growth in this class of business, which is generally undertaken by insurance companies on behalf of the periodicals concerned. The benefits, unlike those of the ordinary personal accident policies issued by insurance companies, apply only to more uncommon accidents and the weekly payments are generally very limited. Their most striking feature is the enormous capital sums which are offered as an inducement to buy the newspaper or magazine concerned and, whilst such insurances may be re garded favourably by the readers of certain journals, they should not be led to dispense with the more certain cover provided by the ordinary personal accident policies which are not subject to such irritating restrictions. (A. G. M. B.)