Understanding Double Indemnity Accidental Death in Car Insurance Coverage

By Desiree Baughman
Desiree maintains insurance licensure in 46 states, and by combining years of experience as a writer and insurance professional, she delivers information consumers can easily relate to and understand. A graduate of Sweet Briar College with a diverse writing portfolio, she regularly serves as an expert source and commentator for respected outlets like CBS Money, Bankrate, and Ragan.com.

Understanding Double Indemnity Accidental Death in Car Insurance Coverage

When it comes to finding car insurance, vehicle owners have a variety of coverage options. From liability to collision, comprehensive to missile and riot coverage, you almost expect car insurance companies to offer every type of coverage you could want. But it isn’t so.  One item that you’ll find missing from your menu of car insurance choices is “double indemnity accidental death” coverage. Sound like a foreign term? It does to many, but here’s everything you need to know to decide whether it’s for you.

What is Double Indemnity Accidental Death Coverage?

Before we talk about car insurance, let’s start by defining double indemnity accidental death coverage. You may have heard of this type of insurance by the name of “accidental death and dismemberment”; it’s often called an “AD&D” policy. AD&D policy coverage is two-fold:

  • Accidental Death:  Should you die unexpectedly as a result of an accident, the insurance company will pay accidental death benefits to your beneficiary (or beneficiaries) in addition to any life insurance payments they may be entitled to–but only up to a set amount.  Some common accidents typically covered by this policy include traffic accidents, homicide, exposure, falls, drowning, and heavy equipment-related accidents.

There are common exclusions to be aware of prior to purchasing accidental death insurance, however.  Deaths as a result of illness, war injury, natural causes or suicide are almost never covered by AD&D, and neither are deaths that occur while one is under the influence of alcohol or non-prescription drugs.

  • Dismemberment: Amounts of your policy will be paid out in fractions should the policy holder lose bodily appendage (i.e. leg, finger, toe, limb) or sight because of an accident.  This type of coverage will also often pay benefits if the insured suffers permanent paralysis.

Double indemnity accidental death insurance pays, as the name states, double or twice as much as your beneficiaries would receive under your standard life insurance policy. Suppose you have a $50,000 life insurance policy with an AD&D rider; your beneficiaries would receive a total of $100,000 if you died in a covered accident.

Does Full Coverage Auto Insurance Include Double Indemnity Accidental Death Coverage?

Full coverage auto insurance is optional–states only require drivers to carry liability coverage, which pays for damages suffered by another party when you cause an accident and injure someone or damage property. Liability coverage also protects your finances because you won’t be forced to pay for damages out of your own pocket. In a serious accident, costs and damages add up fast. Few drivers are prepared to write a large and unexpected check on short notice. Without liability coverage and/or the ability to pay for those costs out of pocket, you could also be sued, have a judgment placed against you, and have assets seized or wages garnished to pay the judgment amount. Liability coverage, in theory, helps everyone avoid a nightmare scenario.

So what does optional full coverage protect against, exactly? Well, what is commonly referred to as a “full coverage” car insurance policy isn’t quite as full as you might hope. ‘Full’ coverage really just means a policy with both comprehensive and collision coverage. Full coverage only protects your property. More specifically, it pays for damages to your vehicle, particularly if an accident is your fault (collision coverage) or if your vehicle is the only vehicle involved (comprehensive coverage; if you crash into a tree, for example). For double indemnity and accidental death coverage, you need more than a car insurance policy.

How You Can Get Double Indemnity Accidental Death Coverage

You may not be able to buy AD&D coverage as part of your car insurance policy, but you can get it several other ways:

  1. Group Life Supplement:  Get AD&D coverage as a part of your group life insurance contract, often offered by an employer.
  2. Voluntary: Get AD&D coverage as a supplement or rider to your existing life or health insurance policy (you’ll pay extra, of course), or buy a standalone accidental death policy.
  3. Travel Accident:  If you’re a traveling employee, AD&D benefits would likely be provided to you through your employee benefit plan.

Is Double Indemnity Accidental Death Coverage Worth the Cost?

People are more likely to die from diseases like cancer and heart disease than as the result of an accident. However, the possibility isn’t so far off. Accidents are the fifth leading cause of death in the United States, and traffic-related accidents are among the most common. So do you need AD&D coverage? Is it worth the expense, considering the risk?

Lifestyle may be an important consideration. Some have jobs with few occupational hazards (think 9-to-5 office job). Other jobs (oil rig worker, for example) carry a ton of risk, and losing a limb or dying on the job is a real possibility. Just remember that your premiums will be significantly higher if you’re in a dangerous industry. Also remember that AD&D coverage is not just for work related deaths; as the long as an accident is covered (not excluded), it doesn’t matter whether it happens on the job or not.

What it really boils down to is whether or not you think the financial benefit of this policy will be worth the money you pay into it right now. Consider the projected financial needs of your family if you were involved in an accident and could no longer contribute to the family finances, or if you needed extensive medical treatment and rehabilitation to recover from an accident which could potentially keep you out of work for months or even years. Some insurance experts are skeptical about the value of AD&D policies and recommend an alternative: Use the funds you would have otherwise paid into a double indemnity accidental death policy to buy a better life insurance policy.

Nobody wants to think about dying unexpectedly. However, learning what your current insurance policies do anddon’t cover is a critical step in assuring your family’s security in the event of a tragedy. You don’t know what you need until you understand what you’ve got. Accidents are often entirely attributed to chance, but giving your family peace of mind should the unthinkable happen isn’t chance at all–it’s responsible and commendable.