Accident insurance
accident insurance is insurance that pays benefits to the policyholder for injuries sustained by accidental means or through an accident. Generally it is intended that the policyholder will be provided coverage when a disability is a natural and ordinary result of external, accidental injury. If the insured dies as a direct result of the accidental injuries, the policy may provide for an accidental death benefit that will be paid to the policyholders beneficiary.
The purposes of accident insurance are to reimburse the policyholder for financial loss that occurs as a result of injuries sustained, including medical, hospital, and nursing expenses, and to reimburse the policyholder for loss of earnings during such period. The policy typically provides for payments when the earning power of the insured is permanently impaired due to the accident, such as in the event of total or partial disability, or in the event of the loss of a member of the insureds body, which may either prevent or inhibit the pursuit of an occupation. The benefits payable under the policy are measured by the terms of the contract, not by the extent of the policyholders loss.
The accident insurance system is administered by the occupational or industrial cooperative associations which are responsible either for particular companies or regions. As well as cooperative associations, statutory accident insurance can also be the responsibility of a wide variety of other institutions. In detail, the federal government, the local authorities and the federal mines office are involved. Their functions include retraining, rehabilitation, preventive measures, inspection and workplace monitoring of working conditions these functions are carried out on a day to day basis in conjunction with the factory inspectorate. The insurers are autonomous organizations run by a delegate assembly and an executive committee consisting of elected representatives of the insured and the employers.
Membership of the statutory accident insurance scheme is compulsory for all employees, regardless of their occupation, the length of their employment and their pay. Self-employed farmers are also covered. If the self-employed are not liable for compulsory insurance, they can opt for voluntary membership. In addition, compulsory insurance coverage is provided for the unemployed, rescue workers, holders of honorary positions, children whilst attending nursery school, school children, students, overseas aid workers, prisoners, and those undergoing rehabilitation. accident insurance is financed solely from employers contributions. Contributions are assessed on the aggregate income of a companys employees and the level of accident risk within the company. Thus those industries with a higher level of risk pay higher contributions. Individual companies may have to pay higher or lower premiums according to the number of insured accidents which have occurred and the costs involved. The premium if adjusted annually in accordance with average wage or salary increases.
accident insurance becomes payable from the day the injury occurs. The size of care grants varies according to the degree of injury. accident insurance covers not only the cost of sickness and rehabilitation, but also injury benefits which are payable for the working disabled provided the insured person is not unemployed or not in receipt of maternity benefit. After the seventh week of sickness the recipients of injury benefits are entitled to eighty percent of previous earnings for a maximum period of seventy eight weeks in every three years. Vocational benefits are another important aspect of accident insurance. They are payable to the employer for re-training and wage costs. During the period of retraining the insured receives the transitional benefit from the seventh to thirteenth week. This benefit amounts to eight percent of previous earnings for insured persons with a dependent married partner or at least one child. The benefit is reduced to seventy percent for others, or for persons who have not been gainfully employed for more than three years.
The question of whether a person covered by accident insurance is entitled to a pension arises after the thirteenth week of absence. At that stage the issue is whether the vocational injury has led to a permanent loss in earning ability amounting to twenty percent or more, for total loss of earning capacity an insured person receives benefits equal to two-thirds of previous annual earnings which is equivalent to a full pension. For a partial loss of earning capacity, benefits are set at a proportional rate. In the case of an entitlement to fifty percent of a full pension, for example, an additional ten percent of the pension is payable for each child up to eighteen years. If the insured person dies, a death grant equal to one months earnings is payable. Widows pensions are paid at a maximum rate of thirty percent of annual earnings of the deceased until the widows death or remarriage. If the widow is over the age of forty five, then the pension is at least two-fifths of the insureds annual earnings. In addition, an allowance of one-fifth of annual earnings is payable until any child reaches the age of eighteen; orphans receive thirty percent.
There are two major problems associated with accident insurance.
- First, the prevention and reporting of accidents.
- Second, the extent of occupational disease.
There is also a significant difference in the incidence of accidents between economic booms and recessions. In a recession there are always fewer accidents. The recognition and classification of occupational disease is a problem area, too. At the moment the legislators have recognized only fifty nine diseases. Thus, if there is a new disease which cannot be treated through accident insurance because it fails to come under any recognized classification, the insured must meet the high cost of the industrial injury themselves.
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