What Is Accidental Death and Dismemberment Insurance and How Does It Differ from Life Insurance?

What is an accidental death?

Accidental death insurance is a form of life insurance that pays an indemnity in the event of an “accident” while life insurance is payable merely on account of the death of the insured.  Oddly, most accidental death insurance policies do not include a definition of what is meant by an accident; however, legal precedents have concluded that “accidental” death is one that is sudden and unexpected.  In addition, when such a death occurs, the deceased must have a subjective expectation of survival and the expectation of survival must be both objectively reasonable and arises under circumstances where death is not substantially certain to result from the insured conduct.  

According to a leading court ruling, “generally, insureds purchase accident insurance for the very purpose of obtaining protection from their own miscalculations and misjudgments.”  Thus, accidental death insurance benefits are payable (unless explicitly excluded) when death results from a drunk driving accident or when the insured engages in dangerous activities such as autoerotic asphyxiation, although court rulings have gone both ways.  

Further, the U.S. Centers for Disease Control publishes a Medical Examiners’ and Coroners’ Handbook on Death Registration and Fetal Death Reporting, which states that coroners or medical examiners list “manner of death” as “accidental” on a death certificate if “there is little or no evidence that the injury or poisoning occurred with the intent to harm or cause death.  In essence, the fatal outcome was unintentional.”

Is a sudden death due to illness “accidental”?

While no one would intentionally contract a fatal illness, accidental death insurance policies exclude coverage for sudden death which results from an illness such as a heart attack or stroke, or which occurs in the course of undergoing medical treatment.  Death due to COVID or other diseases would also likely be excluded, although front-line healthcare and public safety workers who are exposed to the virus in their occupations may have claims for workers’ compensation benefits.  What complicates this issue, and is the source of most litigation over accidental death insurance, are situations where the deceased may have an underlying medical condition that played a role in but did not cause the insured’s death.

Perhaps the best analysis offered in such cases was written in 1893 by future President William Howard Taft while he was serving as a judge on the U.S. Court of Appeals:

“If the deceased suffered death by drowning, no matter what was the cause of his falling into the water, whether disease or slipping, the drowning, in such case, would be the proximate and sole cause of the disability or death, unless it appeared that death would have been the result, even had there been no water at hand to fall into. The disease would be but the condition; the drowning would be the moving, sole, and proximate cause”.

Insurers have drafted policy language in reaction to such rulings that have made it more difficult for claimants to prevail.  As an example, a recent federal appellate ruling found the deceased’s extensive cardiac history supported the insurer’s conclusion that a heart attack caused him to lose control of his car and die in an ensuing collision, which excluded accidental death coverage.  Other cases have disagreed, though.

Another situation that arises is where an accident leads to natural death.  An example is a case that we successfully appealed in the U.S. Court of Appeals, Prather v. Sun Life.  There, the decedent injured his Achilles tendon playing basketball, underwent surgery, and died of a pulmonary embolism several days after the surgery.  The court rejected the insurer’s argument that the death was due to natural causes, finding the accidental injury is what led to death.  Remarking on the general rule applicable in such cases, an earlier ruling from the same court observed, “A layperson has a clear if the inarticulate understanding of the difference between an accidental death and a death from illness.”

Is an accidental death claim precluded if there is a suspicion of suicide?

While death due to suicide would not be considered accidental, there is a legal presumption against suicide.  Thus, the rule set forth in a court ruling more than a century ago remains applicable:

“In the absence of satisfactory evidence as to the death being accidental or suicidal, the presumption is in favor of the theory of accidental death…” adding “When the dead body of the insured is found under such circumstances, and with such injuries, that the death may have resulted from negligence, accident, or suicide, the presumption is against suicide, as contrary to the general conduct of mankind, a gross moral turpitude not to be presumed in a sane person; and whether it was from one or the other, if there is any evidence upon the point, is for the jury.” 

Thus, unless suicidal intent is clear, a death under suspicious circumstances will be viewed as accidental.

What is a “dismemberment” claim

An amputation that results from an accident is also compensable under an accidental death and dismemberment insurance policy.  In cases involving an underlying illness, many courts follow a “substantial contribution” standard.  If injuries resulting from an accident such as a car crash resulting in an amputation, courts ask whether the illness substantially contributed to the need for the amputation.  Thus, a minor injury such as a cut in the foot that ultimately leads to a leg amputation will likely not be found sufficient to trigger dismemberment coverage if an underlying medical condition such as diabetes predisposed the insured to such a loss.  

What if the deceased was partially at fault in causing an accident?

Many accidental death policies exclude coverage if the death results in the course of the commission of a crime.  But routine traffic infractions, including drunk driving, would generally not trigger such exclusions unless the policy has a specific exclusion applicable to such behavior.  The same rule would apply to an accidental overdose from illicit drug use.  

Should I have both accidental death insurance and life insurance?

Not necessarily.  You should not only have accidental death insurance because statistics compiled by the Centers for Disease Control place the risk of death due to an accident much lower than the overall risk of early death.  Life insurance is an important component of any financial plan in order to provide familial support in the event of premature death and buying additional accidental death coverage provides additional support if death or dismemberment results from an accident.  Term life insurance is a relatively inexpensive way to protect against premature death, and because the risk of accidental death is so low, adding such coverage is also relatively inexpensive.  If the goal is to build up savings, though, traditional whole life insurance, while expensive, offers a means of generating savings in addition to insuring against premature death, but does not normally include an additional benefit for accidental death.