Accidental Death and Dismemberment Worked

Accidental death and dismemberment coverage pays a fixed sum when an accident kills the insured or takes a hand, a foot or sight. It is simple to describe and easy to get wrong in a claim, because the amount depends on a schedule, and whether the benefit is owed at all depends on exact words: what caused the loss, how soon the loss followed, and what the policy excludes. The sections below read the policy language in plain terms, work claims through the schedule, and decide several disputed cases by asking who pays and why. Standard forms generally follow the pattern described here, but schedules, time limits and definitions vary by insurer, so the policy in hand controls. Names and figures are invented.

Reading the Insuring Clause

An AD&D policy promises to pay when a covered loss results from an accidental bodily injury. Three phrases in the insuring clause carry most of the weight.

“Accidental bodily injury.” The injury, not just the event, must be accidental. A disease is not an accident, and an injury the insured should have expected from a deliberate act may not count as one. The two wordings are compared below.

“Directly and independently of all other causes.” Many forms pay only when the accident is the sole cause of the loss. An insured whose heart disease contributes to a fatal fall has, on the strict wording, died of more than the accident. Insurers apply this clause with different degrees of strictness, so a producer should not tell a client that every accident-related death is covered.

“Within a stated period.” The loss must occur within the period the policy states after the accident, which can be a number of days or longer. A man who loses a leg in an accident, and dies of complications long after the stated period, may find that the dismemberment benefit was owed but the death benefit is not, depending on the wording.

A loss of a hand or foot generally means severance at or above the wrist or ankle. Loss of sight generally means total and irrecoverable loss. A partial loss, such as part of a finger, is paid only if the schedule lists it.

The Principal Sum and the Schedule

The principal sum is the full benefit. The policy pays it for accidental death and for the most severe dismemberments. The capital sum is the part of the principal sum paid for lesser dismemberments, set by a schedule. A sample schedule for a $200,000 principal sum is shown below. It is typical, not universal.

Loss	Share of principal sum	Amount
Life	100%	$200,000
Both hands, both feet, or sight of both eyes	100%	$200,000
Any two of: one hand, one foot, sight of one eye	100%	$200,000
One hand, one foot, or sight of one eye	50%	$100,000
Thumb and index finger of one hand	25%	$50,000

Most policies also cap the total payable for all losses from a single accident at the principal sum.

Four Claims Through the Schedule

One hand. A woodworker loses his left hand in a saw accident that occurs within the policy’s coverage. The schedule pays 50% of $200,000, or $100,000.

A hand and an eye. In a workshop explosion a machinist loses her right hand and the sight of her left eye. Under this schedule the combination of any two listed losses pays 100%, so the benefit is $200,000.

A foot and two fingers. A cyclist loses one foot and the thumb and index finger of one hand in a single collision. The schedule pays 50% for the foot and 25% for the fingers. That is 75% of $200,000, or $150,000. It does not reach the principal sum, and the cap does not apply.

Dismemberment, then death. A driver loses a leg in a crash, receives the 50% benefit of $100,000, and dies of crash injuries within the policy’s stated period. The same accident caused both losses, so the total for the accident is capped at $200,000. A policy written this way pays the $100,000 balance on death, not another $200,000.

Each claim follows the same steps. Identify the accident and its date. Identify each loss and match it to the schedule. Add the percentages. Check the cap. Confirm the loss fell within the policy’s stated period.

Accidental Means and Accidental Bodily Injury

Policies describe accident in one of two ways. Older forms promise to pay for loss from injury “effected through accidental means.” Newer forms promise to pay for loss from “accidental bodily injury.” The difference lies in what has to be unexpected.

Under an accidental means test, the cause must be accidental: something unforeseen has to happen in the sequence that produced the injury. Under an accidental bodily injury test, the result must be accidental: the injury is unexpected even if the act that led to it was intentional.

A worked contrast shows the difference. An insured steps off a bus that has not yet stopped, meaning to land on his feet, and breaks his leg. He meant to step off, and nothing unforeseen happened in the act itself. Under a strict means test, a claim examiner could find nothing accidental in the means and deny the claim. Under a bodily injury test, a broken leg is an unexpected result, and the benefit is owed. Had he slipped on the step, the means would be accidental under either test. Most current policies use the bodily injury wording, but the policy’s own words govern, and a producer should read them before saying either policy pays.

Exclusions in the Policy Language

The common exclusions apply to loss caused by, or in some forms contributed to by, the listed event.

Exclusion	Typical wording	What the wording requires
Intoxication	Loss caused by the insured’s being intoxicated, or by a narcotic not taken on a physician’s advice	That the intoxication or narcotic caused the loss, not just that alcohol was in the insured’s system
Felony	Loss caused or contributed to by the insured’s committing or attempting to commit a felony	That the loss is connected to the felony
War, suicide, self-inflicted injury	Loss from war or an act of war, intentional self-harm	The excluded cause
Sickness or disease	Loss resulting from disease or medical or surgical treatment	That a disease caused or contributed to the loss
Hazardous activities	Loss during named activities such as flight in a nonscheduled aircraft	That the insured was engaged in the listed activity
Workers’ compensation	Some policies define injury so that it excludes an injury covered by workers’ compensation	That compensation benefits are payable for the loss

Michigan’s Criminal Activity Clause

Michigan allows a disability insurance policy to include an optional illegal occupation or criminal activity provision: the insurer is not liable for a loss to which a contributing cause was the insured’s commission of or attempt to commit a felony, or the insured’s being engaged in an illegal occupation or other willful criminal activity (MCL 500.3452(1)). The statute says willful criminal activity includes operating a vehicle while intoxicated in violation of the Michigan vehicle code, or similar law elsewhere, but not a civil infraction or other activity short of a misdemeanor or felony (MCL 500.3452(2)).

The difference between “caused” and “contributing cause” decides cases. Suppose an insured with a blood alcohol level above the legal limit is killed when another driver crosses the center line and strikes his car. If the policy has only the intoxication exclusion, the insurer must show that the intoxication caused the death. The insurer can argue the insured’s impaired reaction contributed to the crash, but the other driver’s act is the obvious cause, and the claim is a hard one to deny. If the policy contains the criminal activity provision, the question is whether operating the vehicle while intoxicated was a contributing cause, which is a lower bar for the insurer. The result in either case depends on the facts, and the producer should explain that a drink before driving can end a claim.

Sickness and the Sole-Cause Rule

A man with known heart disease collapses and dies while shoveling snow. Under a sole-cause clause, the heart disease contributed, and the insurer denies the claim. If instead he slips on ice, falls and dies of the head injury, an accident caused the death directly. The line is whether the accident, or the disease, set the sequence in motion, and the claim is decided on the medical evidence.

Travel Accident Coverage

Travel accident insurance pays the AD&D benefits for losses during a defined trip or while riding as a fare-paying passenger on a scheduled commercial carrier. It does not cover the traveler’s everyday life.

Mara buys a $250,000 travel accident policy at an airport kiosk for a single trip on a scheduled airline. The aircraft is involved in an accident and she is killed. The policy pays her beneficiary. A different traveler, with the same policy, is killed in a taxi after landing. If the policy covers only the flight, the taxi accident is outside it. If it covers ground transportation on the trip, as some do, it pays. The producer’s job is to read what the policy covers rather than assume.

Michigan lets an insurer omit three provisions, the entire contract clause, reinstatement and the physical examination and autopsy clause, from ticket policies sold only to passengers by common carriers (MCL 500.3400(3)).

Making a Claim in Michigan

A stand-alone AD&D policy is a disability insurance policy under Michigan’s code, so the claim provisions apply as they do to other accident policies. When an insured dies of an accident:

1. The beneficiary gives written notice within 20 days after the loss, or as soon as reasonably possible. Notice to an authorized agent with enough information to identify the insured is notice to the insurer (MCL 500.3412(1)).
2. Written proof of loss is due within 90 days after the date of the loss, for a loss that is not periodic (MCL 500.3414).
3. Indemnity for loss of life is paid immediately on receipt of due written proof, in accordance with the beneficiary designation. If no designation is in effect, it is paid to the insured’s estate (MCL 500.3416; MCL 500.3418(1)).
4. The insurer may, at its own expense, make an autopsy in case of death if the law does not forbid it (MCL 500.3420).
5. The beneficiary may not sue before 60 days after proof is furnished or after 3 years from the time proof was required (MCL 500.3422).

An AD&D feature added to a life insurance policy as a rider is different. A life insurance contract whose only disability provisions are additional benefits for death, dismemberment or loss of sight by accident is outside the chapter on disability insurance policies (MCL 500.3400(2)(c)(i)). Its terms come from the life policy and the rider, and the producer reads those.

Lesson summary

• AD&D pays a lump sum when an accidental bodily injury causes death or a scheduled dismemberment, and it pays nothing for disease.
• The principal sum is paid for death and the most severe losses, and the capital sum, a schedule of percentages, is paid for lesser dismemberments.
• To work a claim, match each loss to the schedule, add the percentages, check the per-accident cap and confirm the loss fell within the policy’s stated period.
• Under a means test the cause must be accidental; under a bodily injury test the result must be, which is the broader promise.
• Common exclusions are intoxication, felony, war, suicide, disease, hazardous activities and, in some forms, workers’ compensation losses.
• Michigan permits an optional clause excluding loss to which a contributing cause was a felony, an illegal occupation or willful criminal activity, which includes operating a vehicle while intoxicated (MCL 500.3452).
• A claim on a stand-alone policy follows Michigan’s disability provisions: 20 days’ notice, 90 days’ proof, payment on due proof, and suit between 60 days and 3 years (MCL 500.3412 to 500.3422).
• An AD&D rider on a life policy is outside Michigan’s disability insurance chapter (MCL 500.3400(2)(c)).