Accident Severity

Updated: 11 March 2024

What Does Accident Severity Mean?

Accident severity is the basis for both the premium for the insurance that covers accidents and the amount of money that an insurance company will release for the policyholder in the event of an accident.

Insuranceopedia Explains Accident Severity

When the policyholder has an accident, the insurance company makes an initial assessment of how much money it can pay out to the policyholder based on the medical reports and records. These documents allow the company to determine the severity of the accident, that is, whether it is a minor or a major one.

Visible bodily damage is more likely to be judged as major. If the damage is not visible, the insurer relies on x-ray reports or laboratory test results to assess the extent or the severity of the accident.

The insurance contract might stipulate that covering a particular accident is equivalent to a particular premium payment.

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