Everyday finances

The major cost of minor accidents

The major cost of minor accidents

Ouch! Doctor! Ouch, my wallet! Sometimes, life’s little accidents can have a surprisingly large impact on our personal finances. Can we do anything to guard against that?

If you’ve been to the hospital recently because of a broken bone – or a big booboo that your child received in the course of some spectacular acrobatic feat –, rest assured that you’re not the only one. Even as far back as 2005-2006, according to the most recent figures from the Public Health Agency of Canada (PHAC), unintentional injuries required almost 195,000 hospitalizations per year in this country. Take a look:

Leading causes of hospitalizations in Canada

Costs that add up

The PHAC estimates that this represents a drain of about $19.8 billion a year on the public purse. But what about our personal finances? That’s hard to calculate, but looking at a few items can give some idea of the stress that injuries can put on our personal budgets.

  • Ambulance services
    If the accident requires the use of an ambulance, at least part of the cost might well be charged to the individual. Depending on the circumstances and the province, the fees can easily exceed $250. And if the accident unfortunately happens during a beach volleyball game on a remote island… imagine the cost of an air ambulance.
  • Transportation
    If the injured person is temporarily less mobile and no family member or friend is available to help with transportation, all the travelling back and forth, especially to receive care, could add up to a major expense.
  • Care
    It’s not unusual for an injury to require specialized care, medication, or various types of braces or orthotic devices. These are not necessarily covered by public health plans. For instance, some dental procedures cannot be claimed, and psychological services are only covered for a limited number of sessions.

Loss of income

However, the main risk to one’s financial health relates to the ability to earn a living and keep some money coming in. If you are unable to do your job for a certain length of time, you might discover that neither your employer-sponsored plan (if you have one) nor the public plans will compensate for the fact that you find yourself without a job. Even for an office worker, a simple arm-related sports injury, for example, could make it impossible to do computer-related tasks. And if the injury is quite incapacitating, your spouse might also have to reduce his or her hours of work to take care of you or chauffeur you around, which would double the strain on household finances.

An ounce of prevention…

Can these mishaps be avoided? Probably not, but financial services professionals generally recommend ways of managing risk to limit their impact:

  • Create an emergency fund
    Putting money into a savings account, such as a TFSA, to build up a cushion representing two or three months’ worth of salary is a good way of buying some peace of mind when faced with the immediate costs of an accident.
  • Insurance portfolio review
    Employees sometimes have coverage under their employer’s group insurance plan. But that’s not the case for everyone and there may be gaps in such coverage. Thus, a regular review of insurance coverage (employer-sponsored and personal) is recommended in order to understand what is and what isn’t included. A variety of products make it possible to add income replacement coverage (“salary” or “disability” insurance), coverage for certain health care costs or long-term care insurance.

In this way, a little planning can help to handle the experience – and the expense! – when the unexpected happens.