Risk Insurance 101: ACC

Risk Insurance

9 September 2020

Accident Compensation Corporation (ACC) is one of those things everyone in New Zealand has but very few know how it all works. So, let’s unpack what ACC is and the coverage it provides.

What is ACC?

ACC is a no fault accident cover (Insurance) that has three basic levels:

1. Treatment and Recovery

This is the part everybody knows. Treatment and recovery provide cover for all Kiwis and visitors to New Zealand regardless of their employment status.

2. Pay As You Earn (PAYE)

Provides cover for PAYE employees in New Zealand if they require time off work due to an accident. Eligible employees can receive up to 80% of their income.

3. Self-employed/shareholder employees

CoverPlus or CoverPlus Extra provides cover for self-employed or shareholder employees based on their preceding 12 months of income up to a maximum of $130,911. This can be complicated to determine for people who have:

  • Cyclic income like farmers or IT project managers (who often run at a 12-18-month deficit before profitability).

  • Split income for tax purposes between spouses.

  • Recently started a business and have no earnings history that shows a loss of income.

What coverage does ACC provide?

While a lot of Kiwis mistakenly believe ACC covers sickness and illnesses, cover is limited to accidents only*.

Because assessment is at the discretion of ACC and their specialists, we have seen instances where conflict arises due to the assessor deciding the medical condition presented could have resulted from degeneration rather than accident, despite no injury previously occurring to that area.

To overcome this, consider ‘plugging the gaps’ using Income Protection and Mortgage Repayments cover, which will provide full cover for all accidents, injuries and sicknesses.

Shareholder employees and self-employed people have the ability to set the level of coverage they require via CoverPlus Extra to a maximum of $130,911. Over and above this, Income Replacement cover can replace up to 75% of earnings.

If you’d like more information, please talk to your Adviser or get in touch with our team of specialist Risk Advisers who have extensive training in not only ACC but best practice Risk Insurance.

*Trauma via sexual abuse is also covered.

Findex Advice Services NZ Limited, trading as Findex

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