ACC vs Income Protection: What ACC Doesn't Cover
"I've got ACC, so I'm covered, right?" It's a common assumption. ACC is a fantastic safety net for accidents, but it doesn't cover everything, and the biggest gap is illness.
What ACC does
ACC (the Accident Compensation Corporation) provides no-fault cover for accidental injuries for everyone in New Zealand, including visitors. If you're injured in an accident, ACC can help with treatment costs and, if you can't work, weekly compensation of up to 80% of your pre-injury earnings, subject to a maximum and other conditions.
What ACC doesn't cover
- Illness. Cancer, heart disease, stroke, mental health conditions and most other illnesses aren't covered by ACC. These are among the most common reasons people are off work long-term.
- Gradual conditions that aren't the result of an accident (outside specific work-related cases).
- Earnings above the ACC maximum. If you earn a higher income, ACC weekly compensation may replace less of it.
- Lump sums for serious illness. ACC won't help you pay off the mortgage if you're diagnosed with a serious illness.
The reality: If you're unable to work for a long period, there's a good chance it will be because of an illness rather than an accident, and that's exactly where ACC can't help.
How income protection fills the gap
Income protection pays a monthly benefit if you can't work because of illness or injury. It's designed to work alongside ACC, not replace it.
- If you're sick, your income protection policy pays (subject to its terms)
- If you're injured, ACC pays first and your policy may top up the difference, depending on the policy
Because of the way policies interact with ACC, it's important to understand how your benefit would be calculated before you buy.
Other covers that help
- Mortgage repayment cover: a monthly payment sized to your mortgage, for illness or injury
- Trauma insurance: a lump sum on diagnosis of a serious illness, which ACC doesn't provide
- Accidental injury cover: lump sums for specified injuries, which can complement ACC
Self-employed? Check your ACC levy cover
If you're self-employed, your ACC compensation is based on the earnings you declare, and there are different ACC cover options available. It's worth understanding your ACC position and your private cover together.
Not sure where your gaps are? We'll look at your ACC entitlements, sick leave and existing policies and show you clearly what would happen if you couldn't work. The chat is free.
Want a second opinion on your cover? Book a free, no-obligation chat with AFA Insurance. We compare policies from a range of New Zealand insurers and explain your options in plain English. Call 021 985 218 or book online.
This article is general information only and is not personalised financial advice. It doesn't take into account your objectives, financial situation or needs. Policy features, definitions and limits vary between insurers and change over time, so always read the policy wording and talk to an adviser before making a decision. Financial advice is provided by AFA Insurance advisers under the licence of Certainty Financial Advisers Network Limited (FSP677951).