ACC is often misunderstood. Many New Zealanders assume it covers all injury and illness situations, providing comprehensive protection. In reality, ACC has significant gaps that leave many people without adequate support. Understanding what ACC does and does not cover helps you identify your protection gaps.
ACC is a safety net, not a complete solution.
What ACC Actually Covers
ACC covers personal injuries caused by accidents. This includes workplace accidents, car crashes, sports injuries, and injuries at home. If you are injured in an accident, ACC can cover treatment costs and provide income replacement.
The key word is accident. ACC defines accident as a specific event that causes physical injury. Injuries with a clear cause and moment of occurrence fall under ACC coverage.
ACC provides treatment funding, weekly compensation if you cannot work, and rehabilitation support to help you recover and return to work.
What ACC Does Not Cover
Illness is not covered by ACC. If you develop cancer, have a heart attack, or are diagnosed with any disease, ACC does not apply. These are medical conditions, not accidents.
Mental health conditions are generally not covered unless they result directly from a physical accident. Depression, anxiety, and other mental health issues typically fall outside ACC coverage.
Gradual process injuries are complex. Conditions that develop slowly over time, like some back problems, may or may not be covered depending on whether ACC deems them injury or illness.
Income Replacement Limitations
When ACC covers an injury, income replacement is limited to 80 percent of your pre-injury income, capped at a maximum weekly amount. High earners do not receive 80 percent of their full income.
Self-employed people often find ACC compensation disappointing. Your compensation is based on declared income, which may be lower than your actual earnings if you minimise taxable income.
ACC compensation is taxable income. After tax, you may receive significantly less than 80 percent of your usual take-home pay.
The Illness Gap
If you cannot work due to illness, you receive nothing from ACC. This is the biggest gap in New Zealand coverage.
Serious illness can prevent you from working for months or years. Without income protection insurance, you have no income replacement during illness.
Cancer, heart disease, stroke, and many other conditions can devastate your ability to work without any ACC support.
The Self-Employment Problem
Self-employed people face particular challenges with ACC. Your compensation is based on your most recent tax return, which may not reflect your current income.
If your income varies significantly year to year, or if you have recently grown your business, ACC compensation may be much lower than your current earnings.
The self-employment gap means many business owners need private income protection even for accident injuries.
Waiting Period And Duration
ACC has a week of stand-down before weekly compensation begins. During this period, you receive no ACC income replacement.
For longer-term injuries, ACC continues payments but may push for return to work or vocational rehabilitation. Your compensation can reduce or end if ACC determines you could be working in some capacity.
There is no guarantee ACC will continue supporting you for as long as you remain affected by your injury.
Filling The Gaps
Income protection insurance covers both accident and illness. It fills the illness gap that ACC ignores and can supplement ACC injury payments.
Trauma insurance provides a lump sum if you are diagnosed with serious conditions like cancer or heart attack. This provides funds when ACC does not apply.
Understanding your specific situation helps identify which gaps matter most to you and how to address them.
Why This Matters
Assuming ACC will cover everything leaves you vulnerable. Illness is more common than serious accident, yet ACC provides no help.
The gap between what people expect from ACC and what it actually provides causes real hardship when serious health events occur.
Proper planning considers ACC as one component of your protection, not a complete solution.
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