Personal Insurance and ACC Working Together

What is ACC?

ACC, the Accident Compensation Corporation, is mandatory insurance that every New Zealander pays. IT was, according to Wikipedia, set up on April Fools Day 1974. Our employer pays, we pay and our car rego pays, we all pay in some way to ACC and if anyone in Aotearoa has an accident then they will be looked after. They medical bills will be paid and they can receive up to 80% of their salary. If the accident is fatal then the surviving family will receive a death benefit for 5 year or until the youngest child leaves school.

I think it is a pretty good way for people to have cover if there is an accident. We unfortunately have no safety net if we have an illness, for example cancer, heart attack or stroke. We all know someone that has struggled financially after an illness. That's what we need to look at options which include Income Protection.

What's Good About ACC?

If an accident should befall anyone in New Zealand then they will be able to access ACC. This could be as little as covering some GP or physio fees or as much as 80% of your salary until retirement.

There is a lot good about ACC.

1. Treatment and Rehabilitation Costs: Many cost are covered to some extent by ACC.
2. Weekly compensation Paid After 2 Weeks: Upto 80% of salary after two weeks disability.
3. Lump Sum and Support: Other support and treatment is covered by ACC
4. Death Benefits: A percentage of income will continue after an accidental death

There are also a few downsides and people complain how difficult it can be to prove something is a work related injury. It is not ideal for the self-emplyed although there is Cover Plus Extra for that demographic. We're always happy to help you. Perhaps you are one of the businesses that could save thousands a year.

What is Income Protection?

Income Protection is a private policy that will consider a claim if the insured is unable to work due to accident or illness. This accident clause is where there is an overlap with the mandatory ACC. So why take out income protection then?

The benefits:

• Illness Covered: A claim to be considered for an illness, a more likely scenario, and accident.
• Top up ACC: Depending on policy an ACC top up to cover some of the 20%+ not paid.
• Pre Disability Definition: Income Protection may cover the pre-claim job, not 'any' job.
• Additional Benefits: A private policy will have more benefits, some optional, to enhance ACC claims.
• ACC May Not Pay: ACC may decline a claim that a personal policy would cover.

The Downside:

Any amount of income protection will be 'offset' by ACC, which means ACC will potentially reduce the amount of claim on income protection. There are different ways this can be calculated depending on the policy type you have. This can range from no payment to topping up claims by 75% of the lost earnings. It can get confusing, we would be happy to explain it to you in more depth, just flick us a message. You can be sure the insurance company have priced in what they save from ACC payment. Remove ACC as an option and income protection premiums would increase over night.

What About ACC Cover Plus Extra?

ACC Cover Plus Extra is also 'offset' from any potential claim from Income Protection. It will of course depend on what level the cover was set too. It is recommended to speak to an independent insurance adviser before altering ACC as it can have a dramatic impact on any claim. Not just for income protection but also life insurance.

Where does Mortgage Cover Come Into it?

Mortgage Cover is generally not offset by ACC. Mortgage Cover needs to be considered as it impacts the amount of income cover available. There is a few simple equations to calculate the amount of cover but I don't know if you would appreciate me typing it and if you cared enough you'd be able to work it out.

Sound Too Confusing?

It can sound confusing if you're not used to it but it becomes quite clear when you deal with it everyday. You can't be expected to know how these two insurances interact, but we can. Get in touch and have a chat with us about how your policy and ACC play together.

Rememebr we are fully independent and don't play favourites with any insurer so we can give you an honest answer. Get in touch now to talk through your options by calling 0800 268 379 or filling out the form below.  No obligation – just straightforward advice.

Cover Yours Ltd (FSP769531) and Marc Hamilton (FSP306046) are registered Financial Service Providers and you can search the register here. Marc Hamilton is a member of the FSCL Disputes Resolution Service. Cover Yours Ltd and Marc Hamilton’s disclosures can be found here or by emailing marc@coveryours.co.nz