ACC and Income Protection: Claiming for a Seamless Weekly Benefit
When you’re unable to work due to an accidental injury or illness, the Accident Compensation Corporation (ACC) and your private income protection policy can both contribute to your weekly income—all while ensuring you don’t receive more than your insured amount. ACC provides no-fault cover for accidental injuries, paying up to 80% of your pre-injury earnings under its standard CoverPlus scheme, whereas private income protection steps in for illness and as a top-up for accidents. For self-employed clients, ACC’s CoverPlus Extra lets you tailor your ACC cover level—potentially reducing your ACC levies and enabling your income protection policy to bridge the gap more effectively.
How ACC and Income Protection Work Together
Under ACC’s standard CoverPlus, if you suffer an accidental injury and can’t work, ACC will pay weekly compensation equivalent to 80% of your recent taxable income, capped at an ACC threshold. This begins after your initial one-week stand-down period and continues until you recover or are assessed as permanently impaired. Private income protection insurance, by contrast, covers both injury and illness and is designed to replace a set percentage of your income—commonly up to 75%—after a defined waiting period. Crucially, most income protection policies include an “offset clause,” which deducts any ongoing ACC payments from your private insurer’s benefit, so the combined total does not exceed your insured level.
From a claims perspective, your ACC entitlement is treated as “other income.” When you lodge a claim with your private insurer, you submit evidence of your ACC weekly compensation, and your insurer calculates the difference between your insured benefit and the ACC payment. For example, if your policy pays up to NZD 1,000 per week and ACC pays NZD 400, your insurer will top up the remaining NZD 600. This collaborative approach ensures you receive consistent support without duplication of benefits.
CoverPlus Extra: Tailoring ACC for the Self-Employed
Self-employed individuals and non-PAYE shareholder-employees are automatically placed on standard CoverPlus, but they can switch to CoverPlus Extra (CPX) to manage their levies and cover amount. CoverPlus Extra allows you to choose exactly how much of your income you want ACC to cover in the event of an injury, rather than defaulting to 80%. By negotiating a lower agreed cover amount, you reduce your ACC levies while still securing a predictable weekly compensation if you’re injured and can’t work.
From a claims standpoint, choosing a lower ACC cover level means ACC will pay fewer dollars weekly, leaving your private income protection policy to pay a larger top-up. If you’ve structured your policy to insure, say, 75% of your income, reducing ACC’s cover to 60% allows ACC to pay 60% and your insurer to pay the remaining 15%, rather than ACC paying 80% and your insurer paying nothing due to the offset clause. This can be a cost-effective strategy: lower ACC levies free up budget to invest in more comprehensive private cover, ensuring you still reach your desired replacement rate when claiming.
Optimising Your Claims Strategy
When an injury or illness occurs, a clear claims workflow helps you access both ACC and private benefits swiftly. First, notify ACC as soon as possible—claims for accidents must be lodged promptly to confirm entitlement to weekly compensation. Gather your medical reports and complete ACC’s claim form, noting your chosen CoverPlus Extra cover level if applicable. Once ACC confirms your weekly entitlement, you can initiate your income protection claim.
For your private claim, provide your insurer with:
Your ACC claim reference and confirmation of weekly compensation
Details of your income protection policy, including insured benefit and waiting period
Medical evidence supporting your inability to work due to illness or injury
By coordinating these claims closely, you avoid delays and ensure each insurer has the information they need. Your Maurice Trapp Group adviser can assist by liaising with ACC and your private insurer, guiding you through documentation and deadlines so that you receive your combined benefit without unnecessary gaps.
Maximising Your Financial Security
By understanding how ACC CoverPlus Extra and private income protection interact, you can design a cost-efficient protection plan that maximises your claim outcome. Tailoring ACC cover to your needs reduces levies and allows your private policy to fill precisely the shortfall, while the offset mechanism preserves the integrity of your insured benefit. When preparing for a claim, early communication with both ACC and your income protection insurer—supported by clear records of your cover levels—ensures you access the full weekly benefit to which you’re entitled.
Take control of your cover now: review your ACC option, confirm your income protection definitions, and speak to your Maurice Trapp Group adviser to optimise your claims strategy. In a time of need, seamless coordination between ACC and private policies means peace of mind and financial stability when it matters most.