1As a New Zealand resident, the government’s Accident Compensation Corporation (ACC) insurance covers you in the event of a non-fault, comprehensive injury, no matter where it happens or how. However, ACC is limited in what it covers and what it pays for, which is why you also should have mortgage repayment or income protection insurance to pay for bills not covered by ACC while you are out of work.




ACC Overview

ACC pays for injuries only. However, data from Statistics New Zealand shows that New Zealanders are more likely to have a serious illness (stroke, heart disease, cancer) than an injury. And ACC does not provide benefits for these illnesses.

Here is a list of situations that could put you out of work, but are not covered by ACC:

  • Illnesses;
  • Injuries related to aging;
  • Non-occupational injuries that come on gradually;
  • Stress or other emotional issues that are not a result of a physical injury or sexual abuse;
  • Non-traumatic hernias;
  • Death not caused by a physical injury.

Financial support provided by ACC benefits is also limited. Although it contributes to medical costs, ACC may not pay 100% of all treatment costs. In addition, you are usually responsible for paying surcharges. ACC is also limited in home care costs, such as equipment, attendant care and child care needed for your rehabilitation.

In terms of your weekly pay, ACC pays for your loss of earnings while you are recovering from your injury, but only at 80% of your weekly earnings. Plus, ACC benefits max out at about $96,000 a year. The ACC expects you to have insurance coverage that covers you for situations it does not cover and to supplement its benefits.

How ACC Works with Mortgage Repayment Insurance

ACC does not provide any funds towards your mortgage loan payment, regardless of whether you are out of work from an injury or illness. Mortgage protection insurance with mortgage repayment is designed to fill in the gaps left by ACC. By receiving only 80% of your weekly income on ACC and having to pay for other expenses related to your injury, you might not have enough funds to cover your monthly mortgage payment.

In addition, ACC is capped at a specified maximum amount that it will pay out in a given year. If an injury keeps you out of work for longer than a year, or if you’re medical expenses go over the ACC maximum amount for the year, you could be left with no funds to pay your mortgage. On the other hand, mortgage repayment insurance pays your monthly mortgage loan payments for as long as you are unable to work.

How ACC Works with Income Protection Insurance (Very Important)

Since ACC only pays for injuries and not illnesses, income protection is an extremely important coverage to have if you are unable to work due to a serious illness. With income protection insurance, you will continue to receive your weekly compensation until you can return to work.

In addition to paying a certain percentage of your income in the event of an illness, an income protection policy also supplements any ACC benefits you are receiving for an injury that put you out of work. Income protection policies differ in how they offset or reduce their benefits based on what you are receiving from ACC. Typically, income protection insurers subtract the income you receive from ACC from the amount their policy pays out and in most cases you don’t receive any of your IP Cover – however, you can claim Mortgage Repayments Cover on top of your ACC payments that’s why we recommend you always split off your Mortgage Repayments from your Income Protection (it does not cost you any more to do this) but can save you a lot when claiming under ACC.

Income protection also comes into play if you stop working in New Zealand and travel overseas for temporary work. ACC may not pay for lost earnings if you are injured during your travels because you are no longer contributing to New Zealand’s income tax.

How ACC Can Save You Money

Although you cannot rely entirely on ACC, there are opportunities to evaluate your mortgage repayment or income protection insurance to reduce your insurance premiums while still maintaining adequate coverage. For a policy review, contact IncomeProtectionInsuranceNZ.co.nz. We are well versed in ACC and how it works with other insurance policies and can help you save money on your premiums.


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