Difference between Private Insurance and ACC
Which of these statements do you believe is correct?
- If I have ACC Cover Plus or Cover Plus Extra, I’m covered for lost earnings compensation if I’m ever out of work.
- Private insurance and ACC are one in the same.
- There’s no way I can afford private insurance with the ACC levies I’m paying for ACC cover.
Actually, none of the above statements are correct. Here’s why:
- With ACC Cover Plus or ACC Cover Plus Extra, you are only covered for lost earnings compensation if you’re out of work due to a work or non-work related injury. ACC does not compensate you if you are out of work due to a major or critical illness. Only private insurance offers such coverage and it’s an important cover to have since health statistics show that illness, not injury, is the reason why most New Zealanders need to take time off from work.
- Private insurance and ACC are very different, with private insurance offering much more comprehensive coverage. In addition, with private insurance, your rates are much less than ACC levies and you can tailor the coverage to meet yours and your family’s needs.
- Granted, high ACC levies make it difficult to have any money left over to purchase private insurance coverage. But there is a way to get both covers and lower your ACC levy by hundreds and even several thousands of dollars. Here’s how: Rather than take the automatic ACC Cover Plus, opt for ACC Cover Plus Extra and choose a lower amount of lost earnings compensation. With a reduced compensation amount, your ACC levy will be much lower. Then, with these savings, you can purchase private insurance for the rest of your desired lost earnings compensation plus get additional coverage for illnesses and other circumstances. The cost of your private insurance policy (ies) is going to be significantly lower than the ACC levy you are currently paying for lost earnings compensation for personal injury only.
Private Insurance vs. ACC Comparison
If you’re self employed in New Zealand and think the government’s ACC insurance plan will cover you when you are unable to work, you’re only half right. It’s important to review the information on the Accident Compensation Corporation (ACC) website at Acc.co.nz so you are well aware of its limitations. In the meantime, this comparison gives you a quick overview of the major differences between private insurance and ACC cover.
| Major Differences: | ACC | Private Insurance |
| Cover Options | Two – ACC Cover Plus and Cover Plus Extra. | Multiple options to cater to your specific needs. Options include Income Protection Insurance, Mortgage Protection Insurance with Mortgage Repayment, Trauma Policy and Life Insurance. |
| Coverage | Only pays out for personal injuries, limited accidental death from injury payout is limited.
You have to be working to receive the benefit (i.e., not out on maternity leave or sabbatical). Does not pay for injuries stemming from congenital or degenerative conditions. Does not pay out for wear and tear injuries. Does not cover injuries that occur outside of New Zealand. |
Pays out for personal injuries, major illnesses, critical illnesses, disabilities and death.
Coverage applies even if you are on maternity leave, sabbatical, or other times when you are out of work. Covers congenital and degenerative conditions. Coverage applies to wear and tear injuries that put you out of work. Covers you wherever you are. |
| Limits | Has a maximum allowable income to be covered. Pays only 80% of income; more cover requires higher levy amount. | No maximum allowable income amount. Pays full coverage amount. |
| Cost | ACC levies change each year and are based on your risk in the business industry you work in and your latest earnings. | Based on the coverage you select, which can be tailored to meet your budget. |
It’s also important to note that private insurance still pays out even when you are receiving ACC payments for lost earnings compensation.
How to Get Fully Insured
If you’re self employed and only have ACC cover, you are leaving yourself open to high expenses if something other than an injury (like an illness) puts you out of work. Without being compensated for your lost earnings, you will have to find a way to pay your bills, your mortgage, other household bills and expenses related to your illness not covered by health insurance. To ensure your financial security, you should look into private insurance and the best coverage that meets your lifestyle.
The easiest way to get started and sort through all your options is an insurance rates comparison. Our free, no obligation rates comparison provides you with quotes from up to seven different leading insurance companies. With this information, you will be able to compare the types of insurance policies and their costs. If you need help in figuring out what to do with ACC to save money on your ACC levies, we can help you determine your best option and the private insurance product(s) that best supplements your decision.
Our free rates comparison tool is easy to use and available 24/7 for your convenience. Get started today on your way to a financially secure life with private insurance that covers you and your family completely.
Important: All information on this site is of a general nature only. When you compare or complete the assessment online, we will connect you with an advisor who can give you advice at no charge. All advisers who are authorised to use this site, for their marketing purposes, are authorised financial advisers. A full list of advisers and what they can advise on is listed here under our terms & conditions of this site usage.
