Many business owners and farmers do not spend much time thinking about ACC. But the type of ACC cover you choose can make a big difference to both your levy cost and the support you receive if you have an accident and cannot work.
If you are self-employed, there are two common options: CoverPlus and CoverPlus Extra. CoverPlus is the default option. If you make a claim, ACC usually pays up to 80% of your taxable income, based on your most recently completed financial year.
CoverPlus Extra works differently. You agree on a set level of cover with ACC before anything happens. If you have an accident and cannot work, ACC pays 100% of that agreed amount. The current minimum cover is $33,972 and the maximum cover is $109,235.
This can be useful for business owners and farmers whose income changes from year to year. For example, business growth, milk price changes, or seasonal results can mean last year’s income is not a good guide for what you need now.
The big benefit is certainty. You can choose a level of cover that reflects what your business would need if you were injured. That might be enough to pay a business or farm manager, a relief milker, or another key person to keep the business running.
CoverPlus Extra may also suit people who are newly self-employed, have no clear earnings history, or want to choose a lower level of cover because the business or family has other financial support available or their roles in the business differ.
The table below shows how the cost can differ between the two options.
CoverPlus | CoverPlus Extra | CoverPlus Extra | |
|---|---|---|---|
Earnings/Cover | $100,000 | $100,000 | $50,000 |
Annual ACC Levy | $4,301 | $5,612 | $2,846 |
Compensation at claim time | $80,000 | $100,000 | $50,000 |
Requirement to receive claim | Required to prove loss of income | Per Agreed Value | Per Agreed Value |
When choosing your cover, ask one simple question:
If you were injured tomorrow, how much money would your business need to keep going?
A small accident may only require short-term help. A serious accident may mean paying an experienced manager at short notice.
It is also important to remember that the agreed cover amount is before tax, and ACC does not cover illness. Some clients choose income protection insurance as well, so it is worth speaking with your insurance adviser.
ACC cover should be reviewed regularly. Your income, staff costs, family situation, and business risks can all change. A short review each year can help make sure you are not overpaying, under-insured, or relying on cover that no longer fits your business.
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Contact Jane for a call or meeting to discuss any tax or accounting questions. Our office is in Cambridge, Waikato, or we can arrange a video conference call.
