What Does ACC Cover vs Income Protection?
ACC (Accident Compensation Corporation) is New Zealand’s no-fault accident insurance scheme. It covers most people in New Zealand (whether you’re employed, self-employed or a visitor) if you’re injured in an accident. That could include things like falling off a ladder, getting hurt in a car crash or being injured while playing sport.
ACC can help cover:
Medical treatment and rehabilitation
Partial replacement of lost income (up to 80%) if you can’t work because of the injury
Ongoing support services, depending on your needs
It’s important to note: ACC only covers accidents. It doesn’t cover illnesses like cancer, stroke or mental health conditions. It doesn’t matter how serious these conditions are.
What Is Income Protection?
Income Protection insurance is a policy you set up yourself (often with the help of a financial adviser) to provide regular income if you can’t work due to illness or injury. Unlike ACC it covers both accidents and health conditions.
If you’re signed off work by a doctor and meet your policy’s criteria Income Protection pays out a portion of your regular income (usually around 75%) on a weekly or monthly basis. This continues until you can return to work or for a set period (such as 2 years, 5 years, or until age 65), depending on the policy.
You can use the money however you need. This could be to pay the mortgage, buy groceries or cover everyday bills.
| Feature | ACC | Income Protection |
|---|---|---|
| Covers accidents? | ✅ Yes | ✅ Yes |
| Covers illnesses? | ❌ No | ✅ Yes |
| Pays regular income? | ✅ Yes (up to 80%) | ✅ Yes (usually up to 75%) |
| Who pays for it? | Funded by levies (employers, self-employed) | You pay premiums directly |
| Applies to mental health? | ❌ Generally not | ✅ Yes, if covered in the policy |
| Duration of cover | While you're recovering from the injury | Based on policy terms—can be long-term |
Why Having Both Can Be a Smart Move
Many people assume ACC will be enough to support them if they can’t work but that’s only true for accidental injuries. If you're diagnosed with a major illness, need surgery for a non-accidental condition or develop a long-term health issue like chronic fatigue or depression then ACC won’t cover it.
Income Protection fills that gap. It ensures that no matter why you can’t work (whether it’s an accident, illness or mental health condition) you still have financial support coming in.
This is especially important if:
You’re self-employed or don’t have much sick leave
You have dependents or a mortgage
You’d struggle to cover bills without your regular income
You want peace of mind that all causes (not just accidents) are covered
How Do the Two Work Together?
If you have both ACC and Income Protection and suffer an injury ACC will usually pay first. Your Income Protection policy may then top up the rest of your cover (if you have “ACC offset” or “agreed value” features). The exact details depend on how your policy is structured.
If you fall ill (not due to an accident) ACC won’t help but your Income Protection policy will kick in after any waiting period (also known as a stand-down period).
It’s important to talk with your adviser to ensure your policy complements ACC rather than overlaps or conflicts with it.
Protecting Your Income No Matter What
ACC is a valuable support system for accidental injuries but it’s not designed to cover the full range of reasons you might be off work. Income Protection adds an extra layer of security giving you cover when health (not injury) is the issue. Together they help create a stronger safety net so you can focus on recovery, not worry about the next bill. If you rely on your income to support yourself or your family then understanding both is key to protecting your financial wellbeing.