Difference between Cover Plus and Cover Plus Extra

Technology in the handsACC Cover Plus versus ACC Cover Plus Extra – that’s the decision self- employed New Zealanders face when it comes to their ACC cover. The government’s Accident Compensation Corporation (ACC) automatically provides comprehensive, no-fault personal injury insurance to self-employed individuals, but charges an ACC levy for the cover. Those ACC levies differ immensely depending on whether you choose the standard Cover Plus or the optional Cover Plus Extra. In deciding which cover is right for you, it’s best to weigh up the differences between the two ACC options.

Three Main Differences

Both ACC covers will compensate you for loss of earnings when you are unable to work because of an injury, regardless of whether it is work related or not. But there are three key differences between the two plans.

1. Amount of Compensation: The weekly entitlement has differences between the two covers which relates to how much you will be paid in loss of earnings. This is extremely important, especially if you rely on your earnings for paying your regular mortgage and other household bills. You need to make sure the ACC compensation amount is enough to meet your financial obligations.

With ACC Cover Plus, the loss of earnings amount you receive is 80 percent of your previous year’s earnings, (proof of earnings will be required). This means you will be 20 percent short in what you normally earn, or even more if you had an increase in earnings over the current year. However, you could receive even less compensation if your business continues to generate income while you are out of work or if you return part time.

With ACC Cover Plus Extra, you receive 100 percent of the pre-agreed amount you negotiated with ACC underwriting, so no proof of earnings is required. You will receive the pre-agreed amount even if your business continues to generate income or you return to work part time. But keep in mind, the higher the amount of compensation you choose, the higher the ACC levy.

Many self-employed individuals choose Plus Extra and a low loss of earnings compensation amount to reduce their ACC levy and use the savings to purchase private insurance that covers them for illnesses, disabilities beyond ACC’s personal injury compensation.

2. ACC Levies: The manner in which ACC levies are calculated is another major difference between Cover Plus and Cover Plus Extra. ACC Cover Plus calculates your ACC levy using your previous year’s earnings as well as the applicable risk rate for your position or job function in the business. With ACC Cover Plus Extra, your ACC levy is determined by your business or occupation and the agreed upon amount of loss of earnings compensation.

3. Waiting Period: When you have a personal injury that puts you out of work and you make an ACC claim, there are differences in when you receive your first payment. Both covers have a stand-down period of seven days, but with ACC Cover Plus, you have to wait until the amount of loss of earnings is determined after you make a claim and submit proof of previous earnings. With Cover Plus Extra, you receive your pre-agreed payment as soon as your claim is accepted.

The ACC website, provides additional in-depth information on the two ACC covers. www.acc.co.nz

How the Differences in Cover Impact You

The differences between Cover Plus and Cover Plus Extra make the biggest impact if your self-employed income fluctuates or if you are relying solely on ACC cover. The best safety net for self-employed individuals is supplementing ACC with private insurance, such as income protection insurance, mortgage protection insurance that includes mortgage repayment, or life insurance. These three insurance products not only protect your income, your mortgaged home and your loved ones, but also cover you when you are unable to work for other reasons. In most cases, the expanded cover private insurance provides costs less than what you are currently paying in ACC levies for just personal injury insurance. Also, you may be able to lower your ACC cover and its levy.

When you have private insurance, you are also less likely to be impacted from the differences in your actual income and what the ACC cover pays in loss of earnings compensation. Your private insurance policy will make up the difference and ensure you can still pay you while you are out of work.

If you would like to learn more about how to supplement your ACC cover with private insurance, a good starting point is a rates comparison. We provide rates from up to seven leading insurance providers so you can easily compare different cover and rates and choose the best insurance policy for your needs. You’ll find our private insurance rates comparison for self-employed New Zealanders quick, accurate, available 24/7 and free to use. We’re also available to assist you in selecting the best plan for you, so you can rest assured knowing you’re buying the right insurance for your needs.