ACC provides essential workplace injury cover, but it doesn't protect everything. Learn about the gaps and how to safeguard your business.
The Accident Compensation Corporation (ACC) is a unique no-fault accident compensation scheme that covers everyone in New Zealand, including employees and self-employed persons. Established under the Accident Insurance Act 1998, it provides cover for injuries resulting from accidents.
For employers, paying ACC levies is mandatory if you have employees. These levies are based on your industry risk level and are typically paid quarterly. This system means you can't sue employees for compensatory damages if they're injured at work – ACC covers their treatment and rehabilitation instead.
ACC is designed to cover immediate injury-related costs, but it has significant limitations that could leave your business exposed to substantial financial risk.
Understanding what's included helps you identify where coverage gaps might exist.
ACC covers reasonable medical costs related to your injury, including:
If you're unable to work due to a covered injury, ACC provides:
Additional support ACC provides includes:
Up to 80% of your pre-injury weekly earnings, subject to ACC's assessment and maximum rates.
For permanent impairments, lump sums range from $1,140 to a maximum of $138,938 (as of 2024), depending on severity.
ACC provides essential cover, but significant gaps exist that could leave your business exposed.
ACC generally does not cover mental stress, burnout, anxiety, or depression unless directly resulting from a specific work-related traumatic event. Employment-related stress claims are typically excluded.
Occupational diseases (like asbestosis or industrial deafness) have limited cover. Most ordinary illnesses like cancer, heart disease, or repetitive strain injuries are not covered unless directly caused by a specific accident.
Unlike many overseas systems, ACC does not provide compensation for pain and suffering, emotional distress, or loss of enjoyment of life – regardless of how serious the injury.
Injuries that develop over time (like tennis elbow or carpal tunnel) have limited coverage. ACC must be satisfied the injury was caused by a specific accident, not gradual wear and tear.
If you're self-employed, ACC cover is not automatic. You must actively opt into the scheme, and many sole traders don't realise they're not covered.
ACC only covers up to 80% of pre-injury earnings, and there are maximum weekly limits. High-earning employees and business owners may find the gap significant.
If an employee disputes an ACC decision or brings a claim against your business, ACC doesn't cover your legal defence costs.
Independent contractors may not be covered under your ACC levy. They need their own ACC cover or may fall into a grey area of coverage.
When ACC doesn't cover a claim, your business can be held directly liable. These claims can result in:
Protect your business from the gaps in ACC coverage with these essential insurance products.
Covers claims not covered by ACC, including mental stress, employment disputes, and pain & suffering.
Essential for: All employers
Provides additional income replacement for employees when ACC payments don't cover their full wages.
Recommended for: Businesses with well-paid staff
Provides long-term income replacement for business owners and key personnel if they cannot work due to illness.
Important for: Sole traders, key personnel
Lump sum payments for accidental injury, regardless of ACC coverage. Can include death benefit and disablement.
Recommended for: All employees
Protects your business if a key employee or owner becomes seriously ill or dies, covering lost revenue and recruitment costs.
Essential for: Small businesses, partnerships
Comprehensive life and health insurance for employees, helping attract and retain talent while filling ACC gaps.
Valued by: Employees at all levels
| Type of Claim | ACC | Employer's Liability | Personal Accident |
|---|---|---|---|
| Workplace injury (accident) | Yes | - | Yes |
| Mental stress / psychological | Limited | Yes | Yes |
| Disease / illness | Rarely | Yes | Yes |
| Pain & suffering | No | Yes | - |
| Death benefit | Limited | Yes | Yes |
These scenarios show how ACC gaps can impact New Zealand businesses.
A Wellington marketing agency faced a $45,000 claim when an employee claimed constructive dismissal due to workplace stress. ACC refused cover as it wasn't a specific workplace accident. The employer's liability insurance covered the legal defence and settlement.
Scenario
Employee mental stress claim
ACC Response
Cover declined
Solution
Employer's Liability covered
A self-employed electrician fell from a ladder while on a job. He discovered he'd never opted into ACC cover. Medical bills and lost income cost him over $30,000. Personal accident insurance would have provided crucial support.
Scenario
Self-employed injury
ACC Response
No cover (not opted in)
Solution
Personal Accident would help
An Auckland factory worker suffered a back injury that limited their life permanently. While ACC provided weekly compensation, the worker's family sought additional compensation for pain and suffering – which ACC doesn't cover. They attempted to sue the employer, highlighting the need for proper liability protection.
Scenario
Permanent injury claim
ACC Response
Basic cover only
Solution
Employer's Liability protects
Don't let ACC cover gaps leave your business exposed. Our expert brokers can help you understand your risks and find the right additional coverage.
No obligation. No pressure. Just expert advice tailored to your business.