The short answer
ACC pays weekly compensation at up to 80% of your income when an accident stops you working. Income protection pays a monthly benefit — commonly up to about 75% — when illness or injury stops you working.
The overlap is accidents. The gap is illness: cancer, heart conditions, MS, mental illness and gradual-onset back and joint problems. Most income protection policies offset against ACC, so you are not paid twice — the cover is doing its real work in the situations ACC is absent entirely.
Last reviewed 2026-07-30
| ACC | Income protection | |
|---|---|---|
| Covers accidents | Yes | Yes |
| Covers illness | No | Yes |
| You pay for it via | Levies (automatic) | A premium you choose |
| Benefit | Up to 80% of earnings | Commonly up to ~75% |
| Based on | Last filed earnings | Agreed or proven income |
| You must apply? | No — it is universal | Yes, with underwriting |
| Health history matters? | No | Yes |
| Lasts | While the injury prevents work | Your chosen benefit period |
General position under the Accident Compensation Act 2001, July 2026. ACC entitlements are decided case by case.
The self-employed problem
For employees, ACC's earnings calculation is usually straightforward. For the self-employed it is based on your last filed tax return — which means a start-up year, a quiet year, or a year where you paid yourself largely in dividends rather than salary can leave your ACC entitlement far below what you actually live on.
ACC CoverPlus Extra fixes this: you agree a cover amount in advance, and that is what gets paid regardless of what your last return showed. It is available, it is not expensive, and a great many contractors have never heard of it. If you are self-employed, sorting this out is often the highest-value thing you can do before buying anything at all. More on this →
ACC is excellent at the thing it does. It simply does not do illness.
So do I need income protection if I have ACC?
Reframe it: would my household survive a two-year illness with no income from me? ACC has no bearing on that question. If the answer is no, income protection is the product that addresses it. If the answer is yes — strong savings, a second income that covers everything, no debt — then you may reasonably decide against it.
The income runway calculator turns that into a number in about a minute.
How the offset actually works
If you are injured, ACC pays, and your income protection policy typically tops you up to your covered percentage rather than paying in full alongside. People sometimes read this as the insurer wriggling out. It is not — it is why the premium is affordable. Without the offset you would be paying for cover that duplicates something the state already gives you for free.
What varies between policies, and matters: whether the offset applies to ACC only, to any income, or to other insurance; and whether a reduced proportion is paid regardless. That distinction is invisible on a price comparison and very visible at claim time.
Common follow-up questions
If ACC covers me at work, am I fine?
Only for accidents, and only for accidents ACC accepts. It makes no difference where the accident happened — ACC covers accidents at home and on the weekend too. But an illness that starts at work is still an illness, and still outside the scheme.
Does income protection pay on top of ACC?
Usually not — most policies offset. Some are written to pay a proportion regardless of ACC. This differs meaningfully between insurers and is worth checking in the wording rather than the brochure.
I am on a salary with good sick leave. Do I still need this?
Sick leave in New Zealand has a statutory minimum of 10 days a year. Even a generous employer scheme is usually measured in weeks or months, not years. The risk income protection addresses is not a fortnight off — it is the eighteen-month absence, and very few employment agreements cover that.
Keep reading
This page is general information about how insurance works in New Zealand. It is not regulated financial advice and it does not take your situation into account. For advice about your own cover, talk to a licensed financial adviser.