The short answer

Self-employed New Zealanders carry three gaps at once: no sick leave, no employer insurance scheme, and an ACC entitlement based on your last filed tax return rather than what you actually earn or live on.

The first fix is usually free-ish and has nothing to do with buying insurance: sort out ACC CoverPlus Extra.

Last reviewed 2026-07-30

Fix the ACC problem first

Standard ACC cover (CoverPlus) for a self-employed person calculates weekly compensation from your most recently filed return. That is fine in a steady year. It is a serious problem if you had a start-up year, a quiet year, a year with heavy deductions, or a year where you took most of your money as dividends rather than salary.

ACC CoverPlus Extra lets you agree a cover amount in advance. Whatever your return said, that agreed amount is what gets paid. It also removes the argument at claim time.

Do this before you buy anything If you are self-employed and have never looked at CoverPlus Extra, that is very likely the highest-value hour available to you — and it is a conversation with ACC, not a purchase. Get it right, then look at what is left over.

What is still missing after that

Everything to do with illness. CoverPlus Extra improves your accident position. It does nothing for cancer, a heart condition, MS, mental illness, or the gradual-onset back and joint problems that end a lot of trade careers. See the full ACC gap →

0 daysStatutory sick leave if you work for yourself
Last returnWhat standard ACC pays from
IllnessStill entirely uncovered, either way

The cover that matters most here

  1. Income protection, and specifically agreed value if you can get it. Indemnity policies prove your income at claim time — and if you have a bad trading year immediately before a claim, an indemnity policy pays on that bad year. For variable income, agreed value is worth the extra. It has become harder to obtain in this market, which is a reason to look sooner.
  2. Health insurance, because waiting has a direct dollar cost when you are the business. A six-month wait for a knee is an inconvenience for a salaried office worker and a catastrophe for a self-employed builder.
  3. Business expenses cover if you have real fixed overheads — premises, leases, staff. It keeps the business alive while income protection keeps you alive.
  4. Trauma cover for the immediate cash shock, particularly if you have no cash buffer.
Sheep grazing a steep green New Zealand hill paddock

When you are the business, the business stops when you do.

The income-proof problem

Self-employed applicants get tripped up on how income is defined. Insurers usually work from your taxable income — which, for someone who has been aggressively minimising it, may be far below what the household actually spends. The uncomfortable trade-off: the tax structure that saves you money each year can quietly halve the cover you qualify for.

This is worth a joint conversation with your accountant and an adviser, ideally before the next return is filed rather than after.

A sensible order of operations

  1. Sort ACC CoverPlus Extra at a realistic level.
  2. Work out your true monthly outgoings and your runway. Use the income runway calculator.
  3. Get income protection sized to that, with the longest wait period your runway genuinely supports and the longest benefit period you can afford.
  4. Add health cover while you are well.
  5. Layer trauma and business expenses cover as cashflow allows.
  6. If there is more than one shareholder, get a buy-sell agreement and shareholder protection sorted with your lawyer. See business cover →

Common follow-up questions

I am a contractor through my own company. Which am I?

For ACC purposes it depends on whether you pay yourself PAYE salary or take shareholder drawings, and the two are treated differently. This is exactly the situation where standard ACC cover produces a number nobody expects, and where CoverPlus Extra earns its keep. Worth confirming with ACC directly rather than assuming.

Can I claim insurance premiums as a business expense?

Sometimes, and the answer changes the tax treatment of any benefit you receive. Broadly, where premiums are deductible the benefit tends to be taxable, and vice versa. Business expenses cover and key person cover have different treatments again. This is a genuine accountant question and worth settling before the policy is written.

My income varies enormously. How do they even price it?

Usually on an average of recent years, which is precisely why agreed-value cover matters for variable income — it fixes the figure at application rather than leaving it to be argued about at claim time, when a single bad year can dominate the calculation.

Keep reading

What ACC does not coverThe core gapIncome protectionThe main cover hereBusiness coverIf you have overheadsACC vs income protectionCompared

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.