ACC CoverPlus vs CoverPlus Extra
If you are self-employed or a non-PAYE shareholder-employee, you may have a choice between ACC CoverPlus and ACC CoverPlus Extra (CPX).
The key difference is how your lost earnings compensation is determined.
CoverPlus is generally based on your actual liable earnings, while CoverPlus Extra allows you to agree on a level of cover with ACC before you need to make a claim.
This makes the comparison similar in principle to Indemnity Value vs Agreed Value in income protection, although ACC CoverPlus and private Income Protection are different types of cover.
ACC CoverPlus
CoverPlus is the standard and default ACC cover for everyone. It applies automatically when you become employed or self-employed and provides personal injury cover if you have an accident and are unable to work.
For self-employed people, weekly compensation is generally based on your liable earnings from your most recently completed financial year. For employed people, weekly compensation is generally based on your last 2-3 payslips. ACC can pay up to 80% of those earnings, subject to the applicable rules and maximums.
Because the calculation is based on your actual earnings, the amount you receive may not reflect what you are currently earning if your income fluctuates week-to-week or month-to-month.
ACC CoverPlus Extra (CPX)
CoverPlus Extra is optional cover that allows you to agree with ACC on the amount of income you want covered if an accident leaves you unable to work.
You can choose the amount that you are covered for, within ACC minimum and maximums, and you pay the levies for that amount each year. This is subject to ACC's assessment and approval.
With the standard CPX option, ACC currently states that compensation is based on 100% of the agreed cover amount before tax, rather than being calculated from your actual earnings at the time of the claim.
This can provide greater certainty, particularly where income fluctuates from year to year or your taxable income doesn't necessarily reflect the value of the work you do.
The Connection to Indemnity and Agreed Value
There is a useful way to think about the difference:
CoverPlus → similar concept to Indemnity Value
The amount of compensation is linked to your actual liable earnings.
CoverPlus Extra → similar concept to Agreed Value
An amount is agreed in advance, providing greater certainty about the level of compensation.
They are not the same products, but the terminology provides a helpful comparison when explaining how the two approaches work.
Example: Why the Difference Can Matter
Imagine Sarah is self-employed and earns around $100,000 a year, but her income has varied significantly over the past few years.
Under CoverPlus, her weekly compensation is generally linked to her liable earnings. If the relevant previous tax year showed earnings of only $70,000, that figure can affect the amount ACC uses to calculate her compensation.
Under CoverPlus Extra, Sarah could apply to have an agreed level of cover, subject to ACC's assessment and approval.
For example, if ACC agreed to cover $90,000, her compensation under the standard CPX option would be based on that agreed amount rather than simply reverting to her most recently filed earnings.
This is particularly relevant for people whose income fluctuates, whose business income doesn't neatly reflect their personal earnings, or who want greater certainty about what ACC would provide following an injury.
The important point is that the agreed amount needs to be established before the accident - it isn't something you negotiate after making a claim.
Why It Matters
Your taxable income and your actual financial contribution to a business aren't always the same thing.
This can be particularly relevant for business owners who:
have fluctuating income
have recently increased their earnings
split business income with a partner or spouse
receive income through different structures
expect their income to change from year to year
want more certainty about the level of ACC compensation available following an injury.
CoverPlus Extra is designed to provide that greater certainty by agreeing the level of cover in advance. ACC describes CPX as an optional product that can be useful when income varies or when you want certainty about your cover.
Common Misunderstandings
“CoverPlus and CoverPlus Extra are basically the same.”
They provide ACC personal injury cover, both cover treatment costs, but the way lost earnings compensation is determined is different.
“CoverPlus will always pay me 80% of what I'm earning now.”
Not necessarily. CoverPlus generally uses your relevant liable earnings, including information from your tax returns, rather than simply looking at your current income.
“CoverPlus Extra means ACC will automatically cover whatever I ask for.”
No. The agreed cover amount is subject to ACC's assessment and approval.
“CoverPlus Extra is the same as private Agreed Value Income Protection.”
No. The concepts are similar, but they are different types of cover with different definitions, eligibility requirements and claim conditions.
“CoverPlus Extra means I don't need Income Protection.”
Not necessarily. ACC CoverPlus Extra is still designed around covered injuries. Private Income Protection can provide protection for eligible illness as well as injury, subject to the policy terms.
FAQs about CoverPlus vs CoverPlus Extra
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CoverPlus is the standard ACC cover for self-employed people. ACC also provides standard cover arrangements for non-PAYE shareholder-employees.
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CoverPlus Extra is available to eligible self-employed people and non-PAYE shareholder-employees who file ACC liable income, subject to ACC's eligibility requirements.
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It uses an agreed cover amount, which is similar in concept to Agreed Value Income Protection. However, CoverPlus Extra is an ACC product and should not be confused with private Agreed Value Income Protection.
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Under the standard CPX option, ACC currently states that compensation is based on 100% of the agreed cover amount before tax. There is also a Lower Levels of Weekly Compensation (LLWC) option, where payments can reduce if you return to part-time work or your business continues to generate income.
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Both CoverPlus and CoverPlus Extra have a seven-day waiting period according to the ACC comparison brochure.
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Yes. Because CoverPlus is linked to liable earnings, changes in your earnings can affect the amount of compensation available.
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CoverPlus Extra allows you to choose an agreed level of cover, subject to ACC's application and assessment requirements. The available minimum and maximum amounts can change each year.
If you're self-employed or a business owner, it's worth understanding exactly what ACC would provide if an injury stopped you from working.
At New Vision Financial Services, we can help you look at ACC CoverPlus, CoverPlus Extra and private Income Protection together, so you can understand where each type of cover fits and where potential gaps may exist.
Your ACC cover is an important part of protecting your income - but it's worth knowing exactly how that protection works before you need it.