Being in business requires a continual assessment of risk. Many would argue the key risk you should insure is your ability to earn income.
If you had an accident, what impact would that have on the operations and finances of your business? While NZ ACC provides a no-fault cover for accidents (not sickness), it is important to understand the level and nature of this cover.
ACC operate two schemes for self-employed. ACC COVER PLUS (default scheme) and ACC COVER PLUS EXTRA (application form required).
The schemes provide both a minimum and maximum level of cover for self-employed working thirty hours or more per week.
The ACC levy paid on the adopted level of cover is dependent on your industry’s risk profile. Typically, fishing, farming and forestry carry higher levies than, say, an office-based business.
ACC levies also incorporate a component for non-work/recreation accidents.
How do the two schemes compare?
Options exist to purchase enhanced accident and sickness income protection from our own insurer. There will be some overlap as ACC will still require you to hold a minimum cover with them. ($29,452 or $36,816).
In the event of a claim for lost income from a private provider, your entitlement is generally reduced by any compensation received from ACC.
Typically, ACC levies are based on the risk profile of the business undertaken, not the role of the owner. In strict circumstances ACC will allow a spouse to adopt different industry classifications where their roles are distinctly different. One may be in the building site while the other is in a less risky but strictly administrative role.
Private companies often distribute annual profits by way of shareholder salaries. As profits fluctuate year-on-year, so to does ACC cover and ACC levies. CoverPlus Extra also provided an option to adopt cover based on a fixed level of compensation rather than an annually fluctuating level of salary.
We believe CoverPlus Extra is a better option for most businesses. It provides certainty of cover level with stable levies. The next time your ACC levy invoice arrives, take some time to review that the cover is appropriate and take action.