Does ACC cover me if I’m sick?

No. ACC covers injuries from accidents, not illnesses such as cancer, heart disease or mental illness. Income protection insurance is the main way to cover your pay if illness stops you working.

Is car insurance compulsory in New Zealand?

No. ACC covers injuries in a crash, but not damage to cars or property. Third party insurance is cheap and covers you if you damage someone else’s car, which could otherwise cost you thousands.

Do I need life insurance?

It matters most if someone depends on your income or you have a mortgage. If no one would struggle without your income, you may not need it.

Do I need extended warranties?

Usually not. The Consumer Guarantees Act already says goods must be of acceptable quality and last a reasonable time, and an emergency fund covers the rest.

Insurance basics in NZ: what you need and what to skip

Q: How much does ACC pay if I can’t work after an injury?

Usually 80% of your earnings before the injury, before tax, up to a cap of about $2,410 a week. For a work injury your employer pays the first week; for other injuries nothing is paid for the first week.

Your income: what ACC does and doesn’t cover

ACC covers injuries from accidents for everyone in New Zealand, whoever was at fault. If an injury stops you working, it usually pays 80% of your earnings before tax, up to about $2,410 a week. For a work injury, your employer pays the first week; for other injuries, nothing is paid for the first week.

But ACC doesn’t cover illness, such as cancer, heart disease or mental illness, which cause most long-term time off work. After your sick leave runs out (10 days a year, once you’ve been in a job for six months), there’s no pay from ACC or your employer.

If you couldn't work, on $70,000 a year Pay each week, before tax

Your pay now Before tax: $1,346
Off work after an accident ACC pays 80% from the second week: $1,077
Off work with an illness Nothing from ACC once your sick leave runs out: $0

ACC weekly compensation is capped at about $2,410 a week. Income protection insurance can cover illness, which ACC doesn't.

Income protection insurance covers that gap. It pays a monthly amount if illness or injury stops you working, after a waiting period you choose. A longer waiting period, such as 8 or 13 weeks, makes it cheaper, if your emergency fund and sick leave can cover the wait. Mortgage protection is a version that covers your mortgage repayments only.

Health

The public health system covers hospital care, but you can wait a long time for non-urgent surgery and specialist appointments. Many New Zealanders add private health insurance, mainly for quicker elective surgery and specialist care. Check what each policy covers, and whether it pays for specialist visits and tests or only surgery.

Life and trauma insurance

Life insurance pays a lump sum if you die, and is worth considering if you have a mortgage or children. Some employers include it, but it ends if you leave.

A common starting point is enough to clear your debts and cover your family’s living costs for several years. Term cover is usually much cheaper than whole-of-life cover. Stepped premiums start low and rise each year with your age; level premiums cost more at first but stay the same for longer.

Trauma insurance pays a lump sum if you’re diagnosed with a serious illness, such as cancer or a heart attack.

Home, contents and car

Your mortgage lender will require house insurance. House insurance also brings cover from the Natural Hazards Commission (Toka Tū Ake), formerly EQC, for damage from earthquakes, landslips, floods and other natural disasters, up to a cap. Your private insurer covers the rest. Premiums vary a lot by area, depending on the risk.

If you rent, contents insurance covers your belongings, and is usually cheap.

Car insurance isn’t compulsory in New Zealand. ACC covers injuries in a crash, but not damage. At the very least, third party cover protects you if you damage someone else’s car.

What you can usually skip

Extended warranties and gadget insurance: the Consumer Guarantees Act already says goods must be of acceptable quality and last a reasonable time, and an emergency fund does the rest.
Cover you already have: check what your job, bank account, credit card and existing policies include before buying more.
Low excesses: choosing a higher excess lowers your premium, if you could pay it.

Paying less, and getting help

Shop around at renewal, rather than letting a policy roll over.
Tell the truth on applications, and mention anything the insurer would want to know: a claim can be refused if you didn’t.
Review your cover when life changes: a new job, partner, baby or home.
Using an adviser? Financial advisers must be licensed by the FMA, or work for a licensed firm. Ask how they’re paid, as many earn commission from insurers.

If an insurer turns down a claim and you disagree, you can complain to its dispute resolution scheme for free.