A Business Owner's Guide To Optimising ACC

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We’ve all heard of someone in business who has had a tough time trying to get an ACC disability claim paid or who has been hit with a large unexpected ACC levy.

For most business owners ACC is something they’d prefer to ignore – the truth is it will form an essential part of their income protection plan. It’s designed to cover up to 80% of gross personal income with a waiting period of only 7 days. There are a number of ways to streamline ACC claims and potentially reduce ACC costs on an ongoing basis through the alternative ACC cover known as ACC CoverPlus Extra.

So why do we see ACC Extra as a must have for each and every one of our self-employed clients?

It allows you to update shareholder ACC occupation classifications.

Take a husband and wife owned residential construction business – hubby is on the tools while his wife manages the administration. Under the ACC Standard Cover, both the husband and wife are considered – and charged as – builders.  This means for every $100 paid to either shareholder, $1.46 will need to be paid to ACC. It defies logic for an administrator to be charged at such a high rate when their risk of disablement from an accident is much lower than that of a builder.

Enter ACC Extra – this gives a shareholder the ability to update their ACC occupation classification so it aligns with their actual role in the business. In this case the levy rate will reduce from $1.46 per to $0.19, resulting in a significant and ongoing reduction in ACC levies – and yes, the same magic can be worked on businesses with more than two shareholders.

You can streamline future claims.

The ACC Standard Cover is what we call – in boring and jargony insurance terms – an indemnity type cover. This means if you’re injured an unable to work after 7-days ACC will make you prove not only your injury and inability to work but also your actual loss of income. In short, they want you to confirm your personal income from the previous 12 months – ACC are then supposed to cover 80% of that ‘loss’. The general challenge for many business owners is they’re yet to finalise their accounts for the previous tax year, their income and net profit is fluctuating, or they’re waiting on large contract to finish so they’re yet to pay themselves from their business. Situations like these can make it very challenging to 'prove' the loss of income.

Enter ACC Extra – this gives a shareholder the ability to pre-select a level of ACC cover. This is what we call – in boring and jargony insurance terms – an agreed value type cover. This means no having to prove your loss of income or worrying about your financial statements not looking to flash or being finalised as the financial assessment for cover is completed at application time. If you’re unable to work from an injury for more than 7-days, you’re entitled to 100% of the amount noted on your ACC Extra contract minus any tax.

You can eliminate those pesky claim offsets.

If you refer to the ACC Product Comparison form you’ll see a section ‘Weekly compensation entitlement when injured’ – one of the single biggest complaints from business owners with employees is they end up with reduced ACC payments when they go on claim. Essentially, the claimant will struggle to fully utilise the level of cover they’re paying for.  

Enter ACC Extra – this gives a shareholder the ability to pre-select a level of cover which eliminates any annoying reductions in ACC payments if their business is still generating an income while they’re injured. Furthermore, under this arrangement, ACC has to pay 100% of the amount noted on your ACC contract minus any tax until you’re back at full working capacity.

This article is for informational purposes only and should not be considered as financial advice. It is always recommended to consult with a qualified financial professional before making any financial decisions based on your individual circumstances.


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