What ACC Covers and Doesn't Cover in 2026 | QuoteHub
By QuoteHub Editorial Team · Updated 2026-03-23
What ACC Covers and Doesn't Cover in 2026: The Definitive NZ Guide
Most New Zealanders grow up with a vague sense of comfort around ACC. If something goes wrong, ACC will sort it out. That assumption is understandable, but it is also dangerously incomplete.
ACC (the Accident Compensation Corporation) is one of the most comprehensive no-fault accident compensation schemes in the world. It covers around 2.3 million claims per year and costs over $8 billion annually. But the word "accident" is doing a lot of heavy lifting in that sentence. If your inability to work is caused by illness rather than injury, ACC will not pay you a cent.
This guide breaks down exactly what ACC covers, where the gaps are, how weekly compensation works, and what options you have for protecting yourself and your family against the risks that ACC does not address.
What ACC covers
ACC provides coverage for personal injuries caused by accidents. This applies to all New Zealand residents and visitors, regardless of employment status. You do not need to prove fault, and there is no requirement to sue anyone.
Covered injury types
ACC covers a broad range of accident-related injuries, including:
- Physical injuries from accidents. Fractures, sprains, dislocations, burns, lacerations, concussions, and soft tissue injuries from falls, sports, motor vehicle accidents, and workplace incidents.
- Work-related gradual process injuries. Conditions that develop over time due to workplace exposure, such as noise-induced hearing loss, occupational overuse syndrome (tendonitis), and some occupational diseases.
- Treatment injuries. Physical harm caused by medical treatment from a registered health professional, provided it was not an ordinary consequence of the treatment. This replaced the old "medical misadventure" category.
- Mental injuries linked to physical injury. If you develop depression or anxiety as a direct result of a covered physical injury, ACC may cover treatment for the mental health condition.
- Sexual violence-related mental injuries. ACC provides a specific sensitive claims pathway for mental injuries caused by sexual assault or abuse.
ACC entitlements for covered injuries
When your claim is accepted, ACC can provide:
- Medical treatment costs. GP visits, specialist appointments, surgery, physiotherapy, prescription medicines, and diagnostic imaging related to your injury.
- Weekly compensation. Income replacement payments if you cannot work due to your injury (details on rates and caps below).
- Rehabilitation support. Vocational and social rehabilitation to help you return to work and daily life.
- Home help and childcare. Assistance with household tasks if your injury prevents you from managing them.
- Travel costs. Reimbursement for travel to treatment appointments.
- Lump sum compensation. A one-off payment for permanent impairment, assessed once your condition has stabilised.
- Death benefits. Funeral grants and survivor payments if a covered injury results in death.
What [ACC does not cover](/acc)
This is where many New Zealanders get caught out. ACC's mandate is strictly limited to personal injury caused by accidents. If your condition falls outside that definition, you are on your own unless you have private insurance.
1. Illness and disease
This is the single largest gap in ACC coverage. If you are diagnosed with cancer, heart disease, stroke, diabetes, kidney failure, or any other illness, ACC provides no income replacement, no treatment funding, and no rehabilitation support.
Consider the numbers. The most common reasons New Zealanders cannot work for extended periods are not accidents. They are illnesses. Cancer, cardiovascular disease, musculoskeletal conditions, and mental health disorders account for the majority of long-term work absences. ACC covers none of these unless they are directly caused by an accident.
2. Degenerative and age-related conditions
Arthritis, disc degeneration, osteoporosis, and other conditions that develop gradually due to ageing are not covered by ACC. This creates a particularly frustrating grey area. If you have a pre-existing degenerative condition and then suffer an accident that aggravates it, ACC may cover the acute injury component but not the underlying condition.
For example, if you have age-related disc degeneration and then slip and herniate a disc, ACC may cover the acute herniation but decline ongoing treatment once the acute phase has resolved. The degenerative component is considered a pre-existing condition.
3. Mental health conditions (unless injury-linked)
Stress, burnout, anxiety disorders, depression, and other mental health conditions are not covered by ACC unless they are a direct consequence of a covered physical injury or sexual violence. If your mental health deteriorates to the point where you cannot work, and there is no qualifying physical injury, ACC will not provide weekly compensation.
This is a significant gap. Mental health conditions are now the leading cause of income protection insurance claims in New Zealand, according to industry data from major insurers.
4. Non-accident gradual conditions
Conditions that develop gradually outside the workplace, such as carpal tunnel syndrome from recreational activities or chronic pain without a clear traumatic origin, generally fall outside ACC's scope. The gradual process pathway only applies to work-related exposures.
5. The 20% income gap
Even when ACC does cover your injury, it only replaces 80% of your pre-injury earnings. That 20% shortfall can be significant, particularly for families already stretched financially. If your mortgage repayments, groceries, and essential bills consume most of your income, a 20% reduction may push you into financial difficulty.
ACC weekly compensation: rates, caps, and limits
Understanding how ACC weekly compensation works is essential for assessing your true exposure.
How weekly compensation is calculated
ACC pays 80% of your pre-injury weekly earnings, subject to minimum and maximum thresholds. The payment is calculated on your gross (before-tax) income and then taxed as normal income.
Key limits to be aware of
| Feature | Detail |
|---|---|
| Compensation rate | 80% of pre-injury gross weekly earnings |
| Maximum earnings cap | Based on the maximum insurable earnings threshold (reviewed annually by ACC) |
| Minimum compensation | Minimum rates apply, linked to benefit-equivalent levels |
| Stand-down period | First week is generally covered by your employer (if employed). ACC payments start from week two. |
| Duration | Payments continue until you can return to work, reach 65 (New Zealand Superannuation age), or are assessed as no longer entitled |
| Tax treatment | Weekly compensation is taxable income |
What the cap means in practice
The maximum insurable earnings threshold means that high earners receive proportionally less coverage. If you earn well above the cap, your actual replacement rate could be significantly lower than 80%. For self-employed individuals, the calculation can be more complex, as ACC bases compensation on your most recent tax return or a combination of recent years.
ACC vs private insurance: a direct comparison
The table below illustrates the fundamental differences between ACC coverage and the main types of private insurance that fill its gaps.
| Scenario | ACC | Income protection insurance | Health insurance | Trauma/critical illness cover |
|---|---|---|---|---|
| Broken leg from sports injury | Covers treatment, rehab, 80% income | Also pays (accident + illness cover) | May cover private treatment | Not triggered |
| Cancer diagnosis | No cover | Pays up to 75% of income | Covers private treatment, specialists, medication | Lump sum payment on diagnosis |
| Heart attack | No cover | Pays up to 75% of income | Covers private treatment and surgery | Lump sum payment on diagnosis |
| Workplace back injury | Covers treatment, rehab, 80% income | Also pays | May cover private treatment for faster access | Not triggered (injury, not illness) |
| Depression preventing work | No cover (unless injury-linked) | Pays up to 75% of income | May cover specialist/psychology costs | Typically not triggered |
| Degenerative disc disease | No cover | Pays if unable to work | Covers private surgery and treatment | Not triggered |
| Stroke | No cover | Pays up to 75% of income | Covers private rehabilitation | Lump sum payment on diagnosis |
The pattern is clear. ACC provides strong coverage for accidents, but the majority of conditions that prevent New Zealanders from working are illnesses, not accidents. Private insurance fills that gap.
What happens when ACC runs out or declines your claim
There are several situations where ACC coverage ends or is not available.
ACC exits and claim closures
ACC has been actively managing long-term claims, with over 8,000 claimants exited from ongoing support in a single year. If ACC determines that your injury has stabilised, that you can return to some form of work, or that your ongoing symptoms are no longer related to the original injury, your weekly compensation can be reduced or stopped.
This can happen even if you still feel unable to work. ACC's assessment process focuses on functional capacity and rehabilitation progress. If there is a dispute, you can request a review, but the process can take months.
Claim declines
ACC may decline your claim outright if it determines that your condition is not caused by an accident. This is common with conditions that have mixed causes, such as back pain that may be partly degenerative and partly traumatic. The distinction between "injury" and "illness" is not always clear-cut, and borderline cases can be declined.
What you are left with
If ACC declines your claim or ends your entitlement, your options without private insurance are limited:
- Sick leave. Most employees have 10 days per year. This is exhausted quickly with any serious condition.
- Jobseeker Support (medical). A Work and Income benefit for people unable to work due to health conditions. The maximum rate is significantly lower than most people's normal income.
- Savings. Financial Services Council NZ research suggests most households would exhaust their savings within four to eight weeks of lost income.
- Family support. Not a sustainable long-term solution for most.
How private insurance fills ACC's gaps
Three types of private insurance are most relevant for addressing what ACC does not cover.
Income protection insurance
Income protection pays a regular monthly benefit (typically up to 75% of your pre-injury or pre-illness income) if you cannot work due to any medical condition, whether accident or illness. Policies can pay until you recover, for a set period (two or five years), or until age 65.
This is the most direct replacement for the income support that ACC provides for accidents. The critical difference is that income protection also covers illness, which ACC does not.
Key features to compare:
- Benefit period. To age 65 provides the most comprehensive cover, but two-year or five-year options are more affordable.
- Wait period. The number of weeks before payments begin. Common options are four, eight, or thirteen weeks. Longer wait periods reduce premiums.
- Agreed value vs indemnity. Agreed value locks in your benefit amount at policy inception. Indemnity bases the benefit on your actual earnings at the time of claim.
- Definition of disability. "Own occupation" means you are covered if you cannot perform your specific job. "Any occupation" means you are only covered if you cannot perform any job suited to your skills.
Health insurance
Private health insurance covers the cost of medical treatment, including private surgery, specialist consultations, diagnostic tests, and cancer treatment. It does not replace your income, but it gives you access to faster treatment and a wider range of providers.
In New Zealand's public system, elective surgery wait times remain a challenge. As of September 2025, only 65.9% of patients received elective treatment within four months. Private health insurance lets you bypass these wait times and choose your surgeon and hospital.
Trauma (critical illness) insurance
Trauma cover pays a tax-free lump sum on diagnosis of a specified serious condition, such as cancer, heart attack, stroke, or major organ failure. The payment is not linked to your ability to work. You can use it for any purpose: mortgage repayments, treatment costs, lifestyle adjustments, or simply reducing financial stress during recovery.
The real cost of being uninsured
Consider a practical example. Sarah is a 38-year-old marketing manager earning $95,000 per year. She is diagnosed with breast cancer and needs six months off work for treatment and recovery.
With ACC only (no private insurance):
- ACC payment: $0 (illness, not accident)
- Sick leave: 10 days of paid leave, then unpaid
- Jobseeker Support (medical): approximately $337 per week (after tax, single person rate)
- Gap to normal income: approximately $1,490 per week
With income protection insurance:
- Monthly benefit: approximately $5,340 (75% of $95,000, divided by 12, after the wait period)
- Gap to normal income: manageable, especially with some savings to cover the wait period
The difference between these two scenarios is the difference between financial survival and financial crisis.
Five steps to closing your ACC gaps
- Understand what ACC covers for your situation. If you are self-employed, check that your ACC levies are correct and that your covered earnings reflect your actual income.
- Assess your financial exposure. Calculate how many weeks you could sustain your household expenses without income. Most families find the answer is uncomfortably low.
- Prioritise income protection. For most working New Zealanders, income protection insurance is the single most important policy for filling ACC's gaps. It covers both accident and illness.
- Consider health insurance. If you want faster access to treatment and the ability to choose your provider, health insurance addresses the treatment side of the equation.
- Talk to an authorised financial adviser. An adviser can assess your specific circumstances, recommend appropriate cover levels, and compare policies across multiple insurers to find the best fit.
Frequently asked questions
Does ACC cover me if I get cancer?
No. ACC only covers personal injuries caused by accidents. Cancer is classified as an illness, not an accident, so ACC provides no income replacement, treatment funding, or rehabilitation support for cancer. You would need income protection insurance to replace lost income and health insurance to cover private treatment costs.
How much does ACC pay per week?
ACC pays 80% of your pre-injury gross weekly earnings, subject to minimum and maximum thresholds. The exact amount depends on your earnings history. The payment is taxed as normal income, so your net weekly payment will be less than 80% of your gross earnings. High earners above the maximum insurable earnings cap receive less than 80% in real terms.
Can I have both ACC and income protection insurance?
Yes. ACC covers accident-related injuries, while income protection covers both accidents and illnesses. If you have an accident, your income protection insurer may top up the difference between ACC's 80% payment and your policy's benefit level (typically 75% of total income). For illness, your income protection policy pays the full benefit because ACC provides nothing.
What happens if ACC declines my claim?
You can request a review of ACC's decision within three months. If the review is unsuccessful, you can appeal to the District Court. During this process, you will not receive ACC weekly compensation. If you have income protection insurance, your insurer may pay your claim regardless of ACC's decision, provided you meet the policy's definition of disability.
Does ACC cover mental health conditions?
Only in limited circumstances. ACC covers mental injuries that are a direct result of a covered physical injury (for example, depression following a serious car accident) or mental injuries caused by sexual violence through its sensitive claims process. ACC does not cover standalone mental health conditions such as depression, anxiety, burnout, or PTSD unrelated to a physical injury or sexual assault.
Is ACC enough for self-employed people?
Self-employed people face additional risks with ACC. Weekly compensation is based on your most recent tax return, which may not reflect your current earnings. If your business has grown since your last return, your ACC cover will be based on older, lower figures. Additionally, ACC does not cover the overhead costs of maintaining your business while you are unable to work. Income protection insurance with a business expenses option provides more comprehensive cover for self-employed New Zealanders.
References
- Financial Markets Authority (FMA) , Insurance guidance
- Sorted.org.nz , Insurance guides
- Insurance & Financial Services Ombudsman (IFSO)
- Insurance Council of New Zealand (ICNZ)
- MoneyHub NZ , Insurance resources
- ACC New Zealand , What we cover
- Ministry of Health NZ
- IRD , Income tax rates
Explore related pages: Life Insurance, Income Protection, Health Insurance, Trauma Insurance.