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:

ACC entitlements for covered injuries

When your claim is accepted, ACC can provide:

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.

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:

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:

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):

With income protection insurance:

The difference between these two scenarios is the difference between financial survival and financial crisis.

Five steps to closing your ACC gaps

  1. 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.
  2. Assess your financial exposure. Calculate how many weeks you could sustain your household expenses without income. Most families find the answer is uncomfortably low.
  3. 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.
  4. 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.
  5. 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

Explore related pages: Life Insurance, Income Protection, Health Insurance, Trauma Insurance.