Key Takeaways
When people compare income protection vs ACC, the biggest surprise is how much ACC does not cover. ACC is a no-fault scheme for accidents. If an injury stops you working, ACC can help replace part of your income. If an illness stops you working, ACC generally does not pay your income at all.
- ACC weekly compensation usually pays up to 80% of your pre-injury earnings, capped at a weekly maximum, for accidents only.
- From 1 July 2026 the maximum ACC weekly compensation is $2,466.20 gross a week.
- Illnesses such as cancer, heart disease, stroke and mental health conditions are generally not covered by ACC for income loss.
- Around four in ten New Zealanders surveyed did not know ACC excludes income loss from illness.
- Income protection is designed to cover illness as well as injury, which is the gap ACC leaves.
Income protection vs ACC: the short answer
ACC and income protection can both pay you when you cannot work, but they are built for different situations. ACC covers personal injury caused by an accident. Income protection usually covers both illness and injury, as long as your condition stops you from working and meets the policy terms.
That difference matters because illness, not accidents, is behind a large share of long-term time off work. If the only plan you have for a serious illness is ACC, there may be no plan at all.
| Feature | ACC | Income protection |
|---|---|---|
| What triggers a payment | Personal injury caused by an accident | Illness or injury that stops you working, depending on the policy |
| Illness such as cancer or heart disease | Generally not covered for income loss | Usually covered |
| How much is paid | Up to 80% of pre-injury earnings, capped at a weekly maximum | Commonly up to around 75% of pre-disability income, depending on the policy |
| When payments start | Work injury: employer pays the first week. Non-work injury: usually nothing for the first week | After the wait period you choose, often four weeks to two years |
| Cost to you | Funded through levies, including on your earnings | A premium based on your age, health, occupation and policy settings |
What ACC covers for loss of income
ACC provides weekly compensation if an accident leaves you unable to work. According to Community Law, you are generally paid 80% of your pre-injury weekly earnings, up to a weekly maximum. Employees, self-employed people and independent contractors can all qualify.
ACC weekly compensation and the maximum
From 1 July 2026, the gross maximum ACC weekly compensation is $2,466.20 a week, as summarised in this ACC weekly compensation guide. Weekly compensation is taxed, so the amount you receive will be lower than the gross figure. Higher earners can find the cap leaves a significant shortfall even when ACC does pay. You can confirm current rates directly with ACC at acc.co.nz.
The first week off work
For a work injury, your employer pays 80% of your earnings for the first week and ACC usually takes over from the second week. For an injury that did not happen at work, neither ACC nor your employer pays for the first week, so most people rely on sick leave, annual leave or savings.
What ACC doesn't cover
ACC covers accidents. ACC is not designed to replace your income when you are sick. The Sorted guide to insuring yourself puts it simply: ACC only covers loss of income from an accident.
Does ACC cover illness?
Generally, no. If you are off work because of cancer, a heart attack, a stroke, diabetes complications or another illness, ACC does not pay weekly compensation. Mental health conditions are also generally not covered unless they result from a covered physical injury or certain specific circumstances, such as some work-related events or sensitive claims.
Gradual process conditions
Conditions that develop gradually, such as many back problems, joint wear and repetitive strain, are generally not covered by ACC unless they are work-related and meet strict criteria. Many people only discover this when they make a claim.
How many Kiwis know about the gap?
Not many. Research from the Financial Services Council, reported by Insurance Business NZ, found 39% of respondents did not know ACC does not cover income loss from illness, age-related conditions or emotional issues. The same reporting noted four in five New Zealanders have not insured their income against sickness or disability.
How income protection fills the ACC gap
Income protection usually pays a monthly benefit if you cannot work because of illness or injury. Because income protection covers illness, income protection fills the biggest hole ACC leaves.
Wait period and benefit period
You choose a wait period, which is how long you need to be unable to work before payments begin. Many people match the wait period to their sick leave and savings. You also choose a benefit period, such as two years, five years or to age 65, which sets how long payments can continue while you remain eligible.
How income protection works alongside ACC
If your claim is caused by an accident, many income protection policies reduce the benefit by what ACC pays, so you are not paid twice for the same lost income. Some policies are designed to top up the difference between ACC and your insured amount, which can matter if you earn above the ACC cap. How this works depends on the policy wording, so ask how ACC offsets apply before you choose a policy.
Read our guide on how income protection cover works in NZ for more on agreed value, indemnity and policy options.
Income protection vs ACC for the self-employed
Self-employed people are often the most exposed to the ACC gap. There is no employer sick leave, no one to pay the first week and often no colleague to keep the business running. ACC can help after an accident, but an illness may mean months with no income while business costs continue.
Income protection can be set up to reflect self-employed income, either on an agreed value basis or an indemnity basis. Some self-employed people also look at business expenses cover, which can help pay fixed business costs while they are unable to work. Our page for business owners and the self-employed explains the options.
Questions to ask before relying on ACC
- How long could my household pay the mortgage or rent if I earned nothing because of an illness?
- How much sick leave and savings do I have, and how long would they last?
- Would the ACC weekly maximum cover my actual costs if I earn above the cap?
- Does my employer offer group income protection, and what does that cover include?
- If I already have income protection, how does my policy treat ACC payments?
If the honest answer to the first question is a few weeks, an illness could put real pressure on your finances. Trauma cover can also help by paying a lump sum on diagnosis of a listed condition. See trauma insurance vs income protection for how the two compare.
How SHARE - The Advisory can help
We look at what ACC would and would not pay in your situation, then compare income protection options across insurers to fill the gap. We help you choose a wait period that fits your sick leave and savings, explain how each policy treats ACC payments and support you at claim time. Learn more about our income protection advice or contact us to talk through your options.
Conclusion
Comparing income protection vs ACC comes down to one question: what happens to your income if you get sick rather than hurt? ACC provides valuable support after accidents, up to a weekly maximum. For illness, ACC generally pays nothing towards lost income, which is why income protection exists.
Check what ACC would pay you, how long your savings and sick leave would last, and whether an illness would leave a gap your household could not cover. This article is general information only and is not personalised advice.
Frequently Asked Questions
Does ACC cover illness in NZ?
Generally, no. ACC covers personal injury caused by an accident. Income loss from illnesses such as cancer, heart disease or stroke is generally not covered by ACC.
How much does ACC pay per week?
ACC weekly compensation is usually up to 80% of your pre-injury earnings, capped at a weekly maximum. From 1 July 2026 the gross maximum is $2,466.20 a week.
Do I need income protection if I have ACC?
ACC only helps if an accident stops you working. Income protection is designed to cover illness as well as injury, so many people use income protection to cover the gap ACC leaves.
Does income protection pay as well as ACC?
For accidents, many income protection policies reduce the benefit by what ACC pays, so you are not paid twice. Some policies top up the difference above ACC, depending on the policy wording.
Does ACC cover the self-employed?
Yes, self-employed people can receive ACC weekly compensation after an accident, based on their earnings. ACC still does not cover income loss from illness, which is why many self-employed people consider income protection.