Self employed people are burdened with heavy expenses to comply with Government requirements and one of these is the cost of ACC cover. For tradespeople in particular, who have a high risk of injury, the cost can be significant. Many self employed people are unaware they may be eligible for ACC Cover Plus Extra, a product designed to suit the needs of self employed people. With standard ACC CoverPlus and Workplace Cover, your policy will pay out 80% of your previous year’s earnings and you must prove loss of income. If you employ your spouse in your business for income splitting purposes, he or she may have difficulty proving loss of income in the event of a claim. If you return to work part time, your payout is reduced accordingly. By comparison, with ACC Cover Plus Extra, your cover is set at an agreed level, which can be either more or less than your typical earnings. You do not have to prove loss of earnings and you are paid regardless of whether you work part time.
If you choose an agreed level of cover that is lower than your usual earnings, the premium for ACC Cover Plus Extra can be significantly lower than for a standard policy. As an example, a builder earning $64,000 per annum would pay a total premium including all levies of $3,847 on a standard policy. By choosing Cover Plus Extra with agreed cover of $35,000, the total premium reduces to $2,454.
The downside of lowering your cover is that in the event of a claim, you receive less compensation. It is very important to work with your insurance broker to put in place income protection insurance, which can provide top-up cover for accidents as well as cover for illness, based on a percentage of earnings.