The one insurance hack every owner-operator needs

Moving from the default ACC Cover Plus to ACC Cover Plus Extra might sound like an expensive exercise, but when topped up with appropriate personal cover, it can cost you less per year for more comprehensive cover that pays out in circumstances of illness as well as injury.

It felt like nothing more than a nagging backache, but when celebrity builder and TV presenter John ‘Cocksy’ Cocks went to his doctor, he was diagnosed with terminal cancer. Despite being fit and active, Cocksy’s doctors said he couldn’t go back to work, but thanks to a restructured ACC and insurance package he had taken out, he was still able to pay his mortgage, put food on the table and petrol in the car.

Years before, Cocksy had been advised he could reduce his ACC bill, and when an adviser analysed the builder’s circumstances, he recommended a move from the default ACC Cover Plus to the ACC Cover Plus Extra option and a top-up of personal insurance to supplement his cover to secure pay-out in times of illness as well as injury.

But the same cannot be said for a great deal of New Zealand’s owner-operators. According to ACC, trades workers have among the highest number of injury claims by occupation, accounting for 17 percent of all injuries claimed at a total of 40,000 in 2016 alone. 

ACC’s default pay-out can cover you for injuries on the job, albeit often three to six months after injury and at only a portion of your earnings, but what happens when you are struck with an illness and cannot work? Financial advisors Garry Mann and Paul Stolworthy let you in on what you need to know.

“We have found that 85 percent of the claims we receive as financial advisers are based on sicknesses rather than injuries – and so it’s vital that business owners and tradies are covered for illnesses and conditions as well,” Mann says. 

Both self-employed and non-PAYE employees working 30 hours or more are eligible for ACC Cover Plus Extra and, unlike the default ACC cover, the pay-out value is established from the outset so that people know what to expect should the worst happen. 

“Only about ten percent of insurance companies are able to offer this solution to their client base. Business owners are often prepared to pay to insure their vehicle, their equipment and their businesses against liability – but their income in an instance of injury and sickness is worth protecting, too,” Stolworthy says.

“There are cost-effective ways of managing their personal insurance as self-employed individuals.” 

Here’s why self-employed Kiwis are making the switch:

1. Save on annual costs

Switching from ACC Cover Plus and restructuring your cover to include ACC Cover Plus Extra and personal insurance can potentially reduce the costs to your business on a yearly basis. Your risk profile helps determine just how much you save – factors such as your age, gender and lifestyle habits determine your total annual cost. 

2. Get faster pay-outs

ACC Cover Plus can take as many as three to six months to pay out, while the ACC Cover Plus Extra policy pay-out process commences after a seven-day stand-down period – so you are likely to have  a faster claim process time. This is possible because there’s no need to prove your income based on the previous year’s liable earnings at time of claim. 

3. You know how much the cover will pay out

When it comes to ACC Cover Plus Extra, you know exactly how much you will be paid out as the amount is based on your income stipulated from the outset of the policy. And unlike ACC Cover Plus, which only pays out at up to 80 percent of the your earnings, ACC Cover Plus Extra covers you for 100 per cent of your agreed pay-out amount and this will remain the same if your business continues to generate income or even if you are able to return to work in a smaller or partial capacity. 

4. Claim on two policies, not just one

By moving to ACC Cover Plus Extra, and signing up for an illness and accident policy, you are able to claim from both policies should you be injured or sick. This means your ACC pay-out, which is capped, will be supplemented by an additional policy in order to ensure your lifestyle remains unaffected. Your financial advisor can assist you in ensuring a predictable outcome come pay-out time.

Garry Mann and Paul Stolworthy are financial advisors specialising in ACC Cover Plus Extra for Rothbury, which is part of the Lifetime Group. They recommend seeking expert financial advice before moving from ACC Cover Plus to ACC Cover Plus Extra.