In many other countries, accidents often result in drawn-out, expensive legal battles to try and get accident compensation.

In New Zealand we’re lucky to have ‘no fault’ insurance cover from ACC (Accident Compensation Corporation), for work and non-work-related accidental injuries. But there are some important things you need to know about ACC cover:

ACC will only cover 80% of your declared income

Will 80% be enough? Also, keep in mind ACC only covers up to $128,470 ($102,776 gross) i.e. 80% of $128,470.

The table below shows the differences between pre-accident salary or wage income, and post-accident income from ACC:

Table 1: Salary / Wage, Pre-accident Income, Annually
Pre Tax Tax After Tax
$50,000 $8,020 $41,980
$75,000 $15,670 $59,330
$100,000 $23,920 $76,080
$150,000 $40,420 $109,580
$200,000 $56,920 $143,080
Table 2: ACC, Post-accident Income, Annually
Pre Tax Tax After Tax
$40,000 $6,020 $33,980
$60,000 $11,020 $48,980
$80,000 $17,320 $62,680
$102,776 $24,836 $77,940
$102,776 $24,836 $77,940
Table 3: Difference, After Tax
Annual Monthly Weekly Percentage
-$8,000 -$667 -$154 -19.06%
-$10,350 -$863 -$199 -17.44%
-$13,400 -$1,117 -$258 -17.61%
-$31,640 -$2,637 -$608 -28.87%
-$65,140 -$5,428 -$1,253 -45.53%


If you only have your income to pay for living and household costs (i.e. no regular savings, cash reserves or private insurance), so you would rely on ACC to pay for everything, you’re likely to struggle financially, need to make major lifestyle changes and/or have to take on debt.

You Need a 3 Month Cash Reserve

Accidents happen all the time … ACC will probably be able to help, but they won’t replace all your income. Not many Kiwis put aside money to prepare for that, but it’s wise to have three months’ worth of cash reserves.

If you don’t have money set aside, it may seem like a lot to save, but start by saving a little bit every pay day. Aim to end up with at least three months’ worth of the difference between your current income, and corresponding ACC payments (ideally, 6 months’ worth).

You can work out how much to save, using the table above. E.g. if you have a pre-tax income of $75,000, aim to save up to $2589 (3 x $863) to $5,178 (6 x $863).

There are some things ACC doesn’t cover

Your injury must be because of an accident and there are some common injuries and conditions ACC doesn’t cover – e.g. illness, contagious diseases, conditions from ageing, emotional issues.

Learn more about ACC

Injuries ACC covers

Injuries ACC doesn’t cover

Community Law - Overview of ACC