Get on top of your ACC
As a farmer you have to pay your ACC levies based on your taxable earnings each year. This provides you cover in the event of an accident whether farming-related or not.
Standard ACC Cover Plus pays 80 per cent of your taxable 2011 income, up to $91,000.
With ACC Cover Plus Extra (CPX) you have a choice to take the maximum cover of $110,000. Generally this is based on 120 per cent of your average income for the past three years.
We encourage our clients to be on CPX giving them a fixed amount in the event of an accident. This means they don’t have to prove loss of income and removes the risk of cover being calculated on an unusually poor year such as a drought season.
Farmers should review their ACC cover and premiums with their accountant annually, specifically looking at the ‘‘classification’’ for each self-employed person. Very often all parties are under the same one, whereas we now have the choice to individualise the correct classification for the actual work being done by that person.
There are different classifications/levies within the agriculture industry for dairy farming, grazing, book work et cetera.
Being on the right classification can create huge savings in ACC premiums.
For example, in a dairy farming partnership on Standard Cover Plus with earnings of $140,000, with salary allocated $70,000 each, ACC levies would be $9028.
By transferring them to CPX the farmer’s cover can remain the same, but the partner doing book work could consider reducing cover from $56,000 to the minimum of $21,216 and when placed on the correct classification of admin this would give a premium for both of $6160, a saving of almost $3000.
Additional aspects to look at when reviewing your ACC include:
Age of each person as more established farmers will not require full replacement accident cover as farm is more financially secure.
If the ‘‘experience rating’’ or ‘‘no claims’’ has been applied, discounts could be up to 10 per cent.
Updating to CPX to secure a fixed level of cover.
Completing an Agriculture Worksafe course to secure a further 10 per cent discount.
Over recent years ACC has been tightening its claims criteria and not paying out for ‘‘wear and tear’’ such as an old sports injury or hernia.
It is vital to lodge your claim with ACC at the time of the accident.
This means it is documented with ACC so should it progress to time off work, the wear and tear may not become an issue.
Reducing your ACC cover and premiums and complementing this with private insurance for sickness and accident could be a better option. All the main life insurance providers now have key person and specific farmer-related products.
Depending on age the premiums are generally less than ACC and claims are not restricted to accidental injury but cover anything stopping you from working including illnesses which make up the majority of off-work time. These products will also pay out fully if you are receiving payments from ACC.
It is important that you really understand the cover you have. ACC provides cover for accidental death but this is not the case with private insurance arrangements as people tend to have life insurance policies to cover death.
Also when reviewing a combination of ACC and private insurance, be careful with regards to pre-existing conditions that may be excluded from private insurance.