Self-employed unaware of crucial ACC option

Compensation choice isn’t well promoted, writes Rob Stock.

Only one in eight self-employed business owners have opted to specify what weekly compensation ACC would pay them, if they were injured and could no longer work.

And Kevin Smee from financial adviser network MySolutions says it’s time for government action to give the self-employed the same certainty over weekly compensation that salaried workers enjoy.

Smee estimated that just 50,000 of around 400,000 eligible business owners had specified an ‘‘agreed value’’ through ACC’s CoverPlus Extra.

When a self-employed person is injured, their weekly compensation payments from the staterun no-faults accident insurer are based on their recent earnings, unless they have nominated an agreed value through ACC.

‘‘As the income of the selfemployed can fluctuate, they can be grossly under-insured in some years while in other years they are paying for ACC cover at a level that they don’t want, don’t need or can’t afford,’’ Smee said.

Smee said CoverPlus Extra gave the self-employed certainty in terms of costs and cover, let them pay in advance rather than in arrears.

The main reason so few business owners had opted for CoverPlus Extra was that it was not well promoted, Smee said.

‘‘The Government needs to put more resource into CoverPlus Extra and getting it out to the selfemployed,’’ he said.

‘‘We would suggest even making it the default contract for the self-employed. Small and mediumsized enterprises are the backbone of our economy, so there needs to be more effort to help these business owners.’’

‘‘It is simply not good enough that only one in eight eligible businesses are using it.’’

CoverPlus Extra is advertised on the entry page to the ‘‘selfemployed’’ section of its website, which links to a brochure outlining how it works.

Smee said CoverPlus Extra also resulted in fairer ACC levies in some cases.

‘‘If you have a family business in the building industry, the husband, who goes out and builds, and his wife, who manages the administration, both get billed by ACC as builders. CoverPlus Extra allows you to split classification within a company, meaning the administration person pays administration fees,’’ Smee said.

There is a case that illustrates what can happen to the selfemployed, if they don’t nominate a sum insured.

A case that was heard by the Human Rights Review Tribunal in late 2009 taken by a man named David Alderson, who complained that ACC had breached his human rights by not publicising CoverPlus Extra to him.

He moved to New Zealand from the UK in 2002, but went selfemployed in May 2005. Six months later suffered a serious accident.

‘‘Because of his comparatively modest earnings in the period immediately before the accident he was only entitled to a low rate of earnings-related compensation’’, the tribunal said. ‘‘He says if he had organised his affairs differently, for example by taking out... CoverPlus Extra, he would have been entitled to very much more.’’

He claimed recent immigrants like him were at a disadvantage in not knowing the ACC system.

The tribunal found ACC had not breached the man’s human rights.