Mind the Gap: Understand the ACC Cap!
By Steve Munro, October 2023

As an insurance adviser and a property investor, I’ve often felt like a circus performer, juggling every dollar amidst soaring interest rates. Life's unpredictability remains the one constant through it all.

The ACC Reality Check

Many perceive the Accident Compensation Corporation (ACC) as a beacon. However, contrary to popular belief, it's not the all-encompassing safety net that it appears to be. Many Kiwis might be surprised to learn that ACC has its limits, with a ceiling set at $2,615 weekly (that's circa $136k per year - ACC pays 80% of this amount less tax). Those earning beyond this limit will face a substantial gap, which is particularly daunting for both homeowners and property investors dealing with sizeable mortgage commitments.

The Real Cost of Liquidation

Here’s a scenario: Health issues force you into a rushed property sale during a market dip. The numbers aren’t favourable. As you finalise the deal to release the much-needed cash to relieve financial stress, the IRD may suddenly have their hand out, waiting for their cut. Once your health recovers and the market booms, you realise the significant opportunity lost. The property you hastily sold is now worth substantially more. This situation underscores the value of each insurance premium paid, as the cost of the policy pales in comparison to the potential financial impact of a hasty sale.

Bridging the Gap with Insurance

Insurance is not just a safety net—it’s a vital lifeline, especially when handling large mortgages. It offers more than mere coverage; it provides peace of mind that unforeseen events won't derail your financial plans. Irrespective of whether you're earning over the ACC cap or not, there are still ways to structure your income protection so that a portion of your payments will not be offset against any income paid by ACC. This approach puts you in a much stronger position at claim time in the event of an injury.

From One Investor to Another

Consider this: Would you purchase a home without a builder's report? Similarly, relying solely on ACC is risky, especially for us property enthusiasts. Remember, forewarned is forearmed. Fortify your safety nets with the right insurance, ensuring your investments remain secure through all life’s twists and turns.


In the property investment game, staying ahead is crucial. Understand the nuances of ACC, strengthen your defences, and ensure your investments can withstand any storm.

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