If you're self-employed, ACC is probably something you pay without thinking too much about. The levy comes out, you move on.

But for most self-employed people, the default ACC cover - called CoverPlus - isn't actually the best option available. There's an alternative called CoverPlus Extra, and it works quite differently.

Here's what you need to know.

What's the difference?

Under standard CoverPlus, if you're injured and need to make a claim, ACC calculates your payout based on what they determine you were earning. For people with variable income - which is most self-employed people - that process can be slow, complicated, and uncertain. You may need to provide financial statements, and the amount you receive isn't guaranteed upfront.

CoverPlus Extra works differently. You agree on your level of cover in advance. That's the amount you'd receive if you needed to claim - no argument, no financial statement headache, no uncertainty about the number while you're already dealing with something serious.

Your occupation classification matters

One thing most people don't realise: under CoverPlus Extra, sole traders and shareholder-employees can align their ACC occupation classification with their actual role in the business.

That matters because ACC levies are calculated based on occupation risk. An administrator working in a construction company shouldn't be paying levies at the same rate as someone doing physical work on site. Getting your classification right can make a real difference to what you pay each year.

What about if your business keeps earning while you recover?

This is a common concern for business owners. Under CoverPlus Extra, if your business continues to generate income while you're off work, ACC still pays 100% of the agreed amount in your contract. There's no offset or reduction based on what the business earns.

That's a meaningful difference from standard cover, and one worth understanding before you assume the default is fine.

Is it right for everyone?

Not necessarily - it depends on your situation, your income, and how your business is structured. That's why it's worth having a proper conversation rather than making a change based on a blog post.

What we can say is that for most of the self-employed clients we work with, CoverPlus Extra is the better fit. The combination of agreed cover, occupation-based levy calculation, and claim certainty tends to stack up well.

If you've never had your ACC reviewed, it's a good place to start.

This article is general in nature and does not constitute personalised financial advice. For advice tailored to your situation, get in touch with the EFS team at efsnz.co.nz