Thank you to everyone who joined our recent webinar hosted by CMK Accountants and Finance House Group (FHG). It was a fantastic session packed with practical insights to help farming families better understand and manage one of their most important — and often overlooked — risks: protecting their income and their ability to keep working.
In case you missed it, or want to revisit the key takeaways, here's a summary of what we covered.
The Core Question: What Happens If You Can't Work?
Farming businesses are deeply personal — so much of the operation depends on the people running it day to day. If something happens to you, whether it's an injury or illness, the farm doesn't stop costing money. The cows still need milking. Wages still need paying. The bank still wants its repayments.
Mate from Finance House Group shared a useful analogy: if you had an ATM in your living room that delivered your monthly income in cash, would you insure it? Of course you would. That's exactly how you should think about protecting your ability to earn.
Key insight:Farmers often insure their machinery, buildings and livestock without giving the same thought to insuring their most valuable asset — themselves and their ability to work.
Understanding Your ACC: Cover Plus vs Cover Plus Extra
ACC is New Zealand's government-run accident compensation scheme. If you're injured — whether at work, at home, or playing sport — ACC can cover treatment, rehabilitation, and weekly compensation while you recover. The key word there is injured. ACC only covers accidents, not illnesses.
For self-employed farmers, there are two main options:
| Cover Plus (Standard)• Default option — automatic• Compensation based on 80% of actual taxable earnings• Levies and cover fluctuate with income• Simpler but less certainty |
Cover Plus Extra• You agree the level of cover upfront• Fixed, certain payout amount if injured• Ideal for fluctuating farm incomes• Lets you choose your occupation classification• Maximum cover of $125,000 |
Cover Plus Extra is particularly valuable for contract milkers and share milkers who are new to self-employment — you can lock in an agreed cover amount from day one, rather than waiting to build up two years of financials.
ACC Quick Fact:There is a 7-day stand-down period before weekly compensation from ACC begins. After that, ACC pays out at 80% of your earnings (Cover Plus) or at your agreed amount (Cover Plus Extra).
Don’t Overlook Your Occupation Classification
One of the most commonly missed opportunities with ACC is selecting the right classification (occupation class). If you're a farm owner with contract milkers managing the day-to-day, or if you're in an administrative or investor role rather than doing physical farm work, you may qualify for a significantly lower levy rate.
The Gap ACC Doesn't Cover: Income Protection & Key Person Cover
Here's the important part. ACC only responds to accidents. But the events most likely to keep you off work for a prolonged period — cancer, heart attack, stroke, serious mental illness — are not accidents. They're not covered by ACC at all.
This is where income protection and key person cover come in. These insurance products:
- Cover both accidents AND illnesses
- Allow you to choose your own waiting period before benefits begin
- Allow you to choose the payment term (how long the benefit pays)
- Allow you to set the level of cover based on replacement labour costs — not just what you pay yourself
A critical distinction Mate and James highlighted is the difference between personal income protection products and business/key person cover.
Watch out for offset policies:Many income protection products are offset by ACC — meaning you pay premiums for both but only receive a top-up, not both in full. Business key person cover, by contrast, can be structured so your ACC pays to you personally and the insurance pays to your business separately. Make sure you know whether your policy is offset or not.What’s Actually Covered? A Quick Reference
| Scenario |
ACC Cover Plus/Extra |
Income Protection |
Key Person Cover |
| Broken leg (accident) |
✓ Yes |
✓ Yes (tops up ACC) |
✓ Yes (not offset) |
| Cancer (illness) |
✗ No |
✓ Yes |
✓ Yes |
| Heart attack (illness) |
✗ No |
✓ Yes |
✓ Yes |
| Mental health (illness) |
Sometimes |
✓ Most policies |
✓ Most policies |
| Long-term illness |
✗ No |
✓ Yes (to end of term) |
✓ Yes (to end of term) |
Your Entity Structure Matters
How your farming business is structured affects how your income flows to you — and therefore what ACC cover you automatically have. Here's a quick guide:
- Sole Trader — Income flows directly to you. ACC levies are based on this income.
- Partnership — You're levied on your share of partnership income.
- Company — ACC is based on salary or wages paid to you.
- Trust — Distributions to beneficiaries are treated as passive income. There is no automatic ACC cover on trust distributions. If you're operating through a trust, make sure you're on a salary, or have insurance cover in place.
Trust structures — a common blind spot:If your farm operates through a trust and you receive income purely as a beneficiary distribution, you may have no ACC cover at all. This is something we regularly work through with clients. Talk to us if you would like guidance about this.
Building the Right Strategy for You & Reviewing often
There is no one-size-fits-all answer. The right approach depends on your entity structure, farming role, age, health history, and the stage you're at in your farming journey.
Your farming business evolves. Income levels change. Loan balances shift. Staff come and go. Family needs grow. That's why Sally and the FHG team both recommend reviewing your ACC and insurance cover at least annually — not necessarily making changes every year, but asking the right questions and making sure everything still fits.
Five Things to Check This Week
- What ACC structure are you on? Cover Plus or Cover Plus Extra? Is it the right fit for your situation?
- Is your occupation classification correct? Could you qualify for a lower rate?
- Do you have cover for illness — not just accidents? If you only have ACC, you have a significant gap.
- Is your income protection policy offset by ACC? If so, consider whether a key person / business product could work better for you.
- If you operate through a trust, are you on a salary? Do you have insurance to cover the gap in ACC?
Want to know more?
You can watch the webinar here:
https://www.dwn.co.nz/product/protect-what-matters/We’re available to help you review your ACC and Finance House Group can help guide you with your insurance decisions. Feel free to reach out to CMK or FHG with any questions.
CMK Accountants: 06 765 6178 |
cmk@cmk.co.nzFinance House Group: 09 489 5008 |
admin@financehouse.net.nz
