New Zealand's accident compensation scheme provides accident insurance cover for accidental injuries to New Zealand citizens and residents, and to temporary visitors to New Zealand.
Section 3 of the Accident Compensation Act 2001 sets out the purpose of the scheme. It states that the purpose of the Accident Compensation Act 2001 is to "enhance the public good and reinforce the social contract represented by the first accident compensation scheme" by providing for a fair and sustainable scheme for managing personal injury. The overriding goals are minimising both the overall incidence of injury in the community, and the impact of injury on the community (including economic, social, and personal costs).
The Accident Compensation Act 2001 achieves these goals through:
The Supreme Court has described the accident compensation scheme as a "social contract" under which New Zealanders forgo their right to sue under the common law in exchange for broad, no-fault coverage. The scheme was intended to be a "unified" replacement for the previous regime — not merely another option alongside damages.
"ACC" stands for "Accident Compensation Corporation," which is the government organisation that manages the accident compensation scheme and makes decisions about claims. But often the term "ACC" is used more generally to refer to the whole scheme and the compensation you get under it — as when someone says, "I'm getting ACC for my injury." In this article, we use "ACC" in both those senses, and it should be clear from the context which one we mean.
The Accident Compensation Corporation (ACC) scheme involves a two-step process.
The first step is establishing that your injury is covered by the scheme. Whether you are covered by the Accident Compensation Corporation (ACC) will depend on whether you meet the criteria or legal definition of "accident" set out in the Accident Compensation Act 2001 (see: When You're Covered by the Accident Compensation Corporation (ACC), and When You're Not).
Once it is accepted that you have "cover," the second step is applying for "entitlements." You can apply for multiple entitlements, although each entitlement has its own set of legal requirements that must be met (see: Accident Compensation Corporation (ACC) Entitlements: Treatment, Compensation and Other Support).
Most Accident Compensation Corporation (ACC) claims involve physical injuries caused by accidents. However, sometimes mental injuries are covered too (see: Mental Injuries: Sometimes Covered).
Sometimes physical conditions may be covered even though they are caused gradually, for example, through long-term exposure at work to substances like asbestos (see: Conditions Caused Gradually: Covered Only If Work-Related).
The types of injuries that are covered under the Accident Compensation Corporation (ACC) scheme include:
The courts have consistently held that the Accident Compensation Act 2001 should be interpreted expansively when it comes to what injuries are covered. In the landmark Court of Appeal decision Accident Compensation Corporation v Mitchell [1992] 2 NZLR 436 (CA), Richardson J established that the accident compensation legislation should be interpreted in a "generous and unniggardly" manner, and that cover should not be denied except where the language of the statute is clear and unambiguous.
"The accident compensation legislation should be interpreted in a generous and unniggardly manner, and cover should not be denied except where the language of the statute is clear and unambiguous."
Accident Compensation Corporation v Mitchell [1992] 2 NZLR 436 (CA) at 438, per Richardson J
This principle has been repeatedly affirmed by the courts, including by the Supreme Court in Roper v Taylor [2023] NZSC 49 at [94] and [102]–[103], and by the Court of Appeal in Harrild v Director of Proceedings [2003] 3 NZLR 289 (CA) at [19]. These decisions make clear that the courts will take a broad approach to the scope of cover provided by the scheme, reflecting the social contract at its foundation.
The Supreme Court has demonstrated this expansive approach in practice. In Allenby v H [2012] NZSC 33, the Supreme Court held that pregnancy following a failed sterilisation operation was "personal injury" capable of being covered under the Accident Compensation Corporation (ACC) scheme as a treatment injury. The Accident Compensation Corporation (ACC) itself had argued there was no cover, but the Supreme Court found it would be inconsistent with the spirit of the statute to deny coverage.
"The Supreme Court mandated that the ACC legislation be interpreted expansively in relation to the consequences of personal injury."
Allenby v H [2012] NZSC 33
The significance of this decision extends beyond its particular facts. The Supreme Court confirmed that "personal injury" is used in an expansive way in the current legislation and has a statutory meaning that should not be read down. This is the standard that the Accident Compensation Corporation (ACC) is required to apply to all claims — though whether it does so in practice is another matter entirely.
Cover for mental injury has been one of the most contested areas of the Accident Compensation Corporation (ACC) scheme. The landmark Court of Appeal decision in Accident Compensation Corporation v E [1992] 2 NZLR 426 (CA) established that adverse mental consequences of an accident could amount to "personal injury by accident" even where there had been no physical injury. In that case, an employee who suffered a psychiatric breakdown during a stressful management course was found to be eligible for compensation — no specific triggering event could be identified, but the Court held that this was not required.
However, the nineteen ninety-two (1992) reforms significantly restricted this cover, limiting mental injury claims to those arising from physical injury or from specified sexual offences. The Accident Compensation Act 2001 retained these restrictions while also introducing section 21B, which provides cover for work-related mental injury caused by a single event.
The Supreme Court addressed the scope of mental injury cover in Roper v Taylor [2023] NZSC 49. In that case, a woman who suffered post-traumatic stress disorder (PTSD) caused by sexual assault and false imprisonment during her service in the Royal New Zealand Air Force (RNZAF) was found to have cover under the scheme. Because the assault was covered, section 317 of the Accident Compensation Act 2001 barred her from seeking compensatory damages through the courts.
Despite the expansive approach the courts require, mental injury cover under the Accident Compensation Corporation (ACC) remains restricted. Standalone mental injuries — those not caused by physical injury, sexual offences, or a single work-related event — are generally not covered. This means that many people suffering from conditions such as workplace bullying-induced post-traumatic stress disorder (PTSD) or chronic pain syndrome may fall outside the scheme.
To make a claim, you do not have to show that some other person was at fault and caused your injury. The Accident Compensation Corporation (ACC) is sometimes described as "a no-fault scheme." Whether you fell over at home, twisted your knee playing sport, or were injured in a car accident when another driver failed to give way to you — you will be covered by the Accident Compensation Corporation (ACC).
You do not need to prove anyone else caused your injury. The Accident Compensation Corporation (ACC) scheme covers accidental injuries regardless of fault — that is the foundation of the scheme.
The Accident Compensation Corporation (ACC) scheme has been running since the mid-nineteen seventies (1970s). When the scheme was introduced, it took away the right to sue in the courts for injuries covered by the scheme. Section 317 of the Accident Compensation Act 2001 makes this explicit: no person may bring proceedings independently of the Accident Compensation Act 2001 for damages arising directly or indirectly out of personal injury covered by the scheme.
However, if your injury is not covered by the Accident Compensation Corporation (ACC) and was caused by someone else's actions, you can sue them in court for compensation ("damages").
The Supreme Court has enforced this bar firmly. In Austin v Roche Products (New Zealand) Ltd [2021] NZSC 30, the Court held that once a person lodges a claim with the Accident Compensation Corporation (ACC), they are locked into the Act's procedures. The claimant, Mr Austin, had accepted Accident Compensation Corporation (ACC) cover for a treatment injury caused by the prescription drug Roaccutane, then later tried to sue the drug's distributor for compensatory damages in the High Court. The Supreme Court ruled that section 133(5) of the Accident Compensation Act 2001 prevented any court from considering or granting remedies in relation to a matter covered by the scheme.
"Once a person lodges a claim, they are locked into the Act's procedures. No court may consider or grant remedies in relation to that matter if it is covered by [the] Act."
Austin v Roche Products (New Zealand) Ltd [2021] NZSC 30 at [20]
The Court went further, holding that allowing claimants to wait until their review rights had expired and then sue in the ordinary courts would be "the very antithesis of the Act's purpose." If you disagree with an Accident Compensation Corporation (ACC) decision, you must challenge it through the statutory review and appeal process — not through the courts.
Similarly, in Roper v Taylor [2023] NZSC 49, the Supreme Court unanimously held that section 317 of the Accident Compensation Act 2001 has the effect of excluding any claim for compensatory damages where the injury is covered by the scheme. The claimant's entitlement was limited to what the Accident Compensation Corporation (ACC) scheme provides — and exemplary damages where applicable.
The statutory bar is one of the most significant consequences of the Accident Compensation Corporation (ACC) scheme. If your injury is covered — even if the Accident Compensation Corporation (ACC) provides inadequate support — you cannot sue the person who caused your injury for compensatory damages. Your only recourse is through the Accident Compensation Corporation (ACC) review and appeal process. This is why getting the right support from the outset is critical.
The history of the Accident Compensation Corporation (ACC) is fraught with criticism and avoidance of paying claimants.
In the nineteen sixties (1960s), workers' frustration was bubbling over. Measly compensation payments were not enough to make ends meet if they were injured and could not work.
Supreme Court Judge Sir Owen Woodhouse saw people battling the legal system to prove their injuries were caused by employers' negligence, and chaired a Royal Commission of Inquiry. The resulting report — Compensation for Personal Injury in New Zealand (nineteen sixty-seven (1967)), commonly known as the Woodhouse Report — recommended a radical change: introducing automatic cover for injured people.
As the Supreme Court later described it in Roper v Taylor [2023] NZSC 49, the Woodhouse Report found the existing system to be "fragmented and capricious" and recommended it be replaced with one that was "unified and comprehensive." A key plank of the new system would be the abolition of common law actions for personal injury, which the authors found to be illogical, uncertain, costly, slow-moving, and an impediment to rehabilitation.
"The accident compensation scheme was set up to grant wide-ranging cover on a basis which was efficient, comprehensible and not beleaguered by 'capricious' legal tests. In exchange for this broad coverage, New Zealanders are held to a 'social contract' where they forgo their right to sue under the common law."
Roper v Taylor [2023] NZSC 49 at [34]
In nineteen seventy-three (1973), the original Accident Compensation Act covered work injuries and car accidents, and an amendment the following year — the Accident Compensation Amendment Act 1974 — made it more comprehensive. The nineteen seventy-four (1974) amendment provided entitlements for those who suffered "personal injury by accident," covering all personal injury suffered in New Zealand by earners, non-earners, and visitors.
New Zealanders gave up their right to sue for damages, and in return got the no-fault scheme that still stands to this day.
At the time it started, there were a few hundred civil disputes per year and about five thousand (5,000) workers' compensation claims. Over time, that has built up to about two (2) million claims per year — an incredible increase.
There have also been significant changes in what is covered — from job site accidents to sports injuries and sensitive claims, like those who had been abused in care. Only about one (1) percent of those with sensitive claims were actually compensated, highlighting serious gaps in the scheme.
When the Accident Compensation Corporation (ACC) works, it is one of the best systems in the world, and the fact that it is still operating is really testament to that. However, the Accident Compensation Corporation's (ACC's) darker side leaves a trail of people with treatments that do not actually address their injuries. Whether or not it works in all cases is a completely different question, and there is a large cohort of people who do not get access to justice through the Accident Compensation Corporation (ACC) system.
Not everyone had their party hat on.
Some people have said that the Accident Compensation Corporation (ACC) is no better now than any other large insurance company — but it is bound to uphold the social contract in a manner no insurance company could. When it works, and when it is not avoiding paying.
While the original Accident Compensation Corporation (ACC) was a commission, former Prime Minister Robert Muldoon threw it out in nineteen eighty-two (1982) and created a corporation.
With that, he also tossed Sir Owen Woodhouse's guiding principle — to focus on the injured person's needs. That was a significant mistake, and the Accident Compensation Corporation (ACC) has never been the same since.
When former Prime Minister Robert Muldoon replaced the Accident Compensation Commission with a corporation in nineteen eighty-two (1982), Sir Owen Woodhouse's founding principle — to focus on the injured person's needs — was abandoned. The corporation became focused on cash, not on those who the system was designed for.
Comprehensive entitlement meant everybody was automatically covered by accident compensation. Theoretically, that is what happens now — except if the Accident Compensation Corporation (ACC) disagrees, you have got to prove that you are covered.
The corporation was focused on cash, not those who the system was designed for — and the only way to fix that was to bring back a commission that cared for people.
The Accident Rehabilitation and Compensation Insurance Act 1992 brought significant changes to the scheme. Under the banner of "A Fairer Scheme," the nineteen ninety-two (1992) reforms tightened the definition of "personal injury" by setting out exhaustive definitions for personal injury by accident and by medical misadventure. It also restricted cover for mental injury — effectively overturning the expansive approach established in Accident Compensation Corporation v E [1992] 2 NZLR 426 (CA) — by limiting mental injury cover to cases involving physical injury or specified sexual offences.
The transitional provisions of the nineteen ninety-two (1992) Act were particularly harsh. People who had suffered injuries before the Act but had not lodged claims risked losing their cover entirely. This created significant injustice for many claimants.
There remains serious work to be done, with some struggling to navigate the system and growing numbers of claims putting pressure on those facilitating rehabilitation.
The Accident Compensation Corporation (ACC) scheme is unique in the world. While other countries have elements of accident compensation, such as a workers' compensation scheme or a road accident scheme, no country has New Zealand's comprehensive, no-fault injury cover.
In recent times, the number of staff has been cut, further potential cuts have materially affected customer-facing staff, and resources have been geared towards reducing duplication and pulling projects that would have benefited workers.
One particularly significant structural issue is that the right to appeal Accident Compensation Corporation (ACC) decisions currently stops at the Court of Appeal. As the New Zealand Law Society has noted, there is no right to appeal to the Supreme Court on Accident Compensation Corporation (ACC) matters — despite the fact that the Supreme Court Act 2003 was intended to achieve comprehensive jurisdiction across all areas of law.
In J v Accident Compensation Corporation [2017] NZSC 3, the Supreme Court noted that the advisory group reporting on the Supreme Court Act 2003 was of the view that the jurisdiction of the Supreme Court should be comprehensive. The Court was not satisfied that the principle of complete comprehensiveness of its jurisdiction had been achieved in relation to Accident Compensation Corporation (ACC) matters, nor could it identify a particular reason why the law had not been amended.
The Accident Compensation Corporation (ACC) legislation has not been amended to allow appeals to the Supreme Court. This means that the highest court in the land cannot determine the meaning of the Accident Compensation Act 2001 in relation to adverse decisions — a significant gap in access to justice for injured workers.
For ongoing news coverage of the Accident Compensation Corporation (ACC), including policy changes, staffing decisions, and claimant experiences, see: Radio New Zealand (RNZ) — ACC Coverage.
The Accident Compensation Corporation (ACC) scheme was built on a promise: that every New Zealander injured by accident would be looked after. The courts have said the legislation must be interpreted generously. When the system fails to deliver on that promise, you have the right to fight for what you are owed.
Working for Workers provides expert advocacy and representation for people navigating the Accident Compensation Corporation (ACC) system. Whether your claim has been declined, your entitlements reduced, or you simply do not know where to start — we are here to help.
Please contact us today to discuss your situation.
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