A key aspect of any personal injury claim is calculation of all losses arising from the accident and resulting injuries. In addition to compensation for medical treatment and pain and suffering, another category of damages that shouldn't be overlooked is lost income. In this article, we'll discuss:
In most instances, you're entitled to reimbursement (from the person who was at fault for the accident, or from that person's insurance company) both of:
The right to be reimbursed applies whether you have a full-time or part-time job, regular or occasional employment, an hourly wage or weekly or monthly salary, or are self-employed.
It's important to note that income loss is not a part of the amount multiplied in the personal injury settlement formula that's often applied to special damages. Instead, lost income is usually added on after the proper multiplier has been determined.
For example, let's say that after an accident, your medical bills total $2,000, and your income loss is $1,500. Because your injury was soft tissue only, a formula of two times specials is applied. Only your medical expenses of $2,000 would be multiplied by two, not your $1,500 income loss. Instead, the $1,500 income loss would be added on to the multiplied total. In this example, the formula would be 2 x $2,000 = $4,000, plus $1,500 lost income, for a formula total of $5,500. This total only begins personal injury settlement negotiations, and it can go up or down depending on the facts of your individual case.
The fact that you were able to take sick leave or vacation pay for the time you missed—and therefore did not directly lose income—does not matter; that time is still part of your lost income claim. You were entitled to use that sick leave or vacation time when you might have needed or wanted it. Bottom line: Using up sick leave or vacation pay is considered the same as losing the pay itself.
To be reimbursed for lost income, you typically must be able to show:
If you are regularly employed by someone else, collecting information about your lost income is usually fairly straightforward. Ask your supervisor, boss, or human resources department to print out a letter or email you a document (on company letterhead or stationery, if that's an option) that includes your name, your position, your rate of pay, the number of hours you normally work, and the number of hours or days you missed following the accident. The document need not indicate whether you took sick leave, vacation time, or a leave of absence.
If you are irregularly employed or are self-employed, proving lost income can be a little more complicated. You have to show how much work time you lost and what you might have earned had you been able to work. You can use any evidence you have of a drop in billing or invoices, a calendar showing appointments you had to cancel, and any documents (including printouts of emails and other electronic messages) showing meetings, conferences, or other appointments you were unable to attend.
After you have demonstrated how much work you missed, you have to show how much you might have earned. If you had been working a relatively steady amount immediately before the accident, you can show an average for the period by putting together copies of your billing, invoices, payments received, or other evidence of money earned. Then, depending on the amount you were working and how much you were earning, you can calculate how much income you are considered to have lost for the time you were unable to work due to the nature and extent of your injuries.
If you work sporadically—some weeks or months earning most of your income and other weeks or months earning little or nothing—you can show the value of lost work time through evidence of what you make during an entire year, then dividing that into a weekly or monthly average.
The best evidence of your yearly income is your personal income tax return for the previous year. You need to show only the part of your tax return that gives your year's gross income; the rest of the return—deductions, exemptions—is irrelevant, and an insurance adjuster has no right to see it. If you had particularly low earnings during the previous year, include two or three years of returns to demonstrate how much you usually earn. If you also have some evidence of income for the current year showing a similar earning pattern, include that as well.
Get more tips on gathering evidence to support your injury claim.
In addition to time lost from work, you are entitled to reimbursement for work opportunities lost because of the accident and your injuries. Of course, it's harder to prove you lost income by missing a job interview or a sales meeting than showing you lost income by missing actual work.
But even if you cannot point to specific dollar amounts you lost, the fact that an insurance adjuster knows that lost potential income is a valid part of your claim will boost your settlement (the increase will depend on the specifics of your losses, of course).
Learn more about factors that affect the value of a personal injury settlement. And for advice that's tailored to your situation, get tips on finding the right personal injury lawyer for you and your case.
Much of this article is excerpted from How to Win Your Personal Injury Claim by attorney Joseph Matthews (Nolo).