See what to include in your lost wage claim from the insurance company. Get compensated for lost vacation days, bonuses, perks, PTO, future income, and more.
When you’re injured because of someone else’s negligence, you have a right to be reimbursed for the income you lose while you recuperate.
Lost wages should be part of your personal injury claim against the at-fault party. If you’re in a car accident in a no-fault state you can recover lost wages through your Personal Injury Protection (PIP) coverage.
There’s more to your total income than just your hourly wage. Whether you’re injured in an auto accident, slip and fall, or work accident, be sure to include all the lost wages and other forms of compensation you’re entitled to.
Calculating Lost Wages and Benefits
Income losses include all wages, benefits, and perks that are part of a worker’s total compensation package.
You have the right to demand reimbursement for lost income from your base pay, and the financial value of other benefits you rely on from your employer.
Lost income claims may include:
- Rate of Pay: Your regular hourly wage or salary that would have been paid while you’re unable to work.
- Overtime: Hourly workers who typically worked overtime each week or during busy seasons can recover the lost overtime pay.
- Sick Days: If you had to use sick leave while recovering from your injuries, you should be reimbursed for the value of those days. Most states consider it an unfair burden to make someone lose sick days they will no longer have for future use.
- Vacation Days: Just as with sick days, you should be compensated for vacation days lost while recovering from your injuries.
- Bonus Days: Bonus days are any other days off from work you had to use or failed to earn while recovering. Bonus days include national holidays, birthdays, comp days, and “personal” days.
- Bonuses and Commissions: Employers usually pay bonuses based on an employee’s performance. You might earn a bonus because you had the highest sales for the month, or hit some other benchmark. If you were in line for a bonus, and your injuries prevented you from getting it, you can demand reimbursement for those amounts.
- Perks: Many employees rely on fringe benefits from their employer, including the value of health and life insurance, stock or stock options, profit-sharing plans, and gasoline or other transportation allowances.
- Pay Raises: You may have been up for a scheduled salary increase, including the cost of living (COLA) or a merit raise that you missed because of your injury.
- Retirement Fund Contributions: While out because of your injuries, you may have missed making contributions to pension funds, 401(k) and similar retirement plans, missed your employer’s match to your retirement funds, and also missed payroll contributions to Social Security.
Think about any other types of benefits you receive from your employer that you lost because you were out of work after an injury. The at-fault party, or their insurance company, should reimburse you for your total lost income.
It’s vitally important to include all types of lost compensation in a workplace injury claim to ensure you get the correct amount of workers’ compensation wage benefits. Don’t leave the calculations to the insurance company.
You or your attorney can prepare an itemized list with the dollar amounts of your lost wages, vacation pay, perks, and benefits to calculate the lost wages part of any type of injury claim.
Although you may depend on cash income to help make ends meet, you will not be able to make a successful claim for undocumented lost income, such as unreported tips, side jobs, and other unreported income.
Even if you can get a letter from someone who says they pay you regularly to work for them, you run the risk of serious trouble if you are working “off the books,” meaning the income hasn’t been reported to the IRS or other government agencies.
Justifying Lost Wages to the Insurer
The insurance adjuster won’t approve reimbursement for time off work that isn’t medically necessary and directly related to your injuries.
Ask your doctor for a regular “work slip” even if you’re employer doesn’t require one, or if you’re self-employed. However, the insurance adjuster will need much more information about your time off work before they’ll pay.
It’s important to discuss with your doctor how your injuries affect your ability to perform your job. The physical and mental requirements of your job will determine how long you may be off work.
Get a Doctor’s Narrative
Tell your doctor you need a medical narrative for your claim. The more detailed the narrative, the better chance you’ll have of getting paid without much argument from the adjuster.
The best proof of your need to be out of work can be a doctor’s narrative, or a copy of your medical records if your doctor’s notes include details about your medical need to be off work.
A narrative tells a detailed story about your injuries, including your diagnosis and a prediction for recovery. The doctor’s narrative should explain your prescribed treatment, how long you may be out of work, and why.
If your doctor expects you’ll be able to return to work on a limited basis, the narrative should explain your work restrictions, including limited hours of work. If your employer can’t accommodate your restrictions and you must continue to miss work until you’re fully recovered, you are entitled to compensation for those missed days.
Proof of Income from Your Employer
Pay stubs don’t have all the information you’ll need to support your lost wages claim. Ask your manager or human resources representative to provide written documentation of your pay and benefits. They should detail the time lost and benefits used during your recovery.
Income verification from your employer should include:
- The days you missed work
- Your hourly pay or salary at the time of the injury
- The number of hours you normally work each pay period
- Any overtime you worked in the weeks or months before the injury
- Any special projects you were working on that would have resulted in additional compensation
- A promotion you were being considered for, but now isn’t available
- Any lost prizes or commission for work performance
- Vacation, sick, and bonus days you used while recovering
- Any perks or other benefits you lost
You can send a customized copy of this downloadable Lost Income Verification Letter to your employer. They only have to fill in the blanks and send it back to you for verification of your lost wages and other income.
Documenting Lost Self-Employment Income
Self-employed people have the same right to recover lost income as anyone else, although gathering proof of that lost income is a bit more challenging.
Claims adjusters tend to be suspicious of self-employed income claims unless you have reliable documentation of your earnings history that pre-dates your injuries.
Useful evidence for self-employed income claims includes:
- Business Documents: Provide the adjuster with proof of the existence of your self-employed business, including copies of your articles of organization, registration with your state’s attorney general, licenses, certificates, etc.
- Tax Forms: 1099-Misc forms from clients will help document your gross income.
- Income Tax Returns: Your previous years’ tax returns can help document your average annual earnings as an independent contractor.
- Profit and Loss Statements: Provide a P&L Statement for the year to date. If your business has been growing steadily for several years, you can use prior years’ statements to show the growth trend.
- Correspondence: If you were working with potential customers and lost them when you were injured, use copies of your correspondence to prove how close you were to closing them. If they will write a letter confirming they would have become a customer, if not for your being injured, that would be even better.
Accountants and Bookkeepers
If your self-employed income is high, or you run a business that involves employees or subcontractors, you probably already have an accountant or bookkeeper to help you with your business administration.
Ask your accountant or bookkeeper to help gather your self-employed income documentation and prepare a financial report supporting your lost income calculations. The report should include the accountant’s fees.
Future Loss of Earning Capacity
Most claims for lost income are made during settlement negotiations of an injury claim, after the person has already returned to work. If your injuries were relatively minor, you can probably handle your injury claim without an attorney.
When your injuries are serious enough to be permanent or disabling, you’ll need a skilled attorney to get the compensation you deserve.
Your attorney will demand compensation for income lost after the injury and will seek compensation for your loss of future earning capacity.
Attorneys often use actuarial studies and forensic accountants to prove lost earning capacity for severely injured claimants. Compensation for lost future earnings could run into hundreds of thousands of dollars.
Loss of future earning capacity depends on the victim’s:
- Lifetime work expectancy – how many more years the victim would have worked
- Earnings history
- Residual capacity, such as the ability to learn a new trade
- Education and training before the injury
Actuarial experts determine how many more years a person would have worked and lived had they not been injured.
Forensic accountants study the past income of an individual and forecast potential future income. If you’re self-employed, they can prepare a detailed report of future income by factoring in the growth rate of your business and the addition of new customers. They can also factor in the income levels of similar businesses in your area.
Serious injury claims take time and money, especially when the injured victim will never work again. Look for an attorney who can advance the funds needed to pay for accountants and vocational specialists to support your case.
Most personal injury attorneys offer a free consultation and will represent you on a contingency fee basis. That means the attorney won’t get any fees unless your case settles or you win a verdict in court.
There’s too much at stake to handle a life-changing personal injury case on your own. If you’ve lost your livelihood because of someone else’s negligence, find out what an experienced attorney can do for you.
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