Here’s what the insurance company won’t tell you about how you can recover all your lost wages and perks in your injury claim.
The financial toll of lost wages after an injury can be devastating. Even while laid up from an injury, you still have to pay for housing, food, and your other monthly expenses. Then the medical bills start coming in. How will you pay for it all?
Fortunately, when you’ve been injured by the negligence of another person or a company, you have a right to be reimbursed for the income you lose while you recover.
You can include your lost wages in a claim against the at-fault party, the at-fault party’s insurance company, or your own insurance company if you’re in a car accident in a no-fault state.
However, there’s more to your total income than just your hourly wage.
Learn what the insurance adjuster won’t tell you about all the lost wages and other forms of compensation you can include in your settlement demand.
What Counts as Lost Income?
When it comes to injury claims and lawsuits, most states have laws that say the injured person is entitled to reimbursement for income they lose while recovering from their injuries.
If you’re out of work due to injury, you’ll need a “work slip” or other written proof from your medical provider showing the dates you’re unable to work.
Lost income includes all wages, benefits, and perks that are included in 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:
- Base 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 days while recovering from your injuries, you have a right to 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.
Proving Your Lost Income After Injury
The insurance adjuster won’t approve reimbursement for time off work that isn’t medically necessary and directly related to your injuries.
You can ask the doctor for a regular “work slip” for your employer. However, the insurance adjuster will need much more information from your medical provider before they’ll pay.
Get a Doctor’s Narrative
The best proof of your need to be out of work can be a doctor’s narrative. 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 and how long you should be out of work.
If your doctor expects you’ll be able to return to work on a limited basis, the narrative should explain your work restrictions. If your employer can’t accommodate your restrictions and you have to continue to miss work until you’re fully recovered, you are entitled to compensation for those missed days.
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.
Proof of Income from Your Employer
To be successful in your injury claim, you need proof of the income you lost during your treatment and recovery.
Ask your manager or human resources representative to provide written documentation of your pay and benefits. They should detail time lost and benefits used during your recovery.
Verification from your employer should be a written and signed document on company letterhead, not just an email. It’s okay if you get an email of a scanned copy of the signed document.
Income verification from your employer should include:
- The days you were absent
- 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
Self-Employed Lost 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-date your injuries.
Useful documents for self-employed income claims:
- 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.
- Tax Returns: Your prior 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 bringing them on. 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.
When you own a highly profitable business, you may need to hire an experienced personal injury attorney to protect your financial interests.
Forensic accountants are often used in injury claims. These accountants can study the past income of a self-employed individual and forecast potential future income. 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.
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 appropriate government agencies.
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 provide evidence of 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
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 injury attorneys don’t charge for their initial 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 injury claim 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.
Video: Demanding Payment for Lost Income
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