Being involved in an accident typically means filing a compensation claim. Your claim probably lists damages like your medical expenses and property repair costs.
If your property is beyond repair, your accident claim can include replacement costs. Like most accident victims, you’re depending on the compensation to help offset some or most of your resulting expenses—and what about recovering compensation for lost earnings?
But, before listing this type of damage it helps to understand the differences between loss of income and loss of earning potential. These differences can impact the overall value of your injury claim.
What is Loss of Income?
If your injury claim includes loss of income, you’re stating your injuries are severe enough to prevent you from returning immediately to work after the accident. In other words, if you’re scheduled to work the day after the accident and your injuries are preventing you from going in, you can probably claim loss of income.
You may not receive all of your lost wages, but most accident claims can help you recover at least a portion of your missed income. If you’re wondering if loss of income can include additional work-related benefits, the answer is occasionally yes.
For example, if you’re missing out on your employer-donated lunch allowance you’re probably going to need to write this off as a loss. However, if you’re due to receive a financial bonus for never missing a day of work, this may be a claimable benefit. The premise is that you would have received the bonus but for the accident.
As long as you can prove the accident is the direct reason for missing out on the financial benefit, you should be able to receive at least some compensation.
What is Loss of Earning Potential?
While loss of income deals with present and past wages you missed due to the accident, loss of earning potential looks at the future.
Some accidents result in serious or permanent injuries that prevent victims from returning to their previous positions. Some injuries like an amputation or paralysis may prevent an accident victim from ever reentering the workforce.
When this applies, you may be able to file a claim for your lost earning potential. No, you’re probably not going to receive a check for the entirety of your future potential earnings but you can recover a portion.
If you’re wondering when loss of income turns into lost earning potential, it’s usually if your injuries prevent you from returning to work for longer than a month. So, if you’re still facing the prospect of a long recovery after four weeks, then you may want to consider including loss of earning potential in your particular personal injury claim.
Recovering Compensation for Loss of Income
If you only miss a few days of work or even up to a month, it’s a good idea to talk to your accident lawyer about a loss of income claim. You’re going to need to provide proof of both employment and income. Like every other damage you list in an accident claim, you must back it up with supporting evidence.
Items including your previous pay stubs, tax records, and even a letter that comes directly from your employer should be more than enough to satisfy the insurance adjuster. However, just because you can show proof of your earnings doesn’t necessarily mean that you’re actually going to receive the full amount you’re trying to go after.
There’s a good chance you’re going to spend time in negotiations with the insurance adjuster and they will search for ways to reduce your claim’s value. Often, an easy place to start is by reducing the compensation amount of your lost current income.
A good tip is to be prepared to negotiate and be willing to give a little when it comes to discussing acceptable settlement amounts.
Recovering Loss of Earning Potential
Claiming loss of earning potential is a little more challenging than getting back some of your missed income.
You’re still going to need to provide the same documents that include things such as your tax returns, pay stubs, and a letter that comes from your employer. Your employer can verify your employment status at the time of the accident, along with your pay rate. Your employer can also provide evidence supporting your claim of lost earning potential.
Remember how we noted earlier that you’re probably not going to be able to recover all of your lost current wages? This also applies to your lost earning potential. This damage is viewed more as an estimate since no one truly knows what you may have earned if the accident hadn’t occurred.
So, how do you come up with a best estimate of your future earning potential? Your attorney and the insurance adjuster will look at a few factors that typically include:
- A review of your work history. The review usually covers the average number of days you miss work in a year, along with any job-related skills and talents. For example, your earning potential is probably higher if you’re a master electrician compared to an apprentice.
- Medical expert testimony establishing how your injury is negatively impacting your ability to return to your previous or another position.
After establishing your work history and proving your injuries are preventing you from working, it’s time to calculate your damages. Don’t start adding up your annual salary to your expected retirement date. Yes, the total looks impressive but it’s probably not what you’re going to receive.
Instead, the insurance adjuster will review the average pay for your position. From there, the insurance adjuster figures out approximately the amount of income you’ll probably lose based on your injuries. In simple terms.
Lost future earnings are calculated by looking at your potential earning power compared to what your injuries may let you earn.
Ensuring You’re Not Missing Out on Potential Compensation
Trying to have success in a personal injury claim case can be extremelt challenging at times, especially when your damages include the loss of current and/or future income. To help make sure that you receive your claim’s maximum value, it’s a good idea to partner with an experienced personal injury lawyer.
From calculating your damages to explaining the difference between loss of income and loss of earning potential, your attorney can help ensure you receive maximum compensation.