Wage Loss and Car Accidents
If you are in a car accident that is not your fault and you get injured, your car insurance company may reimburse you for lost wages.
Your eligibility depends on your car insurance and ability to file the claim with the proper information.
What Are Lost Wages?
An injury that you get in a car accident can keep you from going to work and earning the money that you normally would have received if you had not been injured in the accident.
Lost wages refer to those wages that you cannot earn because of your injury.
For example, if you have a broken hip and cannot get to work for 3 months, you are entitled to 3 months’ worth of wages IF your car insurance policy covers lost wages (see “What You’ll Need to File a Wage Loss Claim” below).
Lost income can include:
- Lost wages for the period during which you do not work.
- Lost earning capacity if you sustain a long-term disability from the accident and cannot make as much money as you did before the accident.
- Lost opportunities, such as missing a job interview while you are recovering from the injury.
What You'll Need to File a Wage Loss Claim
The following coverage types can be used to collect lost wages:
- Liability bodily injury coverage. If you were injured in a car accident due to another driver’s negligence, you would be able to submit a lost wages claim through the at-fault driver's bodily injury liability coverage.
- Uninsured/underinsured motorist coverage. If you are hit by a driver without insurance or with inadequate coverage, you may also be able to collect lost wages under your uninsured or underinsured motorist coverage, if you have it.
- Personal injury protection (PIP) coverage. Required in no-fault states and optional in some others, PIP pays for your injuries and lost wages up to your policy’s limits, without regard to fault.
- With PIP insurance, you can collect against your own coverage even if you caused the accident.
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Documenting Lost Wages
Once you are sure that your policy covers lost wages, you need to get your documentation together in order to file your claim.
Your paperwork should include the following.
- A letter from your physician*. The letter should describe your injuries and how long your injuries kept you from working. The letter should be as detailed as possible, with information on:
- Medical bills.
- A letter from your employer. The letter must verify that you missed work due to injuries.
- If you are in an occupation that is not full-time and salaried (e.g., you are an independent contractor or self-employed), you may need to provide access to your tax returns.
- A copy of the police report.
* Your car insurance company may have its own form for your physician to fill out. Check with your auto insurance agent.
Calculating Lost Wages
When You Have a Full-Time, Salaried Position
Calculating lost wages is straightforward if your position is salaried. The amount is based on:
- Your pay rate.
- The amount of time you missed because of your injury.
The adjuster may increase your reimbursement if you missed opportunities such as interviews or opportunities for promotions. This adjustment is harder to justify; however, you should always let your insurance company know about any lost opportunities.
When You Don’t Work on Salary
If you have a non-salaried job with irregular hours or you work on commission, you can still calculate your lost wages.
One way to do so is to show what you missed by not being able to work. For example, you can point to missed appointments or a decrease in billing invoices during your recovery time.
You can also provide your tax returns for the previous year as evidence of the wages that you would have earned if you had not be injured in a car accident. If you depend on tips for your wages, you will only be able to show that you lost income if you reported your tips on the previous year's tax returns, as is legally required.
NOTE: You may recover lost wages for any time you needed to take during your recovery. If you took vacation leave or sick time to cover those hours, you are still eligible to collect lost wages for those hours/days.
Lost Wage Exclusions
Check to see whether your policy has a line stating “Exclusion of Work Loss (included).” If so, your coverage will not pay for your lost wages.
Exclusions occur when the policyholder is given the option to reduce the deductible by removing certain benefits.
If you’ve chosen to lower your costs by electing to cut your wage loss benefits, you’ll see this on your policy; most commonly, personal injury protection (PIP) policies will include this provision.
Be careful before choosing this option. If you get injured and are unable to work, you can stand to lose a lot. Speak to your car insurance agent if you’re unsure of whether your current PIP insurance coverage pays for wage loss.
Personal Injury Attorneys
A personal injury attorney can help guide you through the process of a wage loss claim. Attorneys can advocate for you to get as much as possible on your claim.
Car insurance companies will often use their experience to limit the settlement amount, but you can counter the "experience advantage" with representation. A personal injury lawyer will use his or her experience to level the playing field, increasing your odds of receiving a fair settlement.