If you have been in an accident, you may have suffered injuries that prevented you from working while you recovered, or that will prevent you from returning to the same job – or even working at all – in the future. The person responsible for your injuries may have an obligation to compensate you for your lost income. But how are those losses calculated?
Past Loss of Income
The amount of salary that you may have lost before your case goes to trial, or before a settlement is reached is known as past loss of income and is often fairly straight-forward to quantify. This is simply the salary that you would normally have earned but missed out on, including payments such as bonuses and commissions, as a result of being off work or working reduced hours. Usually, you can demonstrate what you have lost by providing pay stubs or other statements showing what you earned before the accident compared with what you earned after.
If you are self-employed or have other types of income besides salary that may also have been affected by your injuries, information such as tax returns or corporate financial statements may also help to determine what income you could have expected to earn if you had been able to continue your usual activities.
If your injuries were not too serious and you were able to make a full recovery and return to your previous job, your compensation may be limited to past loss of income.
Future Loss of Income
However, in some cases, accidents cause lingering or permanent injuries and may affect your ability to return to the same job or pursue the future career path that you had planned. A person in this situation may be able to seek compensation for future loss of income or loss of earning capacity.
A claim for future loss of income or loss of earning capacity includes all salary, benefits, pensions, and bonuses that you would have earned if you had not been injured. If you were running your own business, you could be compensated for the business’ loss of future profits if the business cannot function without you.
Estimating an injured person’s future loss of income means calculating a lump sum of money in the present that will be equal to all the income that will be missed out on in the future, over the course of the injured person’s entire lifetime of earnings. This is a complicated calculation, and normally requires the use of experts to provide projections of your losses into the future based on statistical data.
Calculating Future Loss of Income
There are three basic steps to assessing future loss of income:
- Estimate what you could have earned in the future based on how much you have earned in the past. This includes estimates of how far you would have progressed in your career, and how long you would have worked, if you had not been injured.
- Calculate the impact of contingencies, or uncertain future events, that would prevent you from earning the projected future income that was calculated in step one. Examples of contingencies that may be deducted include the possibilities of early retirement, unemployment, illness, job-related accidents, and pregnancy (maternity and parental leave). Actuarial experts will consider the likelihood of these contingencies happening to a particular injured person and their unique individual situation.
Not all contingencies are necessarily negative – positive contingencies such as promotion, transfer to a more lucrative job, and bonuses will also be taken into consideration.
Contingencies must be reasonable possibilities. An award for future loss of income will not be adjusted for a contingency that is unlikely to happen.
- Determine how much money you can make at a job that you are still able to do after your injury.
Although you may not be able to work at your former job because of your injuries, there may be a different job that you are still capable of doing. For example, perhaps you can no longer work in the construction industry, but you can get a job in information technology.
The experts will need to figure out how much money you will earn over the course of your lifetime at this post-injury job. This sum of money will be deducted from the amount of money that was calculated in step one.
Once these steps are complete, there will be a clearer picture of your likely future loss of income.
Can Children Claim Future Loss of Income?
All injured parties may be entitled to a claim for loss of future income, regardless of their age or circumstances. Even children and minors, who may have never held a job, can still claim for loss of their future income.
When a child’s loss of income must be assessed without the benefit of an educational or employment history to use as a starting point, the calculation is necessarily more arbitrary than it would be for an adult. The court will look at factors like a child’s intelligence level, early educational achievements, and the family’s educational background and plans for their children to try and determine what the child’s career trajectory and earnings might have looked like if they had not been injured.
What if I Was Unemployed at the Time of My Accident?
Being unemployed at the time you were injured does not prevent you from making a claim for loss of future income. However, the assessment of your loss will require consideration of a number of factors, such as:
- How long you had been unemployed, and efforts you were making to find employment;
- The reason for your unemployment (e.g., were you laid off or fired);
- Your past work history, education and experience;
- Economic conditions and the prospects for work in your chosen field.
Essentially, it will be important to show that, despite being unemployed, you were motivated to work and likely would have found employment if you had not been injured.
There may be cases where injuries suffered in an accident cause not only a loss of income, but also the loss of a valuable opportunity. Compensation for this type of loss may also be available.
For example, if you were an athlete and a rising star in your sport, but you were injured right before you were to play in a big game with professional scouts in attendance, you may have missed out on the opportunity to turn pro. Or, perhaps you were part way through completing licensing requirements to qualify for a profession like law, medicine, or engineering or you were unable to continue an apprenticeship for a trade. To quantify these damages, the court would consider the status of your career when the accident happened and the likelihood that the opportunity would in fact have panned out. Your loss would be calculated based on the value of the opportunity and the probability that you would have been able to capitalize on it.
Experienced Personal Injury Lawyers
Damages related to loss of income are often a significant piece of any accident claim. If you have been injured and have questions about how much you can claim for loss of income, CONTACT one of our experienced personal injury lawyers for a free consultation.