Damages after a car accident can include your past and future lost income. These damages account for lost wages and other income you might have missed out on while recovering from your injuries, such as income from bonuses, commissions, and tips.
More importantly, you may be able to claim any reductions in your earning capacity caused by the accident. Thus, if you suffered a permanent disability, your damages can account for the decrease in your ability to earn a living.
Here are some of the things that are important to understand about claiming lost wages after a car accident, along with an outline of the best ways to calculate your income-based damages.
Damages After a Car Accident
California uses an at-fault insurance system. This means that the at-fault driver and their auto insurance company are liable for your damages after a car accident.
California law entitles you to recover these damages in a lawsuit. But most cases settle before you ever reach trial. Insurers want to avoid paying lawyers to litigate cases where their customer is clearly liable.
When you file an insurance claim, you will include all of your damages. This includes both economic damages and non-economic damages.
Economic damages include all of the past and future financial costs of your injuries, such as:
- Medical expenses
- Lost income
- Diminished earning capacity
Your damages include any expense that you incurred or owe as a result of your accident. They also include your opportunity costs, such as income that you would have earned if you had not suffered your injuries.
Non-economic damages compensate you for the personal impacts of your injuries.
Some examples include:
- Physical pain
- Mental suffering
- Loss of activities
- Diminished quality of life
Since these damages cannot be quantified, a claims adjuster or jury will need to estimate the value based on your particular circumstances and injuries.
Calculating Lost Income
You can include virtually any income losses tied to your accident as part of your damage claim. But you will need to prove that the accident caused the loss of income and outline the reasonable value of that lost income.
As a general rule, your damages after a car accident, slip and fall accident, or other avoidable accident include all economic losses caused by the other person’s negligence.
“Causation” requires that the person’s negligence was both the cause-in-fact and proximate cause of your damages.
Cause-in-fact means that the negligence occurred in the sequence of events that led to your injury. For example, a car accident that results in a back injury may have caused you to miss work at a construction site.
Proximate cause means that the damage was reasonably foreseeable. After a car accident, almost any form of income loss is reasonably foreseeable. Car accidents typically cause bodily injuries that interfere with a victim’s ability to earn income.
In most situations, you can easily calculate the value of your lost income. If your employer pays a wage, you calculate your lost income by multiplying the number of hours you missed by your hourly rate. If you receive a salary, you calculate your lost income by counting the days or partial days for which you were not paid.
But in some circumstances, your missed paychecks might not fully capture your income losses.
Some other examples of income losses might include:
If you work in the service industry, you might earn a substantial amount of your income from tips. Your lawyer must prove to a reasonable certainty the tips you would have earned if you had not missed work.
In most cases, this would require you to calculate your average tips per day and multiply the average tips by the number of missed workdays.
Workers who earn commissions can include missed commissions in their damages. Again, the difficulty will come in proving the amount of missed commissions to a reasonable degree of certainty.
Your calculation of missed commissions will probably look similar to the calculation for missed tips. You will calculate your average commissions per day and multiply the average by the number of days you missed work.
Some workers receive a bonus for working a certain minimum number of hours or days in a given period of time. For example, an employee might become eligible for an annual bonus after working 2,000 hours in a year.
A worker might include a missed bonus in an injury claim if the worker can prove to a reasonable degree of certainty that they were on track to earn the bonus that year.
If the injured person does not work outside of the home, they can likely include their household contribution in their damages claim.
Examples of household services include:
- Nursing and personal assistance
Significantly, you do not need to hire someone else to perform these services to claim them as damages. You only need to provide a reasonable value of these services and establish to a reasonable certainty that your inability to perform them was caused by the car accident.
Diminished Earning Capacity
Your damages include your future lost income and reductions in income due to your accident.
Suppose that you work as a truck driver, and you injure your back in a car accident. You might need to change jobs or reduce the number of hours you work.
If the change in your employment results in a diminishment of your income, your damages would include the difference for the remainder of your work life. Thus, if your back injury caused your income to drop $10,000 per year and you have 10 years remaining until retirement, you could claim $100,000 in lost future income.
Proving Lost Income
You and your lawyer will need to prove your past and future lost income to a reasonable degree of certainty in a car accident claim.
For past losses, you will document your income with pay stubs, work schedules, and notes from your doctor explaining that your injuries caused you to miss work.
For future losses, your lawyer may need to hire a vocational expert to analyze your lost earning potential.
Ready to discuss your claim for lost wages after a car accident? Contact our law office in San Diego or call us at (619) 777-5555, our skilled attorneys at Mission Personal Injury Lawyers, P.C. offer a free consultation.