A car accident can quickly overwhelm you with medical bills and vehicle expenses. As a result of your injuries, you may not be able to work, making it impossible for you to pay for living expenses such as groceries, rent, and utilities.
Employees who work for a company may receive paid sick days or leave to offset costs. It may be more challenging to seek full compensation from an insurance company if you are self-employed and don’t have financial benefits to rely on. Thus, loss of income is devastating for entrepreneurs after a car accident.
Fortunately, the insurer of the at-fault driver has legal obligations to cover victims’ lost wages regardless of their employment status. However, self-employed individuals or entrepreneurs can have difficulty proving costs. This guide will show you how to overcome obstacles and fully recover your lost income.
What Are Lost Wages for Entrepreneurs and Self-Employed Workers?
Often, “lost wages” is used interchangeably with “lost income,” “lost compensation,” and “lost benefits.” These are all terms referring to lost income and profits. Among these earnings are the following:
- Recent profits
- Lost business opportunities
- Upcoming contracts
- Lost goodwill
You should not confuse the concept of lost wages with lost earning capacity. Lost wages refer to income that you were supposed to receive had you not been injured. Meanwhile, lost earning capacity is when you’re no longer able to work and earn the way you used to. Future earnings are another way you can claim damages following a car accident claim.
How to Prove Lost Wages and Income
The burden of proving lost wages and income may be greater for self-employed individuals than employees. Without proof of lost wages or self-employment income, you will not be able to claim compensation. You will need to provide supporting evidence and documents to the insurance company or the court.
Profit and loss statements are typically created by the person who handles your books. Your income should be verified before and after the accident to prove the loss of income you’re claiming.
You can use the following forms of proof of income:
- Deposit statements from the bank
- Pre- and post-accident profit and loss statements
- The tax return you filed the previous year
- Contracts signed shortly before the accident
- Invoices and receipts
Hiring a forensic accountant will be helpful in cases involving loss of income after a car accident. This is because they can examine previous income and predict future income. Additionally, they will prepare a detailed forecast of future income, taking into account the growth rate of your business and new customers.
It won’t be necessary to hire a forensic accountant if your business isn’t that complicated – just providing financial statements and tax returns for the past few years should be sufficient to prove your loss of income after a car accident.
Including proof that you were close to acquiring a customer can help prove that you lost them when you were injured. Even better is if they can confirm they would have become a customer if you hadn’t been injured.
You should not exaggerate your financial losses because every document you submit for evidence will be analyzed carefully. If you have any documentation supporting your calculations, speak to your accountant about preparing a financial report. Self-employed people can’t be denied reimbursement simply because they are self-employed, but the adjuster might first dispute the amount. It comes down to proving that the accident caused you to lose your wages or income.
Filing a Claim After a Car Accident
A car accident involving another driver may entitle you to compensation for lost business income. You must hire a lawyer to claim damages whenever you get into a car accident.
Do you qualify for a claim?
People often get confused about what ‘lost work income’ means. Injuries sustained in a car accident could leave you taking several months off work. You may lose clients or businesses, which can have serious financial consequences. A claim can be filed in these cases.
How long do you have to make a claim?
You must file your claim for lost earnings within two years of the accident. The court can grant you an extension if you don’t file your claim within this timeframe. However, this is mostly likely if special circumstances hindered you from making your claim earlier.
How do you file a claim?
Ensure you have all the supporting evidence before filing your personal injury claim. It is also necessary to provide supporting medical documentation to prove your incapacity to work and earn an income. In some cases, to claim lost earnings, you must show that you attempted to mitigate your losses by returning to work as soon as possible.
Immediately contact your accountant and explain that you will incur a loss due to your injury. Ask them to gather information about your accounts from the three months preceding the accident.
Furthermore, you should collect all the paperwork you were unable to follow through on due to your accident, such as work diaries, invoices, and contracts. Using this information, you can calculate the net loss to your company.
Calculating the loss of future earnings
It’s possible to include future earnings in your personal injury claim if you demonstrate that your injury will impact your future earnings. Make an appointment with your doctor so they can assess your injuries comprehensively.
Once you are at your maximum level of recovery or you’ve reached maximum medical improvement, outline your capabilities and limitations. You should consider the financial implications of different career options and the impact this will have on your regular duties.
It’s Important to Hire a Car Accident Lawyer
Pursuing legal action after a car accident involving lost work income can be frustrating and lengthy. However, you should wait until you know the full value of your claim before making any decisions. When it comes to settlements, be sure to consult your lawyer.
Self-employed people who are recuperating from car accidents already have a lot on their plates. You don’t have time to investigate and gather evidence to support your insurance claim because your business is running, and you must make ends meet.
You should hire an experienced lawyer if you need extra documentation to prove your lost income claim when you’re self-employed. It is better to hire an expert attorney who can collect evidence for you so that you can concentrate on running your business and recovering physically.