How to Calculate Lost Income

By Chris Dixon


If you’re injured on the job, on the road, at home, or even a commercial location and you’re unable to work, you may be eligible for compensation. The first step is to determine if you have a personal injury case, which the lawyers at the St. Louis-based Dixon Injury Firm can help you with.

If you have a valid insurance claim, part of the process is to document everything and write a solid demand letter. Your demand letter should include a number of things that influence how serious your claim is and how much it’s worth. Here are the special and general damages you should include in your demand letter:

  • A complete history of the accident
  • Police reports
  • Witness statements
  • Medical expense and recordss
  • Contact information for everyone involved
  • Out-of-pocket expenses
  • Pain and suffering
  • Loss of companionship and consortium
  • Loss of career/earning potential
  • Lost income and wages

It’s the latter two damages that we’re going to discuss in this section of the FAQ. But first, we’ll dive into the difference between lost income and lost compensation.

What is Lost Income?

When you say “lost wages,” you’re referring to both lost compensation and wages. This is the compensation you’re paid to work in terms of a check (hourly, salary, commission, etc.). If you’re injured at work you have a workers compensation claim on your hands. Lost income also refers to any amounts of money you may have lost due to being injured in a car accident, in a slip and fall case, or some other incident.

What is Lost Compensation?

“Lost compensation” refers to your earning capacity plus other financial benefits. This includes vacation and sick days, bonuses you would’ve earned if you weren’t in an accident, and other perks. “Perks” can mean paid lunches, monthly bonuses, commission checks, tips, and other financial benefits you would have received.

How Are Lost Wages Calculated?

Lost wages are calculated using the loss of income and compensation. One piece of supporting evidence you need is a letter from your employer. This legitimate proof goes a long way, and can help the insurer understand exactly what it is your claiming. Between you and your employer, you need to show the following:

  • The wages you’ve lost due to your injuries
  • Your current (or future) hourly wange
  • Your average hours worked plus overtime
  • Sick days and vacation you would’ve accrued.
  • Other compensation (commission, perks, promotions, and bonuses)

With proof from your employer, you can show an accurate timescale to the employer and prove how much you would’ve earned if you hadn’t been injured.

If you’re self-employed, it’s important to hire a personal injury attorney or an accountant to help you make accurate estimates.

It’s important to keep in mind that strict loss of wages are reportable. General damages, such as pain and suffering, are not part of this projection. If you have any more questions about how much you can get for pain and suffering, contact a personal injury claims attorney today. The Dixon Injury Firm provides free consultations and case reviews for clients in St. Louis and Southern Illinois.

How Much Lost Income Should I Claim?

Lost compensation comes in many forms. When you begin a claim, you’re going to want to be sure to provide an estimate that equals all of the potential earning capacity you have. You’ll need proof, as we’ve mentioned earlier, and need to take into consideration how much you would have made if it wasn’t for the accident.

If you’re self-employed, you’re going to need to provide months’ worth of income evidence to justify your claim. For example, if you’re seriously injured in a car accident and are self-employed, and claim $400,000 in lost wages due to a six-month recovery time, and your contracting business only brought in $200,000 in that time-frame the year before, the adjusters will probably reject it right away. You need to be honest and accurate when you claim lost wages.

Feel free to contact our Lost Wages Lawyers based in St. Louis, MO, today for more information. You can learn more about winning insurance claims and cases in this FAQ.

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