Lost income after an accident
In plain English: lost income is the money you didn't earn because your injury kept you from working, or forced you onto fewer hours or lighter duties. It covers the time from the accident until you settle, and separately, losses you'll suffer in the future.
More than your basic pay
People often claim only their base salary and leave money behind. Your loss can include:
- Regular wages or salary for the days or weeks you were off
- Overtime, shift premiums and tips you'd normally have earned
- Bonuses or commission you missed because you weren't at work
- Holiday or sick leave you had to use up (in many places, that has value)
- Pension or retirement contributions your employer didn't make
- A promotion or new job you lost out on
- Time off for medical appointments after you went back to work
What proof looks like
If you're employed, the usual evidence is payslips from several months before the accident, a letter from your employer confirming dates off and what you'd have earned, and a fit note or doctor's note saying you weren't fit to work. If you're self-employed, it's harder but still doable: tax returns for the last few years, invoices, bank statements, cancelled contracts and, in larger claims, an accountant's report. Seasonal and irregular work needs a longer look back to show what a normal year looks like.
A self-employed electrician is out of work for ten weeks with a fractured foot. He shows three years of tax returns, messages from two customers who took their jobs elsewhere, and his diary of booked work. His claim covers the ten weeks and a slower month afterward while he rebuilt his bookings.
How sick pay, benefits and tax come in
- UK: lost earnings are claimed on your net pay, after tax and National Insurance. Sick pay your employer paid you is taken into account, and some state benefits are recovered from the compensation by the Compensation Recovery Unit. If your employer's sick pay scheme expects you to repay them from any compensation, that amount can be claimed back.
- US: rules on gross vs net figures and on payments from other sources vary by state. Compensation for lost wages as part of a physical injury settlement is generally not taxed federally, but get advice for your situation. In no-fault states, some lost wages come from your own PIP cover first.
- Canada: provincial accident benefits schemes, such as Ontario's income replacement benefit, pay part of your lost income, and the at-fault driver's insurer won't pay it twice.
Past loss versus future loss
Lost income up to settlement is usually a matter of arithmetic. Losses after that, if you can't return to the same job or can only work part-time, are claimed as loss of future earning capacity, which needs medical and often employment expert evidence.
Tell HR in writing why you're off and keep copies of every fit note. A gap in paperwork can let an insurer argue you chose not to work.
Next: economic damages · mitigation of damages · claim value workbook.
Related terms
General information, not legal or medical advice. Rules differ between US states, the UK and Canadian provinces, so check the law where your accident happened. How we write and check · Legal disclaimer