Apr 29

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Damages for Lost Income and Earnings: The Calculation Can be Complex

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Calculating Compensatory Damages for Loss of IncomeIf you’ve sustained injuries from a motor vehicle accident caused by another person that affected your ability to earn an income, you are entitled to recover compensatory damages. This includes compensation for income lost because you were recuperating from your injuries as well as compensation for a loss of future earning capacity. For example, a surgeon who was in a car accident that affected the nerves in his hand might not be able to operate on patients due to a lack of motor control. A college professor with lingering memory issues after an accident may no longer be able to teach students effectively. These people can be awarded compensation for income lost both during recovery as well as long after the accident.

When discussing compensatory damages related to lost income, it’s important to consider that damages aren’t calculated based on actual earnings before or after the injury. Damages are calculated based on the plaintiff’s ability to potentially earn money. The concept in the law is called lost earning capacity.  This means that you would be eligible to receive compensatory damages even if you were unemployed at the time of the accident. With this approach to calculating damages, a mother who had taken time off to care for her new baby with plans to return to work once her child is in preschool would not find her ability to seek compensatory damages limited by her current lack of paid employment.

Proving Earning Capacity

To prove earning capacity, your attorney may submit copies of your past income tax returns as well as information about employment you’ve held in the past along with the current job market for these types of positions. If you’re self-employed, your attorney may use estimates of what you’d make if you did similar work for someone else or what it would cost to hire someone to perform your duties at your company. Often preparing these calculations is a complex tax.  Your attorney may work with an expert such as a Certified Public Accountant or an economist to prepare a fair and accurate calculation.

Limits on Damages

A plaintiff does not need to be completely disabled to receive compensation for loss of future earnings, as long as the limitations caused by the accident have a direct impact on his or her ability to earn an income. However, compensatory damages may be reduced or limited if the plaintiff was found to have in some way contributed to the injury in question. This could refer to conduct during the accident itself, such as running a red light or texting while driving.  This is called “comparative responsibility” in IDaho law.  It could also refer to conduct after the accident that would aggravate the injury, such as refusing to follow your healthcare provider’s treatment recommendations.  This is called te “failure to mitigate” damages in Idaho law.   Just because an insurance company claims comparative responsibility or a failure to mitigate exists does not mean they are right.   Insurance Companies and and their hired defense attorneys often assert such claims even when they are completely bogus.

Contact Us

If you or someone you love has been seriously injured in a motor vehicle accident, contact the personal injury attorneys at Holzer Edwards. Our lawyers specialize in car accident cases, so please call us today at (208) 386-9119 or toll-free at (888) 490-0992 for a free consultation.

Permanent link to this article: http://holzeredwardsinjurylawyers.com/2014/04/damages-for-lost-income-and-earnings-the-calculation-can-be-complex/

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