Suffering injuries in a car accident can seriously disrupt your life. Along with dealing with medical treatment and recovery, many accident victims also face lost income if they have to take time off work to heal. This leads to the common question of whether car insurance covers lost wages due to an accident.
The answer is – it may, but with limitations. Your own auto policy and the at-fault driver’s policy can both potentially provide compensation for lost wages, depending on the state and circumstances. However, you’ll need to navigate complex claims processes to access these benefits.
This guide explains how lost wage coverage from car insurance works, what policies may pay, claim filing tips, and alternatives if insurance falls short.
Does No-Fault Insurance Cover Lost Earnings?
In no-fault states like New York, Michigan, and Florida, your own Personal Injury Protection (PIP) coverage will pay a portion of lost earnings after an accident, regardless of who was at fault. PIP acts as no-fault insurance that covers medical and lost wage expenses for the policyholder.
However, no-fault has strict limits on lost wage reimbursement:
Coverage caps are typically $2,000 – $3,000 per month
Benefits max out after 1 or 2 years
The overall PIP limit could be used up by medical bills
So while no-fault insurance does offer some lost earnings relief, serious injuries and long recoveries can exceed the limits. This leads accident victims to seek additional lost income compensation.
When Bodily Injury Liability Covers Lost Pay
The at-fault driver’s insurance can cover lost wages through the Bodily Injury Liability portion of their policy. This part pays out when the other motorist’s negligence injures you and causes lost pay.
Liability coverage is fault-based – so the insurer will only pay lost earnings if their insured driver is to blame. But liability policies have higher limits, often $100,000 per person or more.
However, recovering lost income under this coverage has challenges:
- The insurer will fight to minimize or deny your claim
- You may need to file suit against the at-fault driver
- Proving legal culpability takes time
So while liability insurance can pay lost wages, it involves proving negligence and responsibility – a higher bar than no-fault coverage.
How Much Lost Pay Car Insurance Will Cover
The exact amount of lost earnings coverage depends on your individual auto policy limits and state regulations. But some general guidelines on payouts:
No-fault insurance – Up to policy limits of $2,000-$3,000/month, for 1-2 years
Bodily injury liability – Up to per person limits, often $50,000-$100,000 or more
Uninsured/underinsured motorist – Equal to your UM limits
Workers’ comp – Around 60%-80% of gross pay, up to state maximums
Of course, collecting the full amounts depends on providing sufficient evidence and overcoming disputes raised by insurers.
How Insurers Calculate Lost Wage Payouts
Insurance companies use your pay stubs, tax returns, employment records, and a physician’s statement to verify lost income and calculate appropriate compensation.
Key data they examine:
- Hourly wage or annual salary
- Hours/days of work missed
- Income sources like commissions, bonuses, benefits
- Expected timeframe until you can return to work
- Ongoing impairments that reduce earning ability
Insurers will seek to minimize claims by challenging the extent of disability, necessity for time off, and mitigating earning factors. Hiring an attorney can help maximize your payout.
The Claims Process for Lost Earnings
To get lost wage benefits from insurance companies, you’ll need to take proactive steps to prove your losses. Here’s how the claims process typically works:
Reporting – Notify your insurer and file a claim immediately after the accident. Provide initial details on injuries and time off work expected.
Documentation – Supply evidence like medical records, disability notes, pay stubs, employer letters, and work schedules.
Investigation – The insurer verifies the documents and details to confirm eligibility. They may request an independent medical exam.
Settlement offer – Based on the policy limits and verified losses, the insurer presents a settlement offer.
Negotiation – If the offer seems too low, your attorney can negotiate for a fairer settlement. Refusing the initial offer is common.
Payment – The insurer issues payment after final settlement is reached through negotiation.
Persistence and legal help are key to maximizing your payout and overcoming insurer disputes.
Claim Filing Deadlines to Watch Out For
Because insurance policies have strict claim filing deadlines, it’s important to start the claims process immediately and meet all time limitations.
No-fault accident benefits – Give notice within 30 days of the accident in most states. The claim form must follow shortly after.
Bodily injury liability – The statute of limitations is typically 1 to 3 years depending on the state.
Uninsured motorist coverage – Usually the same 1-3 year deadline as liability claims.
Missing the window to claim lost earnings can be devastating. Connect with an attorney promptly to avoid issues.
What if Insurance Won’t Cover All Lost Wages?
Due to stringent limits and exclusions, car insurance may not pay the full extent of income you lose after an accident. When coverage falls short, alternatives like these can help:
Personal injury lawsuit – Recover additional lost pay by proving fault against the other driver.
Underinsured motorist coverage – Tap your UIM if the at-fault driver’s liability limits are inadequate.
Pre-settlement funding – Receive cash advances against a future settlement to pay bills now.
Short-term disability – Some health plans include disability wage replacement benefits.
Social Security disability – For long-term loss of earning capacity.
Don’t assume that denied or inadequate car insurance claims mean you’re out of options. An experienced lawyer can help access extra recovery sources.
Dealing with lost wages after a car accident can quickly become a financial nightmare. But understanding some key points about insurance for lost earnings makes the process smoother:
No-fault insurance offers limited lost wage coverage regardless of fault
At-fault drivers’ liability insurance also pays lost pay if negligence is proven
Strict limits and claim deadlines apply to both coverage types
Extra legal and financial options exist if insurance doesn’t pay enough
An attorney’s assistance is invaluable for maximizing lost earnings settlements
Don’t wait to start filing your lost wage insurance claims – the clock starts ticking immediately after an accident. With persistence and legal help, you can work to recover your lost income as fully as possible.
Frequently Asked Questions
How long does it take to get a lost wage settlement from insurance?
It typically takes at least several weeks to months to receive a lost earnings settlement from auto insurance. Time is needed to supply documentation, have the insurer investigate, and negotiate a fair payment amount.
Should I get a lawyer to help claim lost income?
Yes, hiring a personal injury attorney experienced at handling car insurance claims can help substantially increase your lost wage settlement payout. They know how to properly prove losses and dispute lowball offers.
Can I claim lost wages without suing the at-fault driver?
In no-fault states, you can claim limited lost earnings from your own PIP coverage without having to sue anyone. For larger amounts, you may need to sue the at-fault driver and claim from their liability policy.
How much evidence do I need to prove lost income to insurers?
Insurers require solid evidence like doctor’s notes, employer letters, pay stubs, tax returns, work schedules, and disability statements. The more proof of your lost earnings you can supply, the better.
What if I’m self-employed – can I still claim lost income?
Yes, the self-employed can claim lost earnings but will need to provide documentation like past tax returns, invoices, business records, and evidence of lost contracts or opportunities.
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