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But I was going to make a million $$$: Quantifying your loss of income claim in a personal injury case

Client after client after client tell me that their personal injury case is worth MILLIONS…No wait…BILLIONS of dollars. The reality is that some cases are worth millions, other cases… well….just aren’t.

The real money in personal injury cases is NOT for pain and suffering. Pain and suffering damages are CAPPED in Canada. You read that right. Pain and suffering damages are CAPPED in Canada. That cap sits at around $310,000-$325,000 or so; depending on inflation and who you ask.

The real money for personal injury cases is in future care costs and loss of income or loss of future earning capacity. This blog entry will examine what it takes to establish a past and future income loss claim.

First, in order to establish a past loss of income claim, you need to establish that you in fact held down a job, and got paid. Insurers and Courts are like the State of Missouri aka “The Show Me State“. Courts and Insurers want to see your tax returns to establish a pattern that you worked and earned an income. They want to see your employment file. They want to see your time sheets and pay stubs. They want concrete proof that you were working and making real money. Telling an insurer, Judge or Jury that you made millions selling t-shirts in the street for cash won’t cut it. If your earnings are not reported on your tax returns you will have a very difficult time establishing a past loss of income claim. If you were NOT working before your accident, then you have NO INCOME LOSS CLAIM, because you lost no income.

Showing income loss claims for teachers or other professionals with steady employment histories is relatively easy. Their tax returns should show a reported income in every year before the accident. Then, once the accident happens and the client is not able to work, the earned employment income reported in the tax return should go down in the years following the accident. This pattern is clear, and it doesn’t take a rocket scientist to see the dip in income.

If the Judge or Jury accepts that you were not able to work on account of your accident related injuries, then voila; a past loss of income claim is created and will likely be successful in Court.

But what if you’re not able to work for the indefinite future? How do we establish and quantify your future loss of income.

Great question. The most boring job in the world is probably that of an actuary. Seriously. All these guys do all day long is look at numbers and calculate the probability of a pattern/event happening based on previous mathematical trends, stats and patterns. Basically, they’re number crunchers and pattern finders. Sounds cool and very CSI; but it really isn’t. Actuaries actually have some of the highest suicide rates amongst professionals.

Lawyers retain actuaries, accountants and/or economists to help quantify a client’ future income loss or loss of competitive advantage in the workplace. These experts look at Canadian Market Trends, the client’s education, background, work history, age, health and other factors to make a determination on what their income loss will be. The expert will be able to assess that the client will work to an average age of “x”; and earn raises based on inflation and Canadian Market Salary Averages increased to “y”. And voila; your future loss of income claim is established.

Naturally, the insurance company will likely have a different opinion, but then it will be up to a judge or jury to determine whose opinion is more realistic.

Key in all of these claims is that the client’s injuries need to be so bad such that that client was not able to work at all in the past, and not able to work in the indefinite future. Medical and vocational reports are necessary to help establish that the client is not medically capable of working. If you are capable of working, both in the past and in the future, then you will not be entitled to an income loss claim.

In addition, you are NOT entitled to double dip on collateral damages. What does that mean? Let’s say you earned $50K the year before your accident. You received Long Term Disability Insurance of $30K along with $10K in WSIB benefits as compensation. This doesn’t mean you automatically get an additional $50K from the at-fault insurer. If you did, then you’d earn $80K and you’d be in a better position post accident, then pre-accident. This is not how the law works. You’d only get $10K in damages for loss of income to top you up to the $50K that you’d previously reported on your tax return. You are NOT allowed to double dip.

At the end of the day, these claims rest with the credibility of the accident victim along with the credibility of the experts; both medical and vocational. If the judge or jury isn’t believing your story, or that of your experts, then you will have a hard time proving your case.

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