QuestionI was involved in a 3 car-rearend collision on 4/11/07. I was the lead car, waiting to turn left and the 3rd car did not see either one of us, totaled the 2nd car and hit us at approximately 30-35 MPH. He has admitted complete fault and has paid for the damages to the car(s). I did not go to the doctor until the next day at the 3rd car driver's insistence due to headache and shoulder and neck hurting. They advised it was typical for rear end collision and gave me medications and said to rest/relax. I am self-employed and could not do that very well, but was forced to not work finally after I went back to the doctor the following week due to pain/headaches. I work 60+ hours per week normally and they want to reimburse for 40 hours. I have sent them 1040 forms proving my income, but they are basing the amounts on some formula they have. Wondering what is fair or how to fight it. They have agreed to pay the doctor bills and prescriptions, but no loss of wages. I am not sure how to address this. Thanks for your help.
AnswerHi Lee,
Making a lost income claim is a lot easier for those who work for someone else. All they have to do is to prove that the hours lost were in fact due to injuries sustained in the accident. Unfortunately, those of us who have owned companies know that the proof in our case requires a lot more evidence.
I take it that no one is challenging your assertion that the time you lost was due to injuries sustained. Thus, all you have to do is to prove how much your time is worth. In that respect, it seems to me that you have your position exactly backwards from what you should be claiming.
Anyone who owns a business will ALWAYS be better served in claiming lost time away from work if he claims that his income the year before was made with fewer, NOT MORE, hours of work. Consider the example below, and you will see that you have been hurting yourself with that argument about having to work 60 hours per week.
Let’s first start with how long one has been in business. In your case, there should be no issue regarding the viability of the business, since you already have a tax return from at least one year in the business.
The next issue is how much more you will earn than last year. If you use the calendar year as your tax year, you already have a very good indication of how profits will improve from the year before. If sales are down, shut up on this issue, but be prepared to argue it in case the adjuster raises it. On the other hand, if sales are up, as one would think they would be, then extrapolate from the first three months of last year versus this year. If your quarterly net income was up 10% this year, then use that figure.
Next, be sure to add back in to the tax return net income things like your depreciation and other expense and deduction items your accountant recommends. Hence, it your gross income was reduced by such expenses as depreciation, contributions, a salary or draw taken by you, etc, you would add those back to the net income in order to determine just how much money you “made” over the course of the last tax year. Then, you would increase that amount by the percentage of improvement in profit position from last year up to the time of your accident.
Next, YOU want to state that the income was produced USING THE SMALLEST NUMBER OF HOURS LAST YEAR. By contrast, the insurance adjuster would seek to show that you had to work 60 hours per week. Here is how it would work in the case of an accident victim who was forced to miss three weeks total from work. If the income for last year were adjusted, as above, were $70,000, and the owner said that he worked no more than 35 hours per week, then he is making a LOT MORE PER HOUR than someone who insists that he has to work 60 hours per week.
Let’s just set aside two weeks vacation and deal with 50 weeks per year for illustrative purposes. In the first case, the owner worked 50 weeks at 35 hours per week, or a total of 1,750 hours all year. Thus, his loss per hour computation would be $70,000 divided by 1,750 hours of his work that it took to make that money. Hence, his hourly production is $40 per hour. That is what he should be paid for each hour of work he missed due to injury.
On the other hand, you are insisting that it took you 60 hours per week of work to make the same amount of money. Hence you worked a total of 3,000 hours last year to produce that income. Your hourly production would be the $70,000 divided by 3,000 hours, or just $23.33 per hour. And therefore, you would receive a lot less money for your hours away from work than someone who claimed he only had to work 35 hours to make the same money.
I have no idea what kind of formula they are using to determine the income, but you cannot just go along with it. Figure out your own loss of income as I have done for you here, and fight for that lost income.
FINAL TOPIC: Effective communication with insurance claims adjusters. Establish Firm, Professional, and Positive Relationships With the Insurance Injury Claims Adjuster http://www.settlementcentral.com/page0059.htm
Always communicate with the adjuster in writing, showing your own analysis of value. It is OK I guess to have one call or so, but no more. Always have your information and ammunition in writing to give to the adjuster.
Let him know that you are FIRM IN YOUR RESOLVE to get what you are demanding (NOT "asking", since that invites a counter-offer, but instead "demanding" as fair and reasonable compensation) by asking him what the options are to resolve the matter fairly should he not agree to a reasonable claim value. In other words, let him know that you will go through with a court filing if need be.
Remember these tips, do your homework, print out your evidence, show resolve to get your fair settlement, and you will DO JUST FINE.
I trust that my extra time here has produced some information that has been of value to you, and thus I would respectfully request that you take the time to locate the FEEDBACK FORM on this site and leave some feedback for me.
Best Wishes,
Dr. Settlement, J.D. (Juris Doctor)
http://www.SettlementCentral.Com
