Loss of earnings following a road traffic accident: Who pays, how is it calculated, and what evidence do I need?
Following a serious road traffic accident, it is not uncommon for a person to be temporarily or even for a longer period unable to work. Anyone who is no longer able to carry out their work as a result of an accident for which they are not at fault may, under certain circumstances, be entitled to compensation for the loss of earnings incurred. The costs are usually covered by the third-party liability insurance of the person who caused the accident.
However, in order for the claim to be successfully upheld, it is essential to have thorough documentation: the inability to work must be certified by a doctor, the financial loss must be calculated in a transparent manner, and the link between the accident and the loss of earnings should be clearly evident.
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What is the loss of earnings after a road accident?
Following a road traffic accident, the party responsible for the damage – or their third-party liability insurer – is required to cover the costs arising from the accident. These include not only repair costs, surveyors’ fees and hire car costs, but also financial losses resulting from an inability to work caused by the accident.
Loss of earnings constitutes a financial loss. It describes the financial loss incurred when a victim of an accident is unable to work, or can only work to a limited extent, due to their injuries.
One example:
Anyone who suffers a traumatic brain injury, a complex fracture or severe limitations on their mobility following a road traffic accident may be temporarily unable to carry out their professional duties. This results in financial loss, which may, in principle, be eligible for compensation.
Loss of earnings should not be confused with compensation for pain and suffering. Whilst compensation for pain and suffering is intended to compensate for non-material damage – such as pain, suffering and a reduced quality of life – loss of earnings relates to financial loss that can be specifically measured.
Who pays for loss of earnings following a car accident?
Loss of earnings following a car accident through no fault of your own is usually covered by the third-party liability insurance of the person who caused the accident. If you are partly to blame for the accident, your claim may be reduced in line with your share of liability.
In the case of employees, it is important to note that, in the first few weeks following an accident, employees often continue to receive their salary from their employer. However, this does not mean that no loss has been incurred. Rather, the entitlement to compensation for loss of earnings, to the extent of the continued salary payments made, may be transferred in whole or in part to the employer. The employer can then, under certain conditions, recover this amount from the person responsible for the accident or their insurance company.
For those affected, the loss of earnings is felt particularly keenly when continued pay ceases, sickness benefit is paid, or variable salary components such as commissions, bonuses, allowances or regular overtime are no longer paid.
When are you entitled to compensation for loss of earnings?
A claim for loss of earnings may arise if several conditions are met:
- The accident was caused entirely or mainly by another person.
- As a result of the accident, you were unable to work or were only able to carry out your professional duties to a limited extent.
- The incapacity for work was medically confirmed and documented.
- Your inability to work has caused you a specific financial loss.
- The link between the accident, the injury and the loss of earnings can be clearly demonstrated.
The better these points are documented, the lower the risk that the other party’s insurance company will reduce, delay or reject the claim.
How is the loss of earnings after an accident calculated?
When calculating loss of earnings, a distinction must be made between employees, the self-employed and freelancers.
Loss of earnings for employees
In the event of incapacity for work due to an accident, employees generally receive continued pay from their employer initially. This is normally paid for up to six weeks. After that, those with statutory health insurance may be entitled to sickness benefit.
However, sick pay does not usually replace the full amount of your previous income. This can result in a shortfall. Under certain circumstances, this difference between your normal income and the benefits actually received may be claimed from the other party’s insurance company.
Pay slips from previous months are often used for the calculation. In the case of regular special payments or fluctuating components of income, it may be advisable to consider a longer period, for example the past twelve months.
Factors that may be taken into account include, amongst others:
- regular net pay,
- regular overtime,
- Shift allowances,
- Commissions,
- Boni,
- Holiday pay and Christmas bonus,
- other regular salary components.
The decisive factor is always whether it is reasonably likely that this income would have been earned had the accident not occurred.
Loss of earnings for the self-employed and freelancers
For the self-employed and freelancers, the calculation is usually considerably more complex. In such cases, it is not enough simply to prove an inability to work. Rather, a specific financial loss must be demonstrated.
This is generally not simply a matter of lost turnover, but of the profit actually lost. Additional costs may also be relevant, for example if a temporary replacement had to be hired to fulfil ongoing orders.
The following, in particular, may be accepted as evidence:
- Tax assessment notices,
- Statement of revenue and surplus,
- business analyses,
- Profit and loss accounts,
- Order confirmations,
- Cancellations,
- Calendar entries,
- Offers,
- Invoices,
- Evidence of replacement staff or external service providers.
As the income of self-employed people often fluctuates, a professional calculation is particularly important. It is often necessary to use data from previous periods, specific order books and business indicators to determine what profit would likely have been made had the accident not occurred.
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What role do continued pay and sick pay play?
Many injured parties wonder whether they have actually suffered any loss of earnings if their employer continues to pay their wages initially. The answer is: yes, they may still have suffered a loss — but at this stage, it is often initially offset by the continued payment of wages.
Once the period of continued pay has ended, those with statutory health insurance are entitled to sickness benefit under certain conditions. This is usually less than their previous net income. The difference can have a significant financial impact on those affected.
It is also important to note that payments made by the employer or the health insurance fund may result in compensation claims being transferred, in whole or in part, to these bodies. Nevertheless, it remains crucial for the injured party that the full extent of the loss of earnings resulting from the accident is correctly recorded and claimed from the relevant insurance provider.
What is included in loss of earnings?
Loss of earnings may encompass more than just the basic monthly salary. Depending on the individual case, other components of income may also be affected.
These include, for example:
- lost wages,
- lost commission,
- missed bonuses,
- regular overtime pay,
- Shift, night or weekend allowances,
- lost holiday pay or Christmas bonus,
- loss of earnings for the self-employed,
- Costs for replacement staff,
- career-related disadvantages resulting from a prolonged period of incapacity for work,
- potential disadvantages regarding pension or social security contributions.
Not every item is automatically eligible for compensation. The decisive factor is whether the damage in question can be specifically proven or, at the very least, substantiated in a plausible manner.
What evidence do I need to claim for loss of earnings following an accident?
To ensure that you can successfully claim compensation for loss of earnings following a road traffic accident, you should carefully gather all the relevant documents.
Key supporting documents include, in particular:
- medical records and certificates of incapacity for work,
- Payslips and evidence of special payments or variable remuneration,
- Notices from the health insurance fund, for example regarding sick pay,
- for the self-employed: tax documents, business reports and proof of orders,
- Accident documentation such as photographs, insurance details or a police report.
The more complete the documentation is, the easier it is to substantiate the claim with the insurance company.
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How do I claim compensation for loss of earnings following an accident?
To claim compensation for loss of earnings following a road traffic accident, you should take a structured approach as early as possible.
- Make sure your injuries are documented by a doctor.
- Please keep a copy of all certificates of incapacity for work.
- Please inform your employer that you are unable to work due to an accident.
- Collect your payslips and proof of income.
- Please record any special payments, bonuses or variable income.
- Keep hold of any letters from your health insurance provider.
- If you are self-employed, ensure that your loss of earnings is calculated in a way that is transparent.
- Please submit your claim, clearly organised, to the other party’s insurance company.
In many cases, it makes sense to seek assistance with this. This is because the insurance company of the person who caused the accident does not automatically investigate all possible claims in your favour.
How does fairforce.one help with loss of earnings following a road traffic accident?
Have you suffered a loss of earnings following a car accident, or are you concerned about financial hardship due to a prolonged period of incapacity for work? If so, you shouldn’t leave your claims to chance.
fairforce.one helps you take the right steps and assert your claims in a structured manner following a road traffic accident that was not your fault.
- Our team of experts will discuss the best way forward with you.
- We’ll help you put together all the necessary documents and supporting evidence.
- If required, we can help you determine which medical records may be relevant to the settlement process.
- Your claims are organised and processed using our software.
- Specialist regulatory experts can assert your claims against the insurance company liable for payment.
- If required, our network can assist you with approved specialist garages, surveyors and replacement vehicles.
- Our customer information system allows you to keep track of the progress of your claim at your convenience.
We cannot undo your road traffic accident. But we can help you make the best of it.
Frequently asked questions about loss of earnings following an accident
Am I entitled to compensation for loss of earnings even though I’m still being paid?
Even if your employer continues to pay your salary initially, you may still be entitled to compensation for loss of earnings resulting from an accident. However, your claim for compensation may be transferred, in whole or in part, to your employer to the extent of the continued salary payments. For you, the financial impact is often felt most keenly when the continued payment of wages ends or variable components of your income cease.
What happens after six weeks of incapacity for work?
Once the period of continued pay has ended, those with statutory health insurance are entitled to sickness benefit under certain conditions. This usually does not replace their full previous income. The difference between their normal income and the benefits actually received may, in certain circumstances, be claimed as damages.
How is loss of earnings calculated for the self-employed?
In the case of self-employed persons, the assessment generally focuses on the profit that would likely have been generated had the accident not occurred. The decisive factors are therefore not only turnover, but above all the loss of profit and any additional costs, such as those incurred for replacement staff. Evidence may include, for example, tax assessment notices, business reports, proof of orders or cancellations.
What documents do I need to provide as proof?
The most important documents include medical records, certificates of incapacity for work, payslips, evidence of special payments or commissions, sickness benefit notices and, for the self-employed, business records, tax documents and proof of contracts.
Can a mini-job or part-time job also be taken into account?
Yes, income from a part-time job or mini-job may, in principle, be relevant if it has actually been lost as a result of the accident and can be substantiated with clear evidence.
What can I do if the insurance company reduces my loss of earnings benefit?
If the other party’s insurance company reduces or rejects your claim for loss of earnings, you should have the reasons for this carefully reviewed. Often, supporting evidence, medical records or a clear calculation are missing. fairforce.one helps you to organise your claims in a structured way and take the next sensible steps.
