Determining Lost Wages for PIP Insurance Claim
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By Marc Diller, Esq.
DILLER LAW, P.C.
1. When a person injured in a Massachusetts automobile accident needs to lose time from work as a result of the accident, who pays for the injured person’s income lost resulting from such lost time?
If a person injured in a Massachusetts automobile accident needs to lose time from work because of the accident, such person can recover the income lost related to such lost time as follows:
First, the Personal Injury Protection (“PIP”) insurer shall reimburse the injured person for time lost out of work because of the accident. At a maximum recovery of $8,000, the PIP insurer shall reimburse the injured person a percentage of income lost resulting from the accident. PIP calculates such out of work reimbursements by paying a percentage of such person’s average gross income during the year before the accident.
Second, the injured person may be entitled to recover from a lost wage or salary continuation programs available through work.
Third, the injured person may be entitled to coverage under a separate disability insurance policy, if purchased in advance and such policy covers such work disability
Fourth, if the person injured in the accident is not legally at fault for causing the accident, the at-fault party or its insurer should pay any lost wages or the equivalent less that amount to which the injured person is entitled through PIP.
2. If unemployed at the time of a Massachusetts automobile accident, can the person injured in such accident recover accident related lost earnings?
Yes! Regardless of who caused an automobile accident, the relevant PIP insurer will pay an injured person 75% of the amount he actually lost in earning power as a result of the accident even if such injured person is not employed at the time of the accident. For example, if the person injured can demonstrate that he would have started working after the accident and from such work he would have earned $500/week, PIP benefits should reimburse the injured person 75% of what he would have earned ($375/week). The amount of out of work PIP benefits available to the person injured is $8,000 less any PIP deductible and less whatever PIP benefits the injured person already recovered for medical expenses and replacement services. The purpose of PIP out of work benefits is to provide a quick and certain substitute for tort damages.
If the person injured in the automobile accident is not legally responsible for causing the auto accident, such injured person can recover against the at-fault party and/or its insurer the uncollected out of work losses less the amount to which he was entitled from PIP.
3. If a person injured in an automobile accident is employed or self-employed and loses time from work because
of the accident, can the injured person recover accident related out of work lost income?
Yes! Regardless of who caused the accident, if a person injured in an automobile accident needs to stay out of work because of the accident, the relevant PIP insurer will pay for losses up to 75% of such person’s average weekly gross income for the year immediately before the accident. The PIP insurer should compute the amount of the reimbursement by calculating the yearly gross earnings divided by the full number of weeks that such person worked during that year. For example, if an accident occurs on March 1, 2006 and the person injured can demonstrate that she earned $48,000 in the 48 weeks that she worked between March 1, 2005 through February 28, 2006, such injured person is entitled to collect $750/week out of work. (i.e. $48,000/48 weeks = $1,000/week x 75% = $750). The purpose of PIP out of work benefits is to provide a quick and certain substitute for tort damages.
If the person injured in the automobile accident is not legally responsible for causing the accident, she can recover against the at-fault party and/or its insurer the uncollected out of work lost income/earnings less the amount to which she was entitled through PIP.
4. If a person injured in an automobile accident is entitled to recover accident-related lost wages from a salary/wage continuation program, can such person recover any more lost wages/salary?
If a person injured in an automobile accident is entitled to a salary/wage continuation program from work, the relevant PIP insurer can do one of the following to compensate its injured insured:
(1) The PIP insurer should pay the injured person the difference between what such person would be entitled through PIP and what such person actually recovered from the work salary continuation program; or
(2) The PIP insurer will reimburse its injured insured’s work’s salary/wage continuation program if such person’s work allows such benefits to be converted into cash or additional retirement credit. The PIP insurer will only reimburse the program the equivalent to which the injured person would be entitled in PIP benefits. (See computation formula for PIP lost wage benefits).
(3) If the person injured exhausts his work benefits because of an auto accident, the accident’s PIP insurer will pay for other illness or injuries to which such person would be entitled to recover from the program if he were to suffer such injury/illness within one year of the PIP insurer’s last payment.
If the injured person is not legally responsible for causing the auto accident, arguably he can recover against the at-fault party and/or its insurer for all lost wages/salary (regardless of whether the injured person received payments from the wage/salary continuation program) less the amount to which he was entitled through PIP.
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