Disclaimer: This article is for educational purposes only and does not constitute legal advice.
Detailed Answer
If you run your own business and suffer an injury in Washington, you can recover lost self-employed income as part of a personal injury claim. Under Washington law, the measure of damages for lost earnings includes profits you would have earned but for the accident. See RCW 4.20.046.
To document and prove your lost income, follow these steps:
- Gather historical financial records: Compile at least one to three years of federal tax returns (Schedule C or K-1) and business profit-and-loss statements. These establish a baseline of your average monthly or annual income.
- Prepare current financial reports: Create interim profit-and-loss statements and balance sheets for the period before and after the accident. Use bookkeeping software or a certified public accountant (CPA) to ensure accuracy.
- Collect supporting documentation: Include copies of client invoices, bank statements showing deposits, 1099 forms, and canceled checks. Label each document with dates and descriptions of services provided.
- Engage a forensic accountant: If your business finances are complex, a forensic accountant can analyze your records, calculate lost profits, and produce a clear expert report.
- Document actual work disruption: Keep a written diary or calendar notes showing appointments, canceled jobs, and time spent recovering. Photograph any physical limitations that prevent you from working at full capacity.
- Calculate fringe benefits and overhead: Include expenses you no longer incur (e.g., mileage, supplies) and benefits you lose (e.g., retirement contributions you cannot make).
- Submit a detailed settlement demand: Prepare a cover letter to the insurance adjuster listing each category of lost income, attach your supporting documents, and cite applicable statutes and case law. Under RCW 48.22.020, insurers must conduct a reasonable investigation of claims.
When negotiations stall, you can file a personal injury lawsuit in the appropriate county superior court. Washington courts will require you to file a statement of economic damages, attaching the same documentation you used in settlement negotiations.
Helpful Hints
- Start documenting income and expenses as soon as possible after the accident.
- Keep original records and provide copies to your attorney or accountant.
- Use consistent formats for profit-and-loss statements to highlight discrepancies.
- Maintain a separate file for all accident-related correspondence and medical records.
- Review Washington’s statute of limitations for personal injury (generally three years under RCW 4.16.080).
- Consult a personal injury attorney promptly to understand deadlines and procedural rules.
- Be transparent with your insurance adjuster; hiding records can backfire later.