Understanding what constitutes economic loss and how to calculate it is crucial when dealing with personal injury claims. This guide will help you navigate the complexities of calculating past and future economic losses, including how interest on past economic losses is computed.
What is Economic Loss in Personal Injury Cases?
Economic loss in personal injury claims refers to the financial compensation awarded to cover losses due to an inability to work, both past and future. This includes lost wages from the time of the injury to the present (past economic loss) and projected future losses due to diminished earning capacity (future economic loss). Claimants can also seek compensation for lost superannuation benefits under both categories.
In Queensland, calculating economic loss involves several legal nuances, which we will explore in this article. Please note, this content is informational and not a substitute for professional legal advice.
Calculating Past Economic Loss
To determine a claimant’s past economic loss, courts consider various factors, such as:
- The worker’s earnings history and work situation prior to the injury.
- Impact of unrelated injuries or subsequent accidents on earning capacity.
- Personal life changes, like the birth of children, that might affect work capacity.
- Losses from missed overtime and bonuses.
- Early retirement due to injury.
Courts calculate past economic loss from the date of the injury up to the date of judgment or trial. Additionally, if a claimant returns to work but earns less than before, they can claim the difference as residual earning capacity.
Interest on Past Economic Loss
Compensation for past economic loss includes interest, calculated from the injury date until judgment. This interest compensates for the financial impact of not having access to these funds during that period.
How to Calculate Loss of Future Earnings
Future economic loss calculations consider the difference between what a claimant would have earned without the injury and their current earning capacity post-injury. Courts use discount tables, such as weekly multipliers and deferred multipliers, to calculate these amounts.
For example, consider a 45-year-old who can no longer work full-time due to an injury. If their earnings reduce from $1,100 to $650 per week, the loss is calculated using the appropriate multipliers based on their expected years until retirement.
Claiming Damages for a Loss of a Chance
Courts also recognise compensation for “loss of a chance,” such as missed opportunities for promotion or increased working hours. Proving such claims requires substantial evidence, showing that the lost opportunities were likely to occur.
Loss of Income vs. Loss of Earning Capacity
It’s important to distinguish between loss of income and loss of earning capacity. The former refers to actual earnings lost due to the injury, while the latter refers to potential future earnings lost, considering the injured person’s skills and job market opportunities.
Conclusion: Navigating Economic Loss Claims
Personal injury claims involving economic losses are complex. Whether you are calculating interest on past economic loss, understanding what are considered economic damages, or estimating loss of future earnings, it’s essential to handle these calculations accurately. Examples of economic loss in personal injury claims highlight the significant impact these damages can have on a person’s life.
If you need to navigate these legal waters, consider consulting a professional to accurately assess and claim your rightful compensation.
Contact us for advice about Your Economic Loss Claim
At Denning Insurance Law, we distinguish ourselves as a leader among personal injury law firms, specialising in claims across Queensland. Our Principal, Kate Denning, brings her accredited expertise in Personal Injury Law to every case, offering you unparalleled guidance and support.
Facing an economic loss claim can be overwhelming, but you don’t have to navigate it alone. Don’t let uncertainty cloud your judgment. Call Denning Insurance Law today for a FREE initial consultation. Together, we will ensure that every step of your personal injury claim is handled with the utmost care and professionalism.
Our Frequently Asked Questions for Calculating Economic Loss
When a person is injured and their livelihood is affected, there can be a lot of questions on what they may be entitled to claim. We’ve put together answers to some common questions that you may have.
Can I claim economic loss if I have returned to work?
Yes, you can claim compensation for economic loss if you have returned to work.
If you have returned to work, you can claim damages for the period of time that you have had off work, through to when you return to work again.
Even if you have returned to your same position and work the same hours, the fact that you have suffered loss in the past and have ongoing restrictions, is likely to mean that you will be entitled to claim for a potential future loss of earnings.
Can I claim economic loss if I was unemployed at the time of the accident?
Yes. If you were unemployed at the date of your accident and had plans to return to the workforce, you may still be entitled to claim for economic loss or the loss of a chance to earn an income.
What if my income has increased since the accident?
If your income has increased since the date of the accident, you may still be entitled to damages for future economic loss. If you continue to experience ongoing restrictions due to your injuries, you may be vulnerable in the open labour market. Additionally, you may be unable to undertake certain types of work due to an accident. The fact that a person’s earnings increase after an accident, does not prevent them from making a claim for loss of earning capacity.
Can I claim for my spouse's loss of wages?
If your spouse or partner has time off work to care for you following your injury, neither you, nor they can claim for the loss of their wages. However, you may be entitled to make a claim for damages for gratuitous services. That is, the value of the services that your partner provided to you.
How do I prove economic loss?
There are a number of documents that will help you prove your claim for past and future economic loss. These documents include:
- income tax returns
- ATO notices of assessment
- PAYG summaries or income statements
- your resume
- job applications
- medical certificates
- medicolegal reports
- employment records
What if I was going to start a new job or get a promotion?
If you were going to start a new job or achieve a promotion for work, you will be entitled to claim for that lost opportunity. Your ability to prove your loss will depend upon the likelihood that you would have been successful.
What if my employment is terminated?
If you lose your job due to your injuries and your inability to meet the inherent requirements of your role, then this fact is likely to support your claim for economic loss.
If, however, you lose your job for unrelated reasons, then this will also be taken into account. The fact that you lose your job for reasons unrelated to your injuries does not mean that you will not be entitled to claim for economic loss.
What if I have received workers' compensation benefits?
Workers’ compensation benefits that are received due to an accident will generally be repayable to the workers’ compensation insurer. However, you will be entitled to seek damages for the gap between your potential earnings and those benefits, as well as any loss which you are likely to suffer into the future.
