• I want to consult about a traffic accident in the Yaizu, Yoshida, Makinohara, Fujieda, and Omaezaki area
• I want to know about lost income compensation when I had to take time off work due to a traffic accident
• I am not sure whether the lost income amount offered by the insurance company is fair
• I want to know whether a homemaker can claim lost income compensation
• I want to know how lost income is calculated for self-employed individuals and sole proprietors

Are you troubled by issues like these in Yaizu, Makinohara, Omaezaki, Fujieda, Shimada, Yoshida Town, or surrounding areas?
Yaizu Sogo Law Office offers a free initial legal consultation regarding traffic accident concerns. There is no obligation to retain our services after the initial consultation. We are also available on weekday evenings and Saturdays. Please feel free to contact us by phone or email.

What Is Lost Income from a Traffic Accident?

If you are injured in a traffic accident, you may be able to claim not only medical expenses and consolation money, but also "lost income compensation" (kyugyo songai).

Lost income compensation refers to the damages arising from the reduction in income as a result of being unable to work or perform household duties due to injuries sustained in a traffic accident.

For example,

• You had to take time off work to attend hospital visits due to the accident
• You were unable to go to work because of pain from your injuries
• You returned to work but could only work reduced hours
• You became unable to perform household duties adequately after the accident

In such cases, lost income compensation becomes an issue.

In traffic accident damage claims, attention tends to focus on consolation money, but lost income is also a critical form of damage that directly affects the victim's livelihood.

In particular, the calculation methods and required documents differ depending on your status, such as company employee, self-employed individual, homemaker, or part-time worker.

Therefore, it is necessary to carefully verify whether the amount offered by the insurance company is truly fair.

Basic Calculation Method for Lost Income

Lost income is basically calculated using the following formula:

In other words,

• How much daily income is deemed to have been earned
• How many days of lost work are related to the traffic accident

are the key factors.

For example, if your daily base income is 10,000 yen and you lost 20 days of work due to the accident,
10,000 yen x 20 days = 200,000 yen
would be the approximate lost income compensation.

However, in actual calculations, the outcome varies depending on specific circumstances, such as whether you are a company employee, self-employed, or a homemaker; whether your salary was reduced; whether you used paid leave; and whether you only took time off on hospital visit days or took consecutive days off.

Lost Income for Company Employees

For company employees, lost income is a relatively straightforward category to calculate.

Basically, the daily base income is calculated based on the salary before the accident, and then multiplied by the actual number of days missed.

In most cases, the employer is asked to prepare a "Certificate of Lost Income" (kyugyo songai shomeisho) to certify the number of days absent due to the accident and whether there was any salary reduction.

The following documents are important for lost income claims by company employees:

• Certificate of Lost Income
• Withholding Tax Certificate (gensen choshuhyo)
• Pay slips
• Employment regulations of the employer
• Documents showing the status of paid leave usage

For company employees, if there was an actual salary reduction, that reduction is likely to be recognized as lost income.

Additionally, even if you used paid leave, since you used leave that could have been used for other purposes because of the accident, it may be claimable as lost income.

Even if the insurance company says, "Your salary was not reduced because you used paid leave," this does not necessarily mean that your lost income claim is denied.

Common Disputes in Lost Income Claims for Company Employees

The following points are often disputed in lost income claims for company employees:

①Necessity of Taking Time Off

The insurance company may argue, "Was it really necessary to take that day off?" or "Time off on non-hospital-visit days is not compensable."

However, if you needed to take time off due to severe pain from the accident and based on your doctor's instructions or the severity of your symptoms, time off on non-hospital-visit days may also be recognized.

This is particularly important for jobs susceptible to injury effects, such as physical labor or driving duties, where it is essential to specifically explain the necessity of taking time off.

②No Reduction in Income

If your employer paid your full salary, the insurance company may deny your lost income claim.

However, there are cases where you actually suffered a disadvantage, such as when you used paid leave or when adjustments were made later by the employer.

It is necessary to examine not only whether salary was formally paid, but also what actual disadvantages were incurred.

Lost Income for Self-Employed Individuals and Sole Proprietors

For self-employed individuals and sole proprietors, unlike company employees, taking time off does not immediately result in a salary reduction. Therefore, proving lost income can be more difficult.

For self-employed individuals, the base income is generally calculated based on documents such as the tax return from the year before the accident.

However, revenue and income are different. The entire revenue does not directly become lost income; the basic approach is to calculate based on income after deducting expenses.

The following documents are needed:

• Tax return (kakutei shinkokusho)
• Blue return financial statements (aoiro shinkoku kessansho)
• Income and expenditure statement (shushi uchiwakesho)
• Account books
• Sales records
• Invoices and receipts
• Sales comparison data from before and after the accident

For self-employed individuals, it is necessary to specifically demonstrate the extent to which the accident affected their work and how it impacted their sales or income.

Common Disputes in Lost Income Claims for Self-Employed Individuals

In lost income claims for self-employed individuals, the insurance company may raise the following objections:

①Relationship Between Revenue Decline and the Accident

Even if revenue declined after the accident, the insurance company may argue, "The decline was due to economic conditions or client circumstances" or "It cannot be said that the decline is related to the accident."

Therefore, it is important to specifically explain not only the sales data from before and after the accident, but also the work tasks that could no longer be performed due to the accident.

②Substitute Personnel and Outsourcing Costs

If you were unable to do the work yourself due to the accident and had to hire someone else, the outsourcing costs or substitute personnel expenses may become an issue as damages.

In this case as well, documents supporting the expenditure, such as receipts and contracts, are important.

③Filing a Deficit Tax Return

If the tax return for the year before the accident showed a deficit, proving lost income becomes more difficult.

However, a deficit does not necessarily mean that lost income will not be recognized.

There is room for consideration based on the actual state of the business, sales before and after the accident, future profit prospects, and the burden of fixed costs.

Lost Income for Homemakers

In traffic accident cases, lost income may also be recognized for full-time homemakers.

Since household work does not generate a salary, it may not appear that income has been reduced.

However, household work is labor with economic value.

If injuries from a traffic accident cause difficulties such as:

• Being unable to clean
• Being unable to do laundry
• Being unable to cook
• Being unable to go shopping
• Being unable to adequately care for children

then it may be possible to claim lost income compensation for homemakers.

In practice, homemaker lost income is sometimes calculated using the average wages for women as a reference.

However, the amount varies depending on specific circumstances, such as the extent to which household duties were affected by the accident and whether the same level of impairment continued throughout the entire treatment period.

Part-Time Workers Who Also Perform Household Duties

For those who work part-time while also being responsible for household duties, the calculation of lost income can become an issue.

In this case,

• The reduction in part-time income
• The impact on household work

and how to evaluate both of these become the question.

Generally, the actual income and the valuation of household work are compared to determine the appropriate base income.

The insurance company may only offer a low amount based solely on part-time income.

However, in reality, it may be possible to claim a higher amount that includes the impact on household work.

Lost income for part-time homemakers is an area where outcomes tend to vary depending on individual circumstances, making it highly beneficial to consult with an attorney.

Lost Income for Elderly or Unemployed Individuals

For elderly or unemployed individuals, since there is generally no income, it is often assumed that lost income is unlikely to be an issue.

However, in reality,

• You were performing household duties for your family
• You had plans to start employment
• You had specific work arrangements before the accident
• You were helping with a family business

In such cases, there may be a possibility of claiming lost income.

Rather than simply concluding that "there is no lost income because the person is unemployed," it is important to examine the actual living circumstances before the accident.

How Are the Number of Days of Lost Work Determined?

In lost income claims, not only the daily base income but also the number of days of lost work is important.

The number of days of lost work may include:

• Days you actually took off work
• Days you took off for hospital visits
• Days you were off work on a doctor's instructions
• Days you were unable to work due to your symptoms

and other similar days.

On the other hand, the insurance company may argue, "Only hospital visit days are compensable," "You should have been able to work during that period," or "The period of lost work is too long."

In such cases, it is necessary to explain the necessity of the time off based on medical certificates, medical records, the nature of your work, the progression of your symptoms, and employer documentation.

Documents Required for Lost Income Claims

Proper preparation of documents is essential for making an appropriate lost income claim.

For company employees:

• Certificate of Lost Income
• Withholding Tax Certificate
• Pay slips
• Paid leave usage records

For self-employed individuals:

• Tax return
• Blue return financial statements
• Sales ledger
• Invoices and receipts
• Sales comparison data from before and after the accident

For homemakers:

• Documents showing family composition
• Information about the division of household duties
• Hospital visit records
• Specific circumstances showing how household duties were affected

are important.

If the documentation is insufficient, the lost income may be assessed at a lower amount than what is actually warranted.

It is important to organize your documents from an early stage.

When the Insurance Company's Offer Is Low

You may have received a lost income offer from the insurance company, but find that:

• The number of days of lost work has been calculated as too few
• The base income has been calculated as too low
• Homemaker lost income has not been recognized
• The self-employed individual's loss of revenue has been denied

Such cases do occur.

The amount offered by the insurance company is not always fair. In particular, for homemaker lost income, self-employed lost income, and accidents involving extended time off work, there can be a significant gap between the insurance company's figure and the appropriate amount.

If you are not satisfied, we recommend consulting with an attorney before settling.

Summary

Lost income from a traffic accident is calculated based on:
Daily Base Income x Number of Days of Lost Work
as the basic formula.

However, the calculation methods and required documents differ depending on the victim's status, such as company employee, self-employed individual, homemaker, part-time worker, or elderly individual.

Additionally, the lost income amount offered by the insurance company is not necessarily fair.

In particular, lost income for self-employed individuals and homemakers is an area where disputes with the insurance company are common.

If your work or household duties have been affected by a traffic accident, it is important to organize your documents early and claim the appropriate lost income compensation.

Frequently Asked Questions

The Initial Legal Consultation for Traffic Accidents at Yaizu Sogo Law Office Is Free of Charge

Yaizu Sogo Law Office provides a free initial legal consultation regarding traffic accidents.

We handle all traffic accident-related legal matters, regardless of severity or whether they involve property damage or personal injury. If you are feeling stressed by dealings with insurance companies, or if you want to know whether the amount offered by your insurance company is fair, please do not hesitate to consult with us.

Yaizu Sogo Law Office is available not only during regular weekday hours but also on weekday evenings and Saturdays. Please contact us by phone or email to schedule a legal consultation.

Are You Troubled by a Traffic Accident?

• Settlement Offers from Insurance Companies Are Almost Always Low
• The Insurance Company Said They Would Cut Off My Medical Expenses
• Dissatisfied with the Fault Ratio
• When and How to Consult a Lawyer About a Traffic Accident
• What Claims Can Be Made in a Personal Injury Accident?
• What Claims Can Be Made in a Property Damage Accident?
• What You Need to Know About Whiplash
• Traffic Accidents and Health Insurance
• Procedures and Steps to Follow After a Traffic Accident
• Fault Proportions Between a Through-Going Vehicle and a Right-Turning Vehicle at an Intersection
• Diminished Value (Loss of Market Value)
• Amount Claimable from the Other Party When Personal Injury Protection Insurance Was Used Prior to the Claim for Damages Against the Other Party
• Free legal consultation is available for traffic accidents
• Filing a Victim's Claim with Compulsory Automobile Liability Insurance (CALI)
• Lost Wages for Salaried Employees (Wage Earners) in Traffic Accidents
• Understanding a Company's Losses When Employees Are Killed or Injured in a Traffic Accident
• Finding the Court with Jurisdiction over Traffic Accident Lawsuits
• Want to Know Whether You Can Offset the Other Party's Damages Against Your Own in the Same Traffic Accident
• The at-fault party refuses to use their voluntary automobile insurance. What should I do?
• I was seriously injured in a traffic accident in June 2017, before the enforcement of the amended Civil Code (April 1, 2020). Three years have passed (but less than five years) since I completed my treatment. Is the statute of limitations still valid?
• How to Identify a Hit-and-Run Driver from a Vehicle License Plate Number
• Methods of Dispute Resolution in Traffic Accidents
• What You Need to Know About Medical Commuting Transportation Expenses
• How to Find the Insurance Company of the At-Fault Driver in a Traffic Accident
• Understanding Workers' Compensation Insurance in Traffic Accidents (Leave Compensation)
• How Much Is the Standard Compensation for a Traffic Accident?
• What Is Residual Disability Grade Certification in Traffic Accidents?
• How Much Compensation Can You Get for Whiplash from a Traffic Accident?
• Benefits of Hiring a Lawyer for Traffic Accidents
• Key Points When Dealing with Insurance Companies After a Traffic Accident
• How to Calculate Lost Income from a Traffic Accident
• The Relationship Between Number of Hospital Visits and Compensation for Pain and Suffering in Traffic Accidents (Key Considerations When Visit Frequency Is Low)
• What Is Maximum Medical Improvement (MMI) After a Traffic Accident?
• How to Use Lawyer Fee Special Coverage for Traffic Accidents?
• How to Handle a Traffic Accident When the At-Fault Driver Has No Insurance
• Damages in Bicycle Accidents
• Claiming Compensation When a Passenger Is Injured in a Traffic Accident
• Do You Have to Pay a Traffic Fine for a Burned-Out Brake Light?
• "I Said I Would Pay the Full Repair Cost" in a Bicycle Accident
• If Repair Costs Exceed Your Car's Market Value After a Traffic Accident, Can You Still Recover the Full Amount?
• Can a Car Proceed if a Pedestrian Yields at a Crosswalk?
• What Are "Replacement Incidental Costs" When a Vehicle Is Totaled in a Traffic Accident?
• What Damages Can Be Claimed When a Family Member Dies in a Traffic Accident?

See all articles on traffic accidents