Motor vehicle accident matters produce the full range of economic loss, from a few months of lost pay after an orthopedic injury to lifetime earnings and care losses after a catastrophic crash. The economist scales the analysis to the injury: a short past-loss calculation from pay records, or a full projection of lost earnings, benefits, household services, and future care costs to present value when the injury is permanent.
In short
The claim is made up of past lost earnings while the person was out of work, future lost earnings or reduced earning capacity where the injury limits the work the person can return to, lost fringe benefits, the replacement cost of household services during recovery and afterward, and the present value of future care costs when a life care plan or treating recommendations exist. For a fatal crash the analysis becomes a wrongful death loss to the survivors. The drivers are the earnings and benefit history, the employer's records on the period out of work and any accommodation, and the medical and work-capacity opinions in the record.
In moderate injury the exposure is concentrated in the period out of work and any future surgery or treatment, and the numbers can usually be built directly from the records. Once an injury prevents a return to the prior occupation, the future earnings gap across the remaining worklife becomes the dominant figure, and in catastrophic injury the present value of attendant care and equipment in the life care plan can exceed the earnings loss. Policy limits often frame the practical range, so counsel commonly ask for a report that presents each component separately for settlement evaluation and for trial.
The economist documents the earnings history, the date the person left work, and any return to work at full or reduced capacity, and builds the but-for and post-injury paths from those facts. Future earnings are projected over a worklife expectancy with wage growth, fringe benefits are valued from plan documents or published employer cost data, household services from time-use data and local replacement rates, and future care from the life care plan with medical cost growth. Each stream is discounted to present value with the rate assumption stated. Where the return-to-work date or the post-injury capacity is disputed, the report presents the alternative scenarios so the number tracks whatever the fact finder concludes.
Stage-by-stage guidance on working with a forensic economist in motor vehicle accident litigation.
It depends on what the return looks like. A full return to the same job at the same pay usually leaves only a past loss that counsel can present from the pay records. A return at reduced hours, lower pay, or to a job with fewer benefits or less advancement leaves a future gap that an economist should measure over the remaining worklife.
From the employer's benefit plan documents where available: retirement contributions, health insurance premiums, and paid leave. Where the documents are not available, published data on employer costs for employee compensation supply a benefit rate for the industry and occupation. The report states which approach was used.
The earnings base is projected from the educational path and occupational data for the work the person was preparing for, rather than from a short earnings history. The report states the occupation and education level assumed and the source of the earnings data.
Yes. Household work the person could not perform during recovery is valued at the cost of replacing it, and any permanent limitation on household work is projected over the person's expected life. The hours come from the household's account and time-use data for similar people.
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