What Is the Difference Between Loss of Income and Loss of Earning Potential?

Bill Allen | September 23, 2023 | Personal Injury

“Loss of income” and “loss of earning potential” are two components of damages in a personal injury claim. If you have suffered an injury, you might qualify for one of them, both of them, or neither of them.  

It is easy to confuse loss of income and loss of earning potential, but the distinction is important.  Essentially, loss of income claims look backward, while loss of earning potential claims speculate about the future.

Damages in a Personal Injury Claim

If you go to court and win a personal injury claim, a court will award you damages (you might win $60,000, for example). If you settle the claim, the other side will pay you damages in the exact amount of the settlement. You can classify damages as economic damages, non-economic damages, and punitive damages.

Economic Damages

Economic damages typically include:

• Medical bills;
• Loss of income; and 
• Out-of-pocket expenses.

Loss of potential earnings is a lesser-used component of damages that is nevertheless often available in cases of long-term injury.  

Non-Economic Damages

Non-economic damages compensate an injured party for intangible injuries such as:

• Pain and suffering;
• Mental anguish; and
• Disfigurement.

The foregoing is not a full list of possible non-economic damages. 

Punitive Damages

Florida courts may award punitive damages if the defendant is also liable for economic or non-economic damages. The victim must prove, by clear and convincing evidence, that the defendant acted intentionally or with gross (extreme) negligence. 

Even then, a court does not have to award punitive damages. It usually doesn’t, but once in a while it does. 

Special Case: Florida’s No-Fault Auto Accident Compensation System 

Florida applies special rules to all but the most serious car accidents. Florida drivers must purchase Florida’s Personal Injury Protection (PIP) insurance. Florida drivers rely on PIP insurance instead of claiming against the at-fault party. 

In fact, a Florida car accident victim cannot sue the at-fault party unless their injuries reach a certain legal threshold. This affects the payout in loss of income and loss of earning potential claims. PIP will pay for:

• 80% of your reasonable medical expenses up to $10,000; and
• 60% of any loss of income or earning potential up to $10,000.

In this way, PIP insurance greatly limits your damages. For most personal injury claims, however, you can seek compensation that far exceeds these limitations. 

Loss of Income

Following is a list of components of loss of income claims: 

• Past wage loss: Wage loss you have already accumulated by the time you file your claim.
• Future wage loss: Future wage loss that you anticipate. The distinction between future wage loss and loss of earning potential is a fine one.
• Lost business income: Most useful if you own a stable business.
• Loss of business opportunities: Most useful when your business income over time is more difficult to predict.
• Loss of benefits: Loss of retirement contributions and other similar losses.
• Vacation and sick leave: You can claim used leave time even if your employer paid you for those days. The idea is that your injuries force you to deplete a valuable resource.

Although this list is not necessarily exhaustive, it does cover most forms of lost income that come into dispute in personal injury cases. 

Loss of Earning Potential

You claim loss of earning potential when your injuries are likely to reduce the amount of money you can make in the future:

• Reduced wage-earning capacity: Your injuries might have limited your ability to perform your current job. They might have left you with limited stamina, for example, forcing you to work part-time. A construction worker might suffer from back problems, interfering with heavy lifting. 
• Career limitation: Where your injuries limit your advancement in your current career.
• Loss of professional advancement: Where your injuries interfere with your anticipated career trajectory.
• Loss of retirement contributions and other future benefits.
• Education and training losses:  These losses could lead to reduced future career viability.
• Vocational rehabilitation costs: You can claim this item if your injury forces you to change careers and undergo vocational rehabilitation. This might even happen to a white-collar worker in the event of a brain injury, for example.

You may need expert testimony to prove your claims.

Let a Florida Personal Injury Attorney Take a Look at Your Claim

If you think you might have a personal injury claim, set up a free initial consultation with a Florida personal injury attorney. You might never know how much your claim is actually worth until you actually speak with a lawyer about it.

Contact Our Gainesville Personal Injury Lawyers at Allen Law Accident & Injury Lawyers in North Central Florida

If you need legal assistance, contact the Gainesville personal injury lawyers at Allen Law Accident & Injury Lawyers at your nearest location to schedule a free consultation today.

We have three convenient locations in North Central Florida:

Allen Law Accident & Injury Lawyers – Gainesville office
2550 SW 76th St #150
Gainesville, FL 32608
(877) 255-3652

Allen Law Accident & Injury Lawyers – Downtown Gainesville
621 W University Ave
Gainesville, FL 32601
(866) 928-6292

Allen Law Accident & Injury Lawyers – Ocala Office
112 S Pine Ave
Ocala, FL 34471
(352) 351-3258