How to Calculate Lost Wages After an Accident

Last updated: July 2026

Lost wages is one of the two numbers, alongside medical bills, that every calculator on this site asks for — and it's also one of the numbers insurers scrutinize hardest, because unlike a medical bill, there's no single official document that proves it. Here's how to calculate it correctly and document it well enough that an adjuster can't easily dispute it.

What Counts as Lost Wages

It's broader than just missed hourly pay. A complete lost wages claim typically includes regular pay for missed work hours or days, lost overtime you would have reasonably worked, lost bonuses or commissions tied to work you couldn't perform, and PTO or sick leave you were forced to use instead of taking unpaid time off — that used leave has real value even though no money technically left your paycheck. A separate, more advanced concept is loss of earning capacity, which covers a permanent reduction in your ability to earn going forward rather than time missed during recovery; that typically requires vocational or economic expert testimony and goes well beyond what a simple calculation can capture.

The Basic Calculation

Hourly employees: multiply your hourly rate by the number of hours missed. If you missed partial days, calculate those separately rather than rounding to full days in either direction.

Salaried employees: divide your annual salary by your typical number of working days per year (commonly 260, adjusted for your actual schedule) to get a daily rate, then multiply by the number of workdays missed.

Overtime: if you regularly worked overtime before the accident, a consistent recent history (several months of pay stubs showing the pattern) can support including it, rather than relying on your base rate alone.

If You're Self-Employed or a Contractor

This is where lost wages claims get harder, because there's no employer to write a verification letter. Instead, insurers typically expect an average monthly or weekly income figure built from your most recent one to two years of tax returns, 1099 forms, or profit-and-loss statements, along with specific evidence of work you turned down or couldn't complete — unfulfilled contracts, canceled appointments, or invoices you weren't able to send. A letter from an accountant summarizing your typical income before the accident can add credibility that raw numbers alone sometimes lack.

Documentation That Actually Supports This Number

Pay stubs from before and after the accident showing the gap. A wage-loss verification letter from your employer's HR department, stating your rate of pay and the exact dates you missed. A doctor's note or work-restriction letter connecting the missed time to your injury — without this, insurers can argue you simply chose not to work. Tax returns or 1099s if you're self-employed. And a record of any PTO or sick leave used, since that lost benefit has value even without a corresponding pay gap.

Common Mistakes That Undervalue This Number

Forgetting overtime you would have reasonably worked. Rounding missed partial days down instead of calculating them precisely. Leaving out lost bonuses or commissions because they felt speculative rather than documenting the pattern that supports them. And for the self-employed in particular, submitting a single income figure without the underlying tax documents or invoices an adjuster needs to actually verify it — an undocumented number, however accurate, is easy for an insurer to discount.

Frequently Asked Questions

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