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Join Charles Amodio and Abby Donohue from FAZ Forensics as they dive into the world of no-fault insurance, loss of use claims, and substitute services. Learn how forensic accountants help self-employed individuals like Uber drivers, truckers, and independent professionals recover lost earnings after accidents. Discover the challenges of claim documentation and the importance of thorough financial analysis in insurance settlements.
When a self-employed individual is injured in an automobile accident in New York, they may be entitled to recover lost earnings through a No-Fault insurance claim. Under New York’s No-Fault law, claimants can receive compensation for economic losses – such as medical expenses and lost income – without needing to prove fault or negligence. At FAZ, we assist the claimant with the lost income portion of their No-Fault claim.
Ultimately, we are calculating potential lost net self-employment earnings suffered by the claimant. When it comes to calculating lost net self-employment income, the process is more involved than simply calculating lost gross self employment income. A critical part of this calculation includes an understanding of discontinued, or “saved,” expenses.
Discontinued (or “saved”) expenses are costs, typically variable in nature, that the claimant would not incur subsequent to the date of loss.
In the context of a No-Fault claim, only net self-employment earnings are reimbursable. This equals the amount they would have earned after deducting expenses that would not be incurred as a result of the accident.
Common examples of saved expenses in a No-Fault lost earnings claim include:
It’s important to note that fixed expenses – such as office rent or insurance premiums – are not usually considered saved expenses, as they continue regardless of the individual’s ability to work.
New York’s No-Fault insurance system aims to reimburse real, measurable losses. When a self-employed person submits a claim for lost self-employment income, they must prove what their net earnings would have been, had they not been injured.
This means gross revenue alone cannot be the basis for the claim. Expected lost gross self-employment earnings are adjusted by deducting discontinued expenses, as a percentage of gross earnings.
Here is an example of how discontinued expenses are calculated:
A self-employed Uber driver files a No-Fault claim stating that, due to their injuries, they were unable to work from January 1, 2025 (date of loss), through January 30, 2025. The claimant reported $48,000 of gross earnings through Uber on their 2024 personal income tax return, or $4,000 per month. “Car and truck” expense, which the claimant advised is comprised fully of fuel expenses, totaled $24,000 during 2024. Based on historical earnings information, “car and truck” expense totals 50% of the gross earnings generated during the year. This percentage is utilized in order to calculate the discontinued, or “saved”, expenses during the period the claimant was unable to work.
The claimant states that they were unable to work from January 1, 2025, through January 30, 2025. They claim that they lost $4,000 in self-employment earnings during this period. The claimant is not accounting for the expenses that would be saved as a result of the accident.
The following example lays out how we utilize historical financial information to determine the extent of discontinued expenses that were saved during the loss period:
In the context of a New York No-Fault insurance claim, understanding and accounting for discontinued or “saved” expenses is crucial when calculating lost net self-employment earnings. These expenses reflect costs that would not be incurred due to the individual’s inability to work, and must be deducted from expected gross self-employment earnings during the loss period, to accurately determine the net loss.
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