What do I have to legally provide to insurance company for income loss?

UPDATED: Oct 1, 2022

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What do I have to legally provide to insurance company for income loss?

I own a small nail salon and a car crashed into my business 6 months ago. It caused 2 months of business closure. Right now, I’m fighting a claim with the at-fault driver’s insurance company and it has been 6 months since the accident. We have not settled with the insurance company due to the fact that their initial income loss offer is too low. They asked for support for income loss and I provided them with merchant statements for 3 comparable months from last year since my business is seasonal and summer is the busiest time of the year for nail salons. They ended up taking the 3 months from last year and averaged them out to get a figure for lost income. They then took that amount and subtracted 10% less overhead since the business would not use extra expenses during the closure. Fast forward 6 months, I showed them merchant statements for the following months after the shop re-opened and asked that they average the months from this year before and after the crash since that would give the most accurate number for income loss. They refused to take the months from this year and asked for my tax return from last year instead. Unfortunately, my business just opened last year and it was very slow. Not only that but business did not open a full year. If I show them gross income tax for last year it will reduce my income loss settlement even further since newly established business overhead is always higher in the first year. Also, since my business is seasonal it would not be fair to average out all the months from last year. I feel like merchant statement for this year would be a more accurate representation of income loss because the accident occurred this year. What part of income tax is claimant require to show to insurance adjusters and what part is irrelevant and they do not have the rights to see?

Asked on October 2, 2018 under Business Law, Texas


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

The law doesn't answer this question: the claimant has to substantiate or prove the loss to the satisfaction of the insurer. If the insurer refuses to accept the claimed loss and wants to pay less than the claimant believes appropriate, the claimant's option is to sue the insured--in this case, the driver who crashed into your business. In the lawsuit, if you can prove to the *court's* satisfaction, using, for example, the logic you outlined in your question, that your loss was a certain amount, the court can order the at-fault driver to pay that amount, at which time he and/or his insurer will have to pay. But that's the only way to force the insurer to accept to a certain number--otherwise, until there is a court case and court order, it is up to the insurer what documentation they want and what number or amount they believe appropriate to pay.

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