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If you can’t prove what earnings would be, you’re out of luck

You are self-employed in a one person operation. You might be a roofer, tile setter, drywall contractor or painter in the construction industry. Perhaps a realtor, bookkeeper, accountant, or interior decorator. Whatever your business, you have the potential to make a whack-load of money on a particular project or client.

Before you start the project or get started with the client, some irresponsible driver blows a red light and disables you from working, at least for the time being.

This column is about what you should do in that kind of situation.

You are the victim of a negligent driver. You know the basics—that the negligent driver is responsible to compensate you for your losses arising from the crash, including compensation for the income you lose as a result of your injuries. You focus all of your attention on making it through your days in pain, confident that the insurance company will be fair about compensating you for the obvious fact that you are losing money by not working.

Now, you are not only a victim of a negligent driver, you are the victim of naivety.

It’s obvious to you that you are losing money, but that obvious reality may not be something that you can prove, and if you cannot prove it I assure you the insurance company will completely disregard it. Also, you are failing to actively consider a legal duty imposed on injured victims claiming for their losses: the duty to take reasonable steps to keep those losses at a minimum.

In legal circles, this duty is called a duty to mitigate your losses. If you fail to act on that duty, your very real losses may go uncompensated.

Let’s start with proving the loss. Is there any proof that you had the project or client lined up? Right now there might be. You might have a contact name and number scrawled on a piece of paper. You could call that contact and have him or her confirm the scope of the project and the fact that you were going to be hired to do it.

Right now isn’t when you need to prove it, though. Likely, the proof won’t be needed until sometime in the future when that piece of paper has been lost and the contact person has absolutely no recollection of who you are or the scope of the job.

Steps need to be taken, right now, to preserve that evidence, to have a detailed discussion with the contact person about the scope of the job and the fact you were going to be doing it, all recorded on a little digital recorder. That piece of paper, any e-mails, and all other documents related to that job need to be gathered together. You need to write down the full details in a journal.

It may also make sense, depending on the circumstances, to find out who else was awarded the contract so that you can later prove how much revenue is actually earned, rather than going on the basis of estimates.

Then, of course, it’s not just losing that one job that you may have to prove. You might be disabled from working for a significant period of time. You might turn a number of potential clients away.

If you cannot prove that you turned them away, you will not be compensated for those losses. You need to make sure you get the names and contact information of all potential clients, and also to preserve the evidence of what level of service they were inquiring about.

Will you get that advice from an insurance adjuster? Absolutely not.

Will you get that advice from a lawyer you consult with on a free initial consult basis? Absolutely.

I see that I’ve taken up my column space talking about proving the loss, and will have to leave the important issue of mitigating your loss to next week’s column.

Published August 29th in Kelowna Capital News