In Pennsylvania car insurance, optional insurance coverage is available that can help you if you are injured in an auto accident and have to miss days of work. This coverage is a part of no fault insurance known as income loss coverage or first party benefit. It is an aspect of no fault insurance coverage because your policy will pay for your income loss regardless of who is at fault in the accident In this case, the term “first party” refers to you and your passengers, if any.
This optional coverage provides up to 80% of actual gross income that is lost by you or another person covered by your policy due to accident-related injuries. It can also help cover any special medical-related assistance that you may need in order to continue working. The coverage is available at limits of up to $2,500 per month and $50,000 per incident. Some forms of work loss insurance coverage can be used to raise the limits of lost income coverage you have under another portion of your policy (such as your PIP coverage).
Work loss insurance is sometimes also referred to as optional basic economic loss or OBEL.
What happens if I don’t have work loss coverage?
Unless you have the issue of lost wages covered under a different portion of your car insurance policy, without work loss insurance coverage you won’t be able to file a claim with your insurance company for income lost due to injuries sustained in an auto accident.
How much work loss coverage should I buy?
This can vary from state to state and from carrier to carrier. It is typical to purchase $25,000 in coverage. However, higher amounts can be purchased – as much as $50,000 or $100,000. It will really depend on how high your income is and how much you stand to lose if you cannot work, due to injuries. You have to determine how much you can afford and are willing to add to your existing car insurance policy.
When you purchase income loss coverage, it will be available to any person injured in your vehicle due to an accident. Like any other insurance policy, there is a limit to what work loss coverage will pay. While most policies will pay up to 80% of the insured’s work income, some carriers pay a smaller percentage. The percentage you qualify is determined by your income level. Your insurance carrier will only pay up to the limit of your policy. Three different limits are usually available:
PER MONTH PER PERSON
TOTAL PER PERSON
What does work loss insurance cover?
Certain eligibility requirements must be met in order to claim work loss benefits. The insured driver must actually be employed and earning income in order to get compensation for lost wages. If the driver is unemployed at the time of the accident, they may find it difficult to claim work loss benefits.
With work loss coverage, the insured drivers have more control over how their monetary benefits are disbursed. In other types of insurance coverage, medical providers are paid as the bills are received by the car insurance company. Work loss coverage is often a weekly benefit paid to you and can be used for personal expenses, medical bills, therapy, or for anything you need.
How do I decide if I should buy work loss coverage?
This will depend entirely on your personal financial situation. If you have a low salary and live paycheck to paycheck, work loss coverage can help you survive while your injuries prevent you from going back to work.
If you are the main income earner of your household, not earning wages can be a real setback to your whole family. Work loss coverage will be able to keep you afloat until you can get back to work and earning money.
Those with larger salaries may find that work loss coverage is not worth the high monthly insurance premium. Setting up a savings account with up to six months of income invested in it may be a better option for protecting against lost wages in the event that you get injured in an auto accident.
There are other types of car insurance, such as Personal Injury Protection (PIP) and medical payments coverage that may pay out for lost wages. If you have another policy that covers lost wages, it may be redundant to also purchase work loss coverage. However, work loss coverage can sometimes be used after claiming PIP or other benefits, enabling the insured to get compensation for a longer period of time.