September 16, 2013

We have a situation we are not sure about. The insured owns a small business (café). She was injured in an accident and cannot work for a bit. She hires new employees and/or gives more hours to current employees to cover the hours she normally works. She is claiming the additional hours paid to employees as loss of income under the Income Continuation portion of the PIP endorsement. Is this considered Income Continuation? Arguably, the additional salaries paid are an expense that ultimately cuts into the insured's bottom line (income).

The Income Continuation definition is as follows: An "insured's" loss of income from work, less other income earned, during a period of disability due to "bodily injury".

Washington Subscriber

This is a good question. The definition of income continuation is not that helpful in clarifying the issue. But, the definition does state that income continuation is an insured's loss of income from work due to bodily injury, and since the insured cannot work, it can be said that she is losing income that she would have earned if she had not been injured. So, we are of the opinion that a reasonable interpretation of the coverage does give the insured income continuation. She may say that the money is for paying employees to do her work, but it is also true that she is losing income for herself since she cannot work and that is a reasonable enough interpretation to give the insured the benefit of a doubt.

This premium content is locked for FC&S Coverage Interpretation Subscribers

Enjoy unlimited access to the trusted solution for successful interpretation and analyses of complex insurance policies.

  • Quality content from industry experts with over 60 years insurance experience, combined
  • Customizable alerts of changes in relevant policies and trends
  • Search and navigate Q&As to find answers to your specific questions
  • Filter by article, discussion, analysis and more to find the exact information you’re looking for
  • Continually updated to bring you the latest reports, trending topics, and coverage analysis