Guide to Loss of Earning Capacity in Traffic Accidents

What is Loss of Earning Capacity (LEC) in a Traffic Accident?

Loss of earning capacity is one of the most serious damages that can be sustained in a traffic accident. It refers to impairment of your ability to earn income in the future, whether due to physical injury, psychological injury, or a combination of both. When you are injured in an accident and cannot return to your previous work at full capacity, or when you lose your ability to engage in any professional field, you are entitled to substantial compensation for the economic damage you have suffered.

Compensation for loss of earning capacity is not a fixed one-time payment – it varies according to many factors, such as your age at the time of the accident, your education, professional experience, your salary before the accident, and the extent of impairment to your earning capacity. In Israel, this entitlement is regulated through National Insurance (which provides fixed allowances), through insurance claims (against the party responsible for the accident), and through civil claims against the defendant.

Mandelbrot, Gor, Witzman-Gor & Co. has represented claimants exclusively in personal injury cases since 2008, and specializes in calculating and collecting compensation for loss of earning capacity in traffic accidents. We guide you through every stage: from filing the claim to obtaining your full compensation.

How is Compensation for Loss of Earning Capacity Calculated?

Calculation of compensation for LEC is a complex process involving actuarial, medical, and legal factors. In current Israeli jurisprudence, standard tables and actuarial calculations are typically used based on:

• Percentage of loss of earning capacity: A medical determination of the degree of impairment to earning capacity (typically between 0% and 100%). This is determined based on a medical report from a physician experienced in bodily injury claims.
• Income before the accident: Your monthly salary or annual earnings before the accident serve as the basis for calculation. This figure is typically verified through pay stubs, tax returns, or other financial evidence.
• Working life expectancy: Calculated based on your age at the time of the accident and standard retirement age (typically up to age 67). This affects the duration of the period for which compensation is calculated.
• Actuarial factors: Coefficients that account for inflation, economic interest rates, and future economic risks.

The basic formula is typically: Percentage of loss of earning capacity × Annual income × Actuarial coefficient = Monetary compensation. However, each case involves judicial and medical discretion, and no two calculations are identical.

Distinction Between National Insurance and Insurance Claims

It is important to understand that there are two ways to obtain compensation for loss of earning capacity:

• National Insurance: Provides a fixed monthly allowance to victims of traffic and work accidents, without the need to prove liability. The allowance begins after a waiting period and continues as long as you are in a state of loss of earning capacity.
• Insurance claims: A claim against the insurance company of the party that caused the accident, or against the defendant directly. This is a civil claim based on liability that results in a one-time payment (typically larger than the National Insurance allowance).

Generally, an injured party can file a claim with both systems simultaneously, and his or her rights do not cancel each other out under all circumstances.

Stages of Processing a Loss of Earning Capacity Claim

When you are injured in a traffic accident and need to file a claim for loss of earning capacity, the process includes several important stages:

1. Medical Certification and Personal Injury Report

The first stage is obtaining a detailed medical certificate confirming the extent of impairment to earning capacity. This report should be prepared by a physician experienced in personal injury assessment and must contain an accurate evaluation of the percentage of lost earning capacity. This report serves as the foundation for assessing damages and substantiating the claim in court or settlement negotiations.

2. Collection of Financial Evidence

You must present evidence of your income prior to the accident: pay stubs, tax returns, bank statements, employment contracts, or in the case of self-employed individuals – accounting reports. This evidence is essential to prove the basis for calculating compensation.

3. Filing the Claim

The claim is filed with the District Court (typically) or a National Insurance hearing, depending on the circumstances. The claim must include an accurate description of the accident, the damages incurred, medical expert opinions, calculation of the requested compensation, and all supporting evidence.

4. Negotiations and Settlement

Often, before reaching court proceedings, negotiations take place between the parties. Your attorney will work to achieve a fair settlement that reflects the actual damages, while considering the risks of litigation.

5. Court Proceedings (if necessary)

If no settlement is reached, the case will proceed to trial before a judge. During the proceedings, both parties will present their testimony and evidence, and the judge will determine the final compensation amount based on the evidence presented.

Factors Affecting Compensation Amount

The amount of compensation for loss of earning capacity is not fixed and depends on a series of different factors. Understanding these factors will help you understand why your compensation may differ from that of another injured party:

Age at the Time of the Accident

Younger age generally leads to higher compensation, as a longer expected working life means income loss over a longer period. Conversely, an older injured party may receive lower compensation, since the expected earning period is shorter.

Education and Professional Experience

A person with higher education or significant professional experience in a particular field may receive higher compensation, as the loss of their ability to earn in that field represents a greater economic harm.

Income Level Prior to the Accident

The higher your income was before the accident, the higher the compensation for loss of earning capacity will be. This reflects the actual economic damage caused to you.

Percentage of Loss of Earning Capacity

This is the central factor. A 100% loss of earning capacity (total disability) will result in significantly higher compensation than a 30% loss of earning capacity. This percentage is determined based on a detailed medical report.

Possibility of Professional Adaptation

Generally, in calculating compensation, consideration is given to whether the injured party can adapt to other work. If a reasonable possibility of adaptation exists, the compensation may be lower than in cases where no such possibility exists.

Future Health Status

Medical records and assessments of the likelihood of improvement or deterioration in the future are typically used. If deterioration is expected, the compensation may be higher.

Typical Compensation Ranges

It is important to emphasize that no two cases are identical, and therefore it is very difficult to indicate precise ranges. Nevertheless, typically, in prevailing Israeli case law, compensation for loss of earning capacity varies within a very wide range:

• Partial loss of earning capacity (20%–50%): Typically compensation of tens of thousands of shekels up to hundreds of thousands, depending on the factors outlined above.
• Significant loss of earning capacity (50%–80%): Typically compensation of hundreds of thousands up to one million shekels.
• Absolute loss of earning capacity (80%–100%): Typically compensation of hundreds of thousands up to millions, depending on all factors.

These ranges are a general estimate only, and each case is examined on its merits. Mendelboim, Gor, Witzman-Gor and Partners will conduct a precise evaluation of your case at an initial consultation meeting at no cost.

Comparative Table: National Insurance vs. Insurance Claim

As can be seen from the table, both approaches have advantages and disadvantages. Typically, a victim of a traffic accident will pursue compensation through both systems in parallel to ensure maximum recovery.

Why Choose Mandelboim, Gor, Witzman-Gor & Co.?

Over 18 years of practice, Mandelboim, Gor, Witzman-Gor & Co. has built a strong reputation representing claimants in tort matters, including complex cases involving loss of earning capacity in traffic accidents. Here's why we are the right choice for you:

• Plaintiff Representation Only: We represent only claimants, not defendants or insurance companies. This means your interests are our top priority, with no conflicts of interest.
• In-Depth Experience: Our team has years of experience handling loss of earning capacity cases, working with physicians, actuaries, and the National Insurance Institute.
• Personal and Dedicated Approach: We believe every victim deserves personalized attention and full care. You are not a case number to us – you are a person who has suffered and needs help.
• Free Initial Consultation: You can consult with us for free, without obligation, to understand your rights and options.
• Convenient Location: Our office is located in Ramat Gan, easily accessible from all major cities and the central region. We also operate in all courts throughout Israel.

If you or a loved one has been injured in a traffic accident and believe you are entitled to compensation for loss of earning capacity, we are here to help. Contact us today and schedule your free initial consultation.