Marissa Hayes

Insurance Writer & Expert

Marissa Hayes is a technical editor and contributing writer. She holds a Bachelor’s Degree in history, and she was the editor of the literary magazine, The Bluestone Review.

Insurance Writer & Expert

Daniel Walker

Licensed Insurance Agent

Daniel Walker graduated with a BS in Administrative Management in 2005 and has run his family’s insurance agency, FCI Agency, for over 15 years (BBB A+). He is licensed as an insurance agent to write property and casualty insurance, including home, life, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like and Safeco. To ensure our content is accura...

Licensed Insurance Agent

UPDATED: Dec 4, 2023

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Work loss is an optional insurance policy that assists drivers in recouping some of the wages lost due to a medical injury caused in a car accident. This type of policy is also called optional basic economical loss.

What all does work loss insurance cover?

Work loss coverage is designed to assist people by compensating them for a portion of the wage loss missed because of an injury or disability caused by a car collision. Unlike liability coverage where it protects the vehicle of only the insured driver on the insurance policy is covered, work loss will also cover the other insured drivers on the policy, as well as any passengers with you when the auto accident occurs.

Like any insurance policy, there is a limit to what an auto insurance policy will pay. Many policies will pay up to 80% of the missing paychecks. However, some will pay a lesser percentage for the same incident of physical injury. Your income level will determine the percentage you qualify for. The insurance company will not pay out more than the level of insurance you have purchased.

There are eligibility requirements for claiming work loss benefits. The insured driver must actually be in an income-earning situation 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 make a claim for benefits.

Another advantage to work loss coverage is that it gives drivers more control over the use of their monetary benefits. In other types of insurance coverage, like health insurance, medical providers are billed in the order they are received by the car insurance carrier. Work loss coverage is often a weekly benefit paid to you and can be used for personal expenses, bills from medical care, therapy, or for anything you need.

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Do I have to buy work loss coverage?

Work loss coverage is an optional insurance policy. No state or insurance company will require you to purchase work loss auto insurance coverage. Each driver will have to determine whether or not the cost of maintaining this coverage is worth the risk of going without it.

Some states are mandated to at least offer work loss coverage, but no state requires drivers to purchase the policy add-on. Most states and car insurance companies will recommend that drivers consider this type of coverage, especially if they do not already have lost wages protection under another portion of their auto insurance policy.

How much work loss coverage should I buy?

This can vary from state to state and per car insurance company. It is typical to purchase $25,000 in coverage. However, higher amounts can be purchased such as $50,000 or $100,000, if desired. It will really depend on how much you can afford and are willing to add to your existing car insurance policy.

If in doubt, discuss it with your car insurance company and see what the different limits will cost you and what the company feels would be the best direction to pursue.

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 fill the gaps between a car accident and going back to work.

If you happen to be 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 earn money.

For those who happen to have a larger salary, you may find that work loss coverage does not end up being worth the monthly insurance premium. In this situation, it may be better to set up a savings account with up to six months of your income invested to protect you against this type of scenario.

There are other types of car insurance, such as Personal Injury Protection (PIP) and medical payments coverage that may also be able to pay out for lost wages. If you have another policy that will pay for lost wages, it may be redundant to also purchase work loss coverage. However, if it is purchased it can sometimes be used after claiming PIP or other benefits so that the insured is getting compensation from both policies.

If you are still uncertain about whether or not to purchase work loss coverage, talk to your car insurance provider compare quotes online for a better feel for what the options are. They will be able to give you a quote and give you a realistic idea of whether or not the policy is worth the investment.