What is Adjusted Gross Income?

What is Adjusted Gross Income?



May 17th, 2023


When selecting a Truckers Occupational Accident Insurance policy for your Motor Carrier clients, it's essential to compare coverage levels of the various plans available.  Weekly Disability Income benefits, in particular, can vary significantly between insurance companies; understanding these nuances is critical when making a decision that meets your client’s needs. 

 

Most insurance companies offering Truckers Occupational Accident Insurance pay Weekly Disability Income benefits based on 70% of an Independent Contractor’s Average Weekly Earnings, as defined by their policy. 

 

It is the definition of Average Weekly Earnings where Truckers Occupational Accident Insurance policies can differ…and differ dramatically! 

 

One insurance company defines Average Weekly Earnings as 100% of an Independent Contractor’s Gross Earnings. 

 

Most other insurance companies providing Truckers Occupational Accident Insurance calculate Average Weekly Earnings on a significantly lower scale, normally 1/3 of an Independent Contractor's Gross Income or lower.  This can greatly reduce the amount of Weekly Disability Income payments for these contractors. 

 

A few insurance companies take an even more restrictive approach and pay Weekly Disability Income benefits based on what an Independent Contractor reports as Adjusted Gross Income on their Federal Income Tax Return. 

 

Adjusted Gross Income, simply put, is an individual's total Gross Income minus allowances for personal exemptions and itemized deductions.  And because the IRS code now permits a business owner to depreciate the cost of certain long-term tangible property in a single year, rather than over time, an Independent Contractors’ Adjusted Gross Income can be as low as $0 in any given tax year.   

 

Weekly Disability Income benefits that are based on Adjusted Gross Income make it very difficult, if not impossible, to reach the Truckers Occupational Accident Insurance policy’s stated maximum limit.  The Weekly Disability Income benefit maximum limit is usually expressed as an amount “up to $700 per week.” 

 

Paying Weekly Disability Income benefits that are based on Adjusted Gross Income may lead to disgruntled Independent Contractors and potential Workers Compensation (i.e. Contingent Liability) claims. 


To learn more about Workforce Insurance Underwriters and our new Occupational Accident Insurance program, click here.


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