After an accident, must I give my financial records to the insurance company?

If you allege loss of income as part of your personal injury claim, the defendant's insurance company is entitled to see some or all of your financial records.  

Ordinarily, federal and state law is careful to protect the privacy of your financial records.  

However, if you file a claim for personal injury which includes a claim for lost income as a result of your physical limitations, your financial records are fair game for the insurance company.

If the injured party is a salaried employee, whose only income is from wages which are all recorded on W2 statements, the extent of the invasion of the injured party's financial privacy is usually limited to the production of those W2 statements and federal income tax returns.

If the injured person was in business for themselves, the invasion of that person's financial privacy will be much more intrusive.  

It is very difficult to prove lost income for someone whose income is variable. An example would be a person who owns their own business and whose income therefore is somewhat unpredictable. For instance, a Realtor whose income depends upon the number of houses sold within an certain time period will have a difficult time proving precisely the amount of the income lost if he or she is unable to work for say a three-month period. The argument is that even if that person had not been disabled for the three months, there is no indication as to how many, if any, houses that broker could sell within the three-month period. In other words, the argument is that the lost income is highly speculative.  

In order to prove lost income, it is necessary to show income over prior years. If the current year's income is not lower than the prior year's income, it is almost impossible to show any loss of income for the period of time the injured person is out of work.  

In order to deal with these matters, both sides need access to voluminous records created over long periods of time.  

This, of course, results in the revelation of financial records which state in federal law both would protect from the prying eyes of third parties. However, once a personal injury is filed, if the claim includes one for a lost income, all-financial records are fair game.  

If there is a dispute about whether certain records must be revealed, a trial judge will make a decision. However, in almost every case, the judge will allow the defendant's insurance company to see these records.  

On the other hand, if there is no claim for lost income, the insurance company will not be able to obtain the claimant's financial records