Your No-Fault Policy Can Cover Your Lost Wages — But How Much and for How Long?

If you’re hurt in a car accident and become unable to work as a result of your injuries, Michigan law requires your no-fault auto insurance policy’s Personal Injury Protection (PIP) benefits to pay you to make up for lost wages – even if you were the person who caused the accident.

It’s good to know you won’t face total financial disaster if you can’t work due to injuries following a car accident. But it’s also important to note that there are strict time limits and dollar limitations to this valuable insurance coverage. Specifically, the lost-wages benefit cuts off after three years, and the maximum monthly check you can receive over that period of time is currently set at $6,811. In reality, however, unless you’re a highly paid individual, your actual monthly payment is likely to be a bit less than that amount. Here’s a real-life example of how lost wages benefit amounts are determined:

Let’s say you currently take home $50,000 per year. That works out to a gross salary of $4,167 per month. The no-fault law presumes that you would ordinarily be taxed on that amount, so it reduces your lost-wages insurance benefit by 15 percent. Which means your actual net payment for lost wages will come out to just $3,542 monthly – a sum you’ll fortunately receive tax-free. That payment will be made to you for up to three years following the date of your accident, at which point your lost-wages insurance benefits will typically expire.

Thankfully, though, that isn’t always the end of the story. If you were not at fault, and are suffering from serious body impairment as clearly defined by state law, you have the right to sue the at-fault party and/or their insurance company for damages. Which means you could ultimately receive far more than the minimal lost wage payments we’ve described here. For example, you may also receive funds to reimburse you for medical expenses, rehabilitation charges and long-term care costs. You can even be compensated for your pain and suffering. What’s more, if you’re suffering from a permanent disability caused by the accident, a settlement could result in you being paid for a lifetime of lost earnings.

What if Your Lost Wages Exceed the $6,811 Monthly Cap?

If you are a highly compensated individual (someone earning over $94,000 per year) and you weren’t at fault for the accident in which you were injured, you may receive additional money from the negligent driver’s insurance company exceeding the $6,811 monthly lost-wages limit. The goal would be to increase the monthly payments to make up for your actual lost salary. Fortunately, additional lost wages can often be collected by proving your pre-accident income and making a legal claim for the missing compensation by including that amount as damages in a personal injury lawsuit. Let us get the ball rolling on this for you right away – before you find yourself in a financial hole caused by missing paychecks.

Claiming Payment for Lost Income Isn’t Always Easy.

Getting full compensation for lost wages can be a demanding and time-consuming process. You’ll most likely have to take several steps to prove your income to your insurance company, which can be challenging – especially if you’re a gig worker, a freelancer, or are otherwise self-employed. That’s why keeping good financial records is essential, and you should be sure to safeguard your federal 1040 tax filing documents, along with any W-2 forms and 1099s (if applicable) that you may have received over the past several years. Depending upon your personal circumstances and employment history, you could also be asked to provide a “Wage and Salary Verification” form like this one completed by your present or former employer(s).

You’ll also most likely be required to obtain certification from a medical professional (usually your primary care physician or another licensed healthcare provider) verifying that you are indeed unable to return to work. Your doctor’s office will likely have a standard document they can complete on your behalf and can provide it to your insurance company upon request. But be sure to ask for a completed copy for your own records, too. If your personal physician doesn’t have this type of form on hand, here’s a template you can provide as an example.

Don’t Wait to Start the Process …and Always Document Everything

Compiling this extensive paperwork can be a job in itself. But it’s an essential part of the process, because if you wait too long to do it, you’ll be out of luck. Specifically, state law requires you to file a claim for lost wages with your insurance company before one year has passed after the incident that caused your injuries or you’ll forever forfeit the right to receive that benefit. So don’t procrastinate! If you need help with this process, please don’t hesitate to ask your Mike Morse Law Firm attorney for assistance – we’ll be glad to do what we can to lift that load for you. After all, we know you’ve been hurt, and your new job is recovering from your injuries, so part of our job is covering the bases for you when you can’t do it all by yourself.

Because each insurance company has its own specific rules, forms, and processes that it deems necessary to document your lost wages claim, be sure to keep written records of all interactions you have with your insurance agent, claims adjuster, or any other representatives of the insurance company you’ve interacted with. Make copies of all paperwork and retain printouts in your personal files. Additionally, write down detailed notes of anything related to your claim that’s said on phone calls with the insurance company, including the names of individuals with whom you spoke, the times and dates of conversations, and the topics you discussed. Any and all information can prove essential down the line if you run into issues receiving your payments or need legal help to push an insurance company into compliance.

Furthermore, claiming reimbursement for lost wages is possible even if you are a permanent part-time employee, are working reduced hours, or are temporarily unemployed at the time you’re injured! That’s because your injuries could prevent you from seeking new employment or make it impossible for you to return to your former position following a mandatory layoff. So don’t think that just because you’re not currently on the job full time (or because you’re caught between jobs) that you can’t claim this valuable insurance benefit! After all, you’ve paid for it.

We Can Get Involved in the Fight – on Your Side

As experienced personal injury attorneys, we are intimately familiar with the ins and outs of the process to help you recover lost wages and be fairly compensated for all the many additional unexpected expenses you may face following a major car accident. We know Michigan’s No-Fault insurance law inside out – and can put our teams to work for you… but only if you take the necessary steps to get us on your side. Luckily, that’s an easy thing to do. It just requires one simple phone call to 855-MIKE-WINS (855-645-3946) or online contact and we’ll be ready to fight for you faster than you can say, “win!”

Content checked by Mike Morse, personal injury attorney with Mike Morse Injury Law Firm. Mike Morse is the founder of Mike Morse Law Firm, the largest personal injury law firm in Michigan. Since being founded in 1995, Mike Morse Law Firm has grown to 150 employees, served 25,000 clients, and collected more than $1 billion for victims of auto, truck and motorcycle accidents. The main office is in Southfield, MI but you can also find us in Detroit, Sterling Heights and many other locations.