Lost Wages After a Michigan Car Accident: Who Pays

The medical bills get all the attention. The paycheck that stops coming is what keeps people up at night.

After a Michigan car crash, many people assume they have to wait for the at-fault driver's insurance to cover lost income, or that they're simply out of luck until they can work again. Neither is usually true. Michigan's no-fault system includes a benefit for lost wages, and people leave it on the table constantly. If you're off work after a crash, our personal injury practice can help.

Your own insurer pays work loss, regardless of fault

Michigan's no-fault law gives injured people work loss benefits as part of personal injury protection, or PIP. Under MCL 500.3107, work loss covers income you would have earned from work you would have performed if you hadn't been hurt.

Like PIP medical benefits, work loss usually comes from your own auto insurer, or from whichever policy is first in line under the statute's priority rules. You don't have to prove the other driver was at fault. You do have to prove you were injured in the crash and couldn't work because of it.

We cover the medical side of PIP in Who Pays Your Medical Bills After a Michigan Car Accident? This post is about the paycheck.

The three limits that shape the benefit

Work loss isn't a full replacement for your income. The statute builds in three important limits.

1. The three-year window. Work loss covers income lost during the first three years after the accident. After that, PIP wage benefits stop, even if you still can't work.

2. The 15 percent reduction. Benefits are generally reduced by 15 percent to reflect the fact that they're treated differently for income tax purposes. The statute allows a smaller reduction if you can show the tax advantage is actually worth less to you.

3. The monthly cap. There's a maximum monthly benefit, and it's adjusted each year. Higher earners hit it quickly. For someone with a strong income, the cap, not the 85 percent, is often what decides the check.

Replacement services are a separate benefit

If your injuries keep you from doing the ordinary things you used to do for your household, like cleaning, yard work, snow removal, laundry or driving the kids, no-fault also provides replacement services of up to $20 a day for up to three years. Someone else has to actually perform those services, and they need to be documented.

People who claim work loss often forget this one. It's small per day and adds up fast.

What can reduce or complicate the benefit

A few situations change the math.

Workers' compensation. If you were driving for work when the crash happened, workers' comp may pay first, and no-fault benefits are generally reduced by government benefits like workers' comp that cover the same loss.

Other coverage on your policy. Some policies are written to coordinate with other coverage you have, which can change who pays first. Your declarations page and policy language matter here.

Returning to work. Work loss follows what you actually lost. Going back part time, or at a different job with lower pay, usually means the benefit adjusts to the difference.

Gaps and paperwork. Insurers generally want a doctor's statement that you're disabled from work, plus proof of what you earned. Missing disability slips and inconsistent treatment give an insurer reasons to cut benefits off. We explain the treatment side in Should You See a Doctor After a Crash If You Feel Fine?

Self-employed, gig and between jobs

Work loss claims are easiest for someone with a W-2 job and regular pay stubs. They're harder, but not impossible, for everyone else.

• Self-employed people usually prove income with tax returns, business records, contracts and bank statements. The complication is separating what the business earned from what you earned through your own work, and showing what you would have earned without the injury.
• Gig and rideshare drivers face similar proof problems, plus questions about which policy applies. We cover the rideshare coverage puzzle in Hit by an Uber or Lyft Driver in Michigan?
• People between jobs aren't automatically excluded. The statute has a specific provision for people who were temporarily unemployed at the time of the crash, and evidence of a job you were about to start can matter.

In all of these situations, the claim is only as strong as the records behind it. Start gathering them early.

When PIP isn't enough: excess wage loss

If your income loss is bigger than what PIP pays, whether because of the monthly cap or because you're still unable to work after three years, Michigan law allows a claim against the at-fault driver for excess economic loss, including work loss beyond the PIP limits.

That's a separate claim from pain and suffering, which requires meeting Michigan's injury threshold. We cover that threshold in Michigan's Serious Impairment Threshold. For high earners and people with long-term injuries, the excess wage claim can be one of the most important parts of the case.

The deadlines are strict

No-fault benefits have short and unforgiving time limits, including a one-year rule that restricts how far back you can recover losses once you file suit. A work loss claim that sits unpaid while you wait and hope can quietly shrink. We break down the timelines in How Long Do You Have to File an Injury Claim in Michigan?

What to gather this week

• Pay stubs for the months before the crash, and W-2s or tax returns for the past year or two
• A wage verification from your employer showing your pay rate, typical hours and time missed
• Disability slips from your doctor for every period you couldn't work
• Records of bonuses, overtime and commissions, which can be part of what you lost
• A simple log of household tasks someone else is doing for you, with dates and who did them
• Your auto policy's declarations page

And be careful with recorded statements before you understand your claim. Our post on recorded statements after a Michigan crash explains why.

When to call ELN

Call us if you're missing work after a Michigan crash, if the insurer is paying less than you expected, or if the checks stopped and nobody can tell you why. We'll look at what you earned, what the policy and statute provide, what's been paid, and whether there's an excess wage claim against the at-fault driver.

Out of work after a crash? Schedule a consultation or visit our personal injury practice.

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