In this guide we’re going to cover all of your questions, including over Michigan wage loss reimbursement limits, how to calculate self-employed benefits, what to do if you can’t work for more than three years, and more!
What We Will Cover in This Wage Loss Guide
Is there a limit to how much wage loss reimbursement I can receive from my Michigan no-fault insurance carrier?
Yes. There are two limits on how much you can receive from your own insurance carrier after a motor vehicle collision. This is true whether you caused the collision, or someone else did. That’s why they call it “no-fault.” Remember: if the other driver WAS at fault, you may be eligible to collect additional wage benefits from their insurance, if your wage loss will exceed either or both of the limitations below:
The amount you might receive is calculated on the basis of 85% of the gross pay (before taxes are taken out) that you can prove you would have made if you had not been injured. So applicants who make more than about $75,000/year will get the maximum, but no more, from their own car insurance for wage loss each month that they can prove they are off work due to the accident.
Remember: If you make more than the limit, you are terribly injured and will be off work for more than three years, or both, you can sue the other driver to try to collect the balance IF the other driver was at fault.
As with any legal issue, this is only a summary, and there are many details about your situation that could go into determining how much wage loss you will receive, and for how long, from your insurance company after an automobile accident.
The Michigan No-Fault Law states that an insured person will receive 85% of his or her gross income for up to three years from the date of the accident, provided that the insurance company agrees that the person is off work due to the accident. It is easy to figure out what 85% of a person’s gross pay is if that person takes home a regular paycheck. But how do the calculations work for people who are self-employed, or who are independent contractors who don’t draw a check from an employer?
The basic rule for self-employed people is that net wage loss is calculated by deducting business expenses from gross income. The amount that is leftover is the basis for making the 85% payment. Independent contractors, on the other hand, can apply for work loss benefits based upon their record of earnings for a reasonable time before the accident. They can also present evidence of lost opportunities for work during the time they will be disabled.
A common dilemma that many self-employed people face in no-fault wage loss situations is that the amount of “income” they receive is not significant. It is to the advantage of a small business owner to “expense” as many costs as possible to the business so that the taxable consequences to the business are favorable, and the personal tax consequences to the owner are minimized. However, the benefit of minimizing personal income for tax purposes becomes a negative when it is time to base no-fault reimbursement on your claimed wages.
Many of these cases come down to a battle between the accountant for the insurance company and the accountant a lawyer hires to examine the books of his or her client. It is important that you have detailed and clear records of your business bookkeeping and accounting if you want to argue with your car insurance company about how much wage loss reimbursement you should receive if you are self-employed or are an independent contractor.
The 15% is taken out because you would normally be paying taxes on your wages. The amount you get from the no-fault carrier is not taxable to you. If you can prove that you were in a tax bracket less than 15%, you would get your full wage minus the percentage tax bracket you were in.
Remember, your insurance company has the right to decide on its own whether you are disabled because of the accident. The insurance company may cut you off from wages and other benefits, such as medical coverage, even if your doctor believes you are still disabled. Many lawsuits arise between injured people and their insurance companies over whether a claimant is truly entitled to continue insurance payments.
You should also keep in mind that there is a three year time limit on no-fault wage loss claims, and there is a monthly maximum you can receive, no matter how much you earn. Attorneys who work on auto accident cases will be able to tell you more about how these benefits and limitations work.
The Michigan No-Fault Law says that your own car insurance is first in line to pay your wage loss if you are hurt in a crash. This is true no matter who caused the accident. If you didn’t have car insurance yourself, there is a path set out in the law that you follow to decide who is going to pay these benefits.
No matter whose policy covers your wage loss claim, there are time limits regarding the maximum time in which you can receive wage loss coverage. There is also a limit as to how much per month you can receive.
We have cases where the injured person makes more than the monthly maximum that no-fault will pay, and whose injuries are so severe that it appears that the individual may never return to any job, or at least not to a job that pays as much as the one he or she had at the time of the crash. What can be done to seek compensation for those financial losses?
It is possible to sue the other driver for “excess economic loss.” This means financial losses above the monthly maximum (right now about $5400/month), beyond the three year benefit limit, or both. Whether the other driver is going to have enough coverage to pay that much is something a lawyer can help you figure out.
For the first three years after the accident, if you can prove 1) that you are disabled from work and 2) that you would be making more that the monthly maximum for as long as you are off work, your case against the other driver is relatively simple. Prove those two points and you win.
However, if your claim is that you are going to lose wages after the three-year wage loss legal time limit expires, things get a little more complicated. You have to be able to prove that you will (not might) be disabled for more than three years and that you will (not might) have earned a specific amount at that time if you had not been disabled by the accident.
The courts have consistently said that your excess wage loss claim is based on loss of income, not lost potential earnings. It’s the difference between what is going to happen, and what might happen.
If you are a higher-income earner who is injured in a motor vehicle accident in Michigan, don’t overlook your claim for excess wage loss reimbursement.
Can I collect wage loss from my car insurance if I had been fired before the accident?
This is a question that came up recently from a caller. The answer is “maybe.” Let’s say you were let go from your job a few weeks before you were hurt in a car crash. Your doctor says the injuries are severe enough that you would not be able to work for a time, even if you still had a job. If you can show that you had been making a good-faith effort to find a new job after you were fired, but before the accident (for example, you have a record of the places where you had applied), you can still apply for wage loss benefits on your insurance policy for the time you will be disabled.
On the other hand, if you can’t prove that you had been making a legitimate effort to find a new job between the time you were fired and the date of the accident, don’t expect your car insurance adjuster to pay you for work loss benefits.
As with most legal issues, there are details and other concerns that go into answering this question, so you should check with a lawyer who knows auto law in Michigan if you find yourself in this situation.
Yes, assuming that the student could prove that he or she would have been able to return to employment if not for being injured in the accident.
For example, let’s say Kim is a college student and a Michigan resident who qualifies for no-fault benefits under her parents’ policy. Kim is injured in a car accident while away at college. The accident happens in the spring, a few weeks before the semester is over, and is serious enough that Kim will be on crutches for most of the summer.
Let’s also say that last summer, Kim had a full-time job at a hardware store and that the owner of the store agrees that she would have hired Kim again this summer if Kim hadn’t been hurt.
With that kind of proof, Kim should qualify for wage loss reimbursement through her parents’ policy, based upon the rate of pay she received last year. Of course, if she recovers well enough during this summer to go to work before the beginning of the school year, she will do so, and the wage loss benefits will end.
The same principle applies to any workers who were temporarily unemployed at the time of the accident, but who have proof that they would have returned to work if the accident had not caused them to be disabled during some or all of the time that they would have worked.
That wraps up our guide on what to do if you have lost your wages in Michigan. For additional information on wage loss benefits or to speak with an experienced attorney, contact the lawyers at Matz Injury Law today by calling 1-866-22Not33 or by using our contact page.
Steven J. Matz is a founding shareholder of Matz Injury Law. The firm’s concentration is on personal injury litigation, with an emphasis on traumatic brain injury.
The maximum contingency fee permitted by law is actually 331/3%. Michigan court rules require that the attorney fee be computed on the net sum recovered after deducting all disbursements properly chargeable to the enforcement of the claim.
We can charge 22% while virtually all other injury attorneys charge 331/3% because we are very, very, good at obtaining results for our clients.
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