What You Need To Know About Lost Wages Claims From Car Accidents

A car accident can affect your ability to work and earn a living, making coverage for lost wages an important part of auto insurance. This benefit has specific guidelines in Michigan, which is why you should be aware of how to handle a claim if you need to replace lost income. 

The actions you take, such as gathering proper documentation, submitting claims promptly, and following up with your insurance provider, affect whether you get full compensation for your losses. Learn the essentials about Michigan lost wages claims for car accidents. 

What Qualifies as Lost Wages?

“Lost wages” refers to money you would have earned had you not been injured in the accident. Whether you cannot work at all or can only do partial work, this type of claim replaces what you would have earned.

However, this insurance does not cover any fringe benefits or anticipated earning capacity. For example, if you were up for a promotion or raise but no longer qualify because of your injuries, these cannot make up part of your lost wages claim.

How Do You Claim Lost Wages After a Car Accident? 

Make a claim for lost wages by filing an application with the appropriate auto insurance company. This is likely your insurer if you have a policy. If you don’t own a vehicle or have car insurance, you may still have coverage from a family member in your household who owns an automobile. 

In MCL 500.3142(2), the state explains that you have to provide “reasonable proof” of lost income. This usually includes two months of pay stubs and your tax forms. Your employer will also supply wage verification. If you are self-employed, you’ll share your 1099 forms, bank statements and invoices to prove income. 

Additionally, a doctor must provide a work disability certificate. This form states the date of the accident and whether you have a total or partial disability. 

For a total disability, the doctor states the dates you are unable to work and when you can return. For a partial disability, the doctor outlines your work restrictions and the dates during which you will be under those restrictions. This form also spells out the accident-related injuries or diagnoses that prevent you from working. 

Once you provide reasonable proof, the insurance company has to compensate you within 30 days. If it does not, you may decide to sue the company for your overdue benefits, penalty interest and legal fees. 

How Do You Calculate Lost Wages, and How Much Can You Claim?

Lost wages benefits can cover up to 85% of your gross pay for a maximum of three years after the incident, according to Michigan law MCL 500.3107(1)(b). Since this compensation is tax-free, receiving 85% of your gross pay usually results in a similar take-home amount to your full income. 

The state caps the monthly benefit and adjusts that amount annually. It is important to understand this yearly adjustment so you know what amount you may receive. For the fiscal year of October 2024 through September 2025, that figure is $7,014. That would net a person a little over $84,000 a year and is what you can get if your earnings are $99,000 or more annually.

Those numbers will increase in October 2025 to account for the cost of living. Be aware that the calculation depends on the date of the accident, not the date that you request your benefits. Therefore, an accident that happens on September 30, 2025, is still subject to the $7,014 limit in the next year. 

Likewise, accidents that occurred between October 2023 and September 2024 fall under the maximum of $6,811. Even if you could have gotten $7,014 under the new calculations, you can still only receive the $6,811 maximum. 

Can You Get Benefits if You Were Unemployed? 

MCL 500.3107a states that you can get no-fault lost work benefits if you were temporarily unemployed or had reduced working hours at the time of the accident. In this case, you can get income equal to your last month of full-time employment. 

You can prove your unemployment is temporary if you demonstrate that you had been actively looking for work. Evidence can include copies of job applications or records of interactions with prospective employers and hiring managers. Your web history or attendance at job fairs can also serve as proof. 

Can You Still Get Benefits if You Are At Fault?

Yes, Michigan’s car insurance laws (MCL 500.3105) operate on the no-fault principle, meaning you can claim benefits from your own insurance company if you are responsible for the accident. If you are less than 50% liable, you may still be able to pursue additional compensation through a third-party injury claim if these are in excess of the no-fault benefits. If you are more than 50% liable, you can only receive your no-fault benefits. 

Must You Have an Injury To File a Claim for Lost Wages With Basic No-Fault Insurance?

Yes, you or your loved one must have experienced an “accidental bodily injury” that keeps you from working to claim lost wages benefits under MCL 500.3105(1). This is important to know if damaged property or emotional trauma affects your ability to work. 

For example, the accident may have affected the vehicle you use to make deliveries as a gig worker or self-employed business owner. The crash might also damage tools or equipment. However, lost wages benefits will not cover replacing these items. Instead, you need to use other types of insurance or sue the at-fault parties for compensation. 

Also, this coverage does not deal with noneconomic damages, such as pain and suffering or psychological trauma that could interfere with your ability to work. However, you might be able to get restitution through another type of coverage or a civil legal claim. 

Is It Possible To Get More Than the Maximum for No-Fault Lost Wages? 

MCL 500.3135(3)(c) permits you to sue for lost wages beyond the monthly maximum or past the three-year time limit by filing a suit against the at-fault driver. This case would be for the excess or future income losses that you suffered due to your accident-related injuries. 

If you win the case, you can get a trial award for the amount the court deems appropriate. However, the defendant may choose to settle with you out of court for a sum, which can be quicker and less costly than a trial. Be aware that these excess lost wage benefits are taxable, however.

Need Help Finding Out What You Should Get for Lost Wages in a Car Accident?

Michigan’s no-fault benefits protect residents by ensuring they can get fair assistance when an accident robs them of their ability to work. However, you may be able to get more than what your lost wages claim allows. 

Figure out what’s fair with help from the law team at Big Auto Accident Attorneys. Contact us today if you or a loved one has been in a car accident and needs to decide what to do next. 

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Content reviewed by managing attorney, Nic Edgson. Nic has been an Arizona-licensed lawyer for more than a decade and focuses his law practice on helping people seriously injured in car accidents and truck accidents. He has represented thousands of clients and recovered more than $50 Million Dollars fighting for their injuries and medical bills. Throughout his legal career, Nic has helped those injured through some of the most difficult times in their lives.