In Michigan, short term disability insurance benefits after a car accident may affect your No-Fault wage loss benefits. If you have a coordinated auto policy, then wage loss will kick in only after your short term benefits have been exhausted. If you have an uncoordinated policy, then No-Fault may be the primary payor.
These issues arise in the all too common situation where a car accident victim’s injuries disable him or her from working and earning an income, and the victim has access to both: (1) short term disability benefits through a private policy that the victim purchased, and (2) No-Fault wage loss benefits that the victim may recover through the No-Fault insurance policy that the victim maintains on his or her own car or truck.
Below I will discuss the often confusing interplay between short term disability insurance benefits and Michigan No-Fault wage loss benefits after a car accident.
What are short term disability benefits after a car accident?
In Michigan, short term disability benefits after a car accident provide financial support by paying you a portion of the income you lose when your crash-related injuries temporarily disable you from returning to work. These benefits are provided through a private policy that you must purchase.
What are No-Fault wage loss benefits?
When auto accident-related injuries prevent you from working, No-Fault wage loss benefits help pay for 85% of your pre-crash wages (subject to a monthly maximum) during the first 3 years after your accident. These benefits are provided through the No-Fault auto insurance policy that you must maintain on your car in Michigan.
What is a coordinated No-Fault auto insurance policy?
A coordinated car insurance policy under Michigan law means that in return for being permitted to pay a lower insurance premium, you have agreed to coordinate your No-Fault coverage with other health and accident coverage so that your health or disability insurer pays benefits before your auto insurer does.
Coordinated coverage is permitted under Michigan’s No-Fault law, MCL 500.3109a(1): “An insurer that provides personal protection insurance benefits under this chapter may offer deductibles and exclusions reasonably related to other health and accident coverage on the insured.”
Coordinated No-Fault auto insurance
If you have a coordinated Michigan No-Fault auto insurance policy, your auto insurer does not pay any wage loss benefits until all of your benefits under your short term disability policy have been exhausted after a car accident.
In practice, that means that because you have a coordinated car insurance policy your auto insurer will deduct from the amount it owes you in No-Fault wage loss benefits the amount that you were paid in short term disability benefits.
Although Michigan courts have not specifically addressed whether “short term disability” benefits can be coordinated under MCL 500.3109a(1), the Michigan Court of Appeals in Rettig v Hastings Mut Ins Co, 196 Mich App 329; 492 NW2d 526 (1992) held that long term disability benefits paid by an insurance company constituted “other health and accident coverage” for purposes of coordination under the No-Fault law. Similarly, in Jarrad v. Integon National Insurance Company, 472 Mich. 207, 696 N.W.2d 621 (2005), the Michigan Supreme Court held that long term disability benefits provided by an employer’s self-funded plan also qualified as “other health and accident coverage” for coordination purposes.
No-Fault wage loss is primary
If you have an uncoordinated auto insurance policy, i.e., you did not get a lower premium in return for letting your auto insurance be the secondary payor for benefits, then your insurer will be the first payor on your wage loss benefits when your crash-related injuries prevent you from returning to work.
Can you collect both short term disability and No-Fault wage loss of benefits after a car accident?
Whether you can collect both short term disability benefits and Michigan No-Fault wage loss benefits after a car accident will depend on the terms of both insurance policies. Some auto and disability insurers include a provision in their policies that require an insured to reimburse the insurer for the benefits paid if the insured also recovered benefits from another insurer.
What happens if you claim No-Fault benefits through the Michigan Assigned Claims Plan?
If you are claiming No-Fault wage loss benefits through an insurance company assigned to you by the Michigan Assigned Claims Plan, then that insurer can reduce what it pays to you in No-Fault wage loss by the amount that you received in short term disability benefits.
Specifically, Michigan law states that a car accident victim’s No-Fault benefits (including wage loss) that are “payable through the assigned claims plan must be reduced to the extent that benefits covering the same loss are available from other sources, regardless of the nature or number of benefit sources available and regardless of the nature or form of the benefits.” (MCL 500.3172(5))
Have questions about short term disability after a car accident? Call Michigan Auto Law now!
If you wered injured in car accident and are wondering if you can collect both short term disability and No-Fault wage loss benefits, call Michigan Auto Law now (855) 960-3320 for a free consultation with an experienced car accident attorney. There is no cost or obligation. You can also visit our contact page or use the chat feature on our website.
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