Michigan’s No-Fault Act: Understanding MCL 500.3107

The Michigan no-fault law provides a range of benefits for people injured in motor vehicle accidents. These benefits derive from MCL 500.3107, which says auto insurance carriers must pay:

• Allowable expenses consisting of reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person’s (1) care, (2) recovery, or (3) rehabilitation.
• Wage Loss Benefits - The car insurance carrier must pay 85% of all gross wages for loss of income an injured person would have earned if not for the accident. These payments must continue for up to 3 years from the date of the accident so long as the injured person remains disabled from work due to the accident.
• Replacement Services – Services performed by other individuals such as household chores. Replacement services are capped at $20 per day and are available up to 3 years from the date of the accident.

QUICK SUMMARY: MCL 500.3107

• Allowable Expenses: Medical care, recovery, and rehabilitation.
• Wage Loss: 85% of gross income for up to 3 years.
• Replacement Services: $20/day for household help (3 years).
• The Law: These benefits are guaranteed under MCL 500.3107 regardless of fault.

What are Allowable Expenses?

Michigan courts generally recognize the following items as allowable expenses under MCL 500.3107.

• Medical Expenses – hospital bills, doctor’s bills, surgical bills, out-of-pocket costs, and prescription drugs.
• Rehabilitation Expenses – includes physical therapy, occupational therapy, speech therapy, or any type of activity to help an injured person rehabilitate following a motor vehicle accident.
• Attendant Care – Personal care required by an injured person, such as assisting an injured person in the bathroom, getting dressed, changing bandages, hygiene, or other similar tasks. Family members and friends can receive payment for this work up to certain limitations. Attendant care is paid at an hourly rate, just like an attending nurse is paid in a medical setting.
• Durable Medical Equipment – items such as commodes, canes, wheelchairs and scooters, patient lifts, hospital beds, walkers, oxygen equipment, and other medical supplies.
• Transportation – payment to and from medical appointments or for transportation related to a medical purpose. Transportation can include payment for gas money, medical mileage, and private transportation.
• Home Modifications – a structural or functional alteration to a living space designed to improve safety, accessibility, and independence for individuals with physical, cognitive, or functional limitations from a motor vehicle accident.
• Case Management - Services of an independent nurse case manager to coordinate complex medical care.

What Are Not Allowable Expenses?

• Allowable expenses are not charges for a hospital room in excess of a reasonable and customary charge for semi-private accommodations. There is an exception for an injured person requiring special or intensive care. MCL 500.3107(1)(a)(i).
• Funeral expenses are also not allowable expenses. An insurance carrier must pay no less than $1,750 or is obligated to pay more than $5,000 in funeral expenses. MCL 500.3107(1)(a)(ii).

How Much in Allowable Expenses Am I Allowed?

It depends on the amount of personal injury protection coverage purchased by the vehicle's owner and other factors. Before 2020, Michigan only allowed “unlimited PIP” policies. This meant there was no dollar limit on the medical expenses an insurance carrier was responsible for paying after a crash.

To help rein in costs, in 2020 Michigan allowed choices in PIP coverage, or coverage for allowable expenses. Michigan law provides the following choices in PIP coverage:

• Unlimited allowable expenses
• $500,000
• $250,000
• $50,000 – eligible for Medicaid beneficiaries who meet certain requirements
• No allowable expenses – also known as “PIP opt-out.” This is available to Medicare beneficiaries and individuals who meet the requirements for private health insurance coverage.

Wage Loss Benefits Explained

Wage loss benefits for up to 3 years from the date of the accident. It is limited to 85% of gross wages. The amount is calculated from the work an injured person would have performed if (He or She) not been injured in the accident. MCL 500.3107(1)(b).

Are Wage Loss Benefits Taxable?

No. Wage loss benefits from personal injury protection insurance are not taxable income. However, the benefits must be reduced by 15% unless the claimant can prove they pay a lower income tax rate.

How Are Wage Loss Benefits Calculated for Self-Employed Individuals?

Following an auto accident, self-employed individuals can also file wage-loss claims. However, because many self-employed individuals write off expenses and benefit from this tax advantage, they cannot collect 85% of gross revenue. Instead, expenses must be deducted, and they take 85% of the net profit.

Self-employed business owners can also get 85% of the personal income they paid to themselves at the time they were injured.

Replacement Services (Household Help)

Household replacement services are things the injured person would have performed for himself/herself or their dependents had it not been for his/her injury in a car, truck, or motorcycle accident. They include, but are not limited to, preparing meals, grocery shopping, house cleaning, yard work, lawn mowing, and running errands.

A person may obtain up to $20.00 per day in household replacement services. This benefit is available for three years, beginning on the date of the accident. MCL 500.3107(1)(c).

Which Car Insurance Carrier Pays These Benefits?

There are certain rules that explain which insurance company is responsible for paying an injured person’s PIP benefits. This is called the order-of-priority. The order is the following:

1. The injured person’s own auto insurance carrier.
2. The auto insurance carrier of a resident relative of the injured person.
3. The Michigan Assigned Claims Plan (MACP).

The Michigan Assigned Claims Plan is the insurer of last resort. It is administered by the Michigan Automobile Insurance Placement Facility (MAIPF) and assigns a car insurance carrier to pay the injured person’s claim. The maximum amount an MACP insurer must pay in personal injury protection benefits is $250,000.

Frequently Asked Questions

If I’m At Fault for Causing the Crash, Can I Get PIP Benefits?

Yes, under Michigan's no-fault law, a person is entitled to all the benefits provided by MCL 500.3107, regardless of fault.

Can Pedestrians or Bicyclists Receive Michigan No-Fault Benefits?

Yes, so long as a motor vehicle is involved in causing the injuries, a pedestrian or a person on a bike can obtain the allowable benefits, wage-loss benefits, and replacement services under MCL 500.3107. The phrase “involved in” does not require physical contact with a car or truck. It is important to contact a Michigan car accident lawyer to find out your rights.

MCL 500.3107 is the Cornerstone of the Michigan No-Fault Law

Benefits provided under MCL 500.3107 are considered the cornerstone of Michigan's no-fault law because they establish the essential Personal Injury Protection (PIP) benefits that ensure accident victims receive immediate care and financial support regardless of who caused the accident.

Call 1-800-LEE-FREE (1-800-533-3733) today for a free consultation. We will make sure the insurance company pays what they owe you.