Michigan's Crash Paycheck Tops Out at $7,455 a Month. Earn Over $105,000 and the Rest Is on You.

If you drive in Michigan and earn more than about $105,000 a year, your car insurance won’t replace your paycheck after a bad crash. It’ll replace part of it. The rest comes out of your savings.

Here’s why, and here’s the number to know.

Michigan’s no-fault system pays your lost wages when crash injuries keep you off the job. It pays 85% of your gross pay, for up to three years. Michigan Auto Law explains the haircut simply: the benefit isn’t taxed, so it pays 85%.

Then there’s a ceiling. Every October 1, the state’s Department of Insurance and Financial Services adjusts it. Bulletin 2026-20-INS set it at $7,455 per 30-day period for October 1, 2026 through September 30, 2027. Last year it was $7,201. Five years ago it was $6,065.

That’s a 23% raise in five years. Sounds generous until you do the division.

$7,455 divided by 0.85 is about $8,771 a month in gross pay. Call it $105,250 a year. Earn less and the cap never touches you. Earn more and every dollar above it is yours to cover.

Run it at $150,000. That’s $12,500 a month. 85% of it is $10,625. The policy pays $7,455. You’re $3,170 short every month. Stay out of work the full three years and that’s about $114,000 your auto policy never pays.

Michigan Auto Law says you can sue the at-fault driver for wages above the cap. Fine, if someone else caused the crash and has coverage worth chasing. If you slid off I-96 on your own, there’s nobody to sue.

Now the box you may have checked without reading.

Maybe you bought a “coordinated” policy to shave the premium. Coordination means your other health and accident coverage pays first. For wages, Michigan Auto Law says your auto insurer pays nothing until your short-term disability benefits are used up. Choose uncoordinated, and the auto insurer pays wages first.

Here’s the catch. Your short-term disability is a benefit you’d otherwise have for any illness or injury. A coordinated policy spends it on the crash first. And Michigan Auto Law warns that some auto and disability insurers require you to pay back benefits if you also collected from another insurer.

Coordination is your call. Make it on purpose, not because it was the cheaper line on the quote.

Pull your declarations page this week. Find out whether your PIP wage loss is coordinated or uncoordinated. If you can’t tell, call your agent and ask that exact question.

Then do the math for your own pay. Multiply your monthly gross by 0.85. If it comes out over $7,455, the gap is real.

If it is, open your benefits portal at work. Check whether your long-term disability plan covers injuries that happen off the job, and whether it reduces payments by what no-fault pays. If you have no long-term disability coverage at all, price an individual policy before you need one.

Want to see what your premium buys? Run our insurance estimator and compare against the auto insurance hub.

The cap rises every October. Your paycheck may be rising faster.

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