Today I’d like to answer a question I received from a reader this week. It has to do with the often confusing interplay of disability benefits and Michigan No Fault insurance benefits and how both work after a car accident. Many people (and many lawyers) get confused as to what insurance benefit kicks in first, and whether it’s possible to collect for both.
Hope this helps.
Q. If a person was eligible to receive short term disability benefits during their disability period, how would this affect their wage loss benefits?
A. It depends if you have coordinated wage loss on your auto insurance or if you have a reimbursement clause/subrogation clause or an auto exclusion in your disability policy. Read your short term disability policy and check the declaration page from your No Fault insurance policy to find out. Of course, No Fault insurance only applies if you were actually injured in an automobile accident. Otherwise, the only policy that will be applicable will be your short term disability benefits policy.
If you have coordinated wage loss on your auto No Fault policy, the auto insurer can set off (i.e. subtract) the amount from the disability insurer and will only pay you the difference.
If the disability policy excludes auto accidents entirely or if the disability policy provider want its money back, the auto insurer should be paying all of your wage loss, or you will eventually have to pay the disability plan back.
Also, if you have primary wage loss on your auto No Fault insurance policy, your auto insurer will pay full wage loss. But if you double dip on the short term disability policy, your auto insurer will likely have contract language that requires it to be paid back.
And remember, even though No Fault is required by Michigan law, your actual insurance policy is still considered a contract. The terms and requirements can vary significantly depending on the policy language. If you are confused, it may help to have an experienced insurance attorney review both policies.
I understand that reading the language of insurance policies and disability policies can be confusing. I read these for a living, and often wonder if they’re drafted by attorneys to be as confusing as possible.
The answer above should help the majority of people who are in this situation struggling with the terms of a short term disability policy and your No Fault auto contract. Feel free to call our law office with further questions, and we can give you free advice that can point you in the right direction.