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Did you know that self-employed individuals face unique challenges when seeking compensation for lost wages after car accidents? Michigan alone reported over 60,000 injuries from car accidents in 2020. Many self-employed victims struggled not just with recovery but also with proving their income losses.

The good news for Michigan residents: the state’s No-Fault law allows victims to recover 85% of lost wages tax-free for up to three years after a crash. But proving your losses requires careful documentation. Here’s how to do it.

Understand If You Qualify as Self-Employed

Before filing, you need to confirm you’re self-employed. The IRS and Department of Labor define self-employed people as those who:

• Work independently without employer control
• Set their own schedules and work locations
• Use personal equipment
• Receive 1099 forms instead of W-2s
• Serve multiple clients
  

Common examples include freelancers, contractors, small business owners, consultants, tradespeople, rideshare drivers, and real estate agents.

Your classification affects your compensation. Self-employed individuals can claim lost business opportunities, goodwill damage with clients, and must meet different documentation standards than traditional employees.

Gather the Right Documents to Prove Lost Wages

Strong documentation is key to proving your income losses:

Tax Returns and 1099s
These are the foundation of your claim. Gather the last 2–3 years of:

• Federal tax returns
• Schedule C forms (Profit/Loss from business)
• 1099-NEC and 1099-K forms

Client Invoices and Canceled Contracts
Collect:

• Invoices showing your regular workload
• Client communications about canceled projects
• Lost business opportunity records

Bank Statements and Profit/Loss Reports
Provide:

• Business bank statements showing regular deposits
• Profit and loss statements
• Expense reports and accounting records

Organize all documents chronologically and highlight pre-accident vs. post-accident income trends.

File Your Lost Wages Claim Step-by-Step

Correct filing helps avoid delays. Here’s the process:

1. Notify your insurance company immediately after the accident.
2. Complete application forms carefully and submit them within your policy’s deadline (often 30–90 days).
3. Include a doctor’s disability certificate showing your inability to work.
4. Attach all supporting documents like tax returns, invoices, and bank statements.

Stay in contact with your insurance adjuster to confirm receipt of your paperwork and address any additional requests quickly. Keep records of all communications.

Filing a No-Fault Application (if applicable)

States like Michigan require you to file for No-Fault benefits. Michigan residents can recover up to 85% of lost income (up to $7,014 monthly as of October 2024).

You’ll need:

• A formal No-Fault application (e.g., NYS Form NF-2)
• Proof of self-employment income
• Medical verification
• A detailed loss of income letter explaining:
  • Your self-employment role
  • How injuries affected your work
  • Calculations of income loss backed by documents

Due to scrutiny, some people may need a lawyer if claims get delayed or denied.

Know What to Expect After Filing

After you submit your claim, timelines can vary:

• PIP Claims: Typically 2–6 weeks once paperwork is complete.
• Third-Party Claims: 1–3 months if the other driver was at fault.
• Serious Cases: Can extend to 6 months or more, especially with litigation.

States like New York require insurance companies to pay within 30 days of receiving full documentation.

Who Pays for Lost Wages?

Depending on your location and insurance:

• Personal Injury Protection (PIP) covers 60–80% of lost income.
• At-fault driver’s liability insurance covers losses after fault is proven.
• Uninsured/Underinsured coverage steps in if the other driver lacks insurance.
• Short-term disability insurance may also apply.

If Your Claim Is Delayed or Denied

If your claim stalls:

• Request a written explanation from the insurance company.
• Review and resubmit any missing or corrected documents.
• Consider arbitration if available in your state.
• Consult a lawyer experienced in self-employed wage loss claims.
  

An experienced attorney can negotiate with insurers and help you organize evidence properly to speed up the claim.

Conclusion

Self-employed individuals must be especially prepared when claiming lost wages after a car accident. Clear documentation – including tax returns, invoices, contracts, and financial statements – is crucial.

Note that your lost wages could be covered by different insurance sources based on your location and situation. Personal Injury protection, liability insurance from the at-fault driver, or your own underinsured motorist coverage are vital parts of your financial recovery. You have options if you face delays or denials. You can submit more documentation or talk to an experienced attorney who knows self-employed claims.

Understanding who pays, filing your documents correctly, and knowing your legal options can help you recover lost wages effectively. Though the process may seem overwhelming, proper preparation greatly increases your chances of success.