Replacement Services

Replacement Services (House Hold Help)

MCL. 500. 3107(1) (c) states that “expenses not exceeding $20 per day, reasonably incurred in obtaining ordinary and necessary services in lieu of those that, if he or she had not been injured, an injured person would have performed during the first 3 years after the date of the accident, not for income but for the benefit of himself or herself or of his or her dependent.”

The no-fault statute provides that a person who is injured in an automobile accident may recover the sum of $20 per day to pay a person to help them perform services that they normally would perform themselves for their own benefit or that of their family. This benefit, as well as the other 3 major no-fault benefits, is paid regardless of who is at fault in the accident.

Some of the hallmarks to note regarding household services are as follows:

  • Replacement service sometimes called household services benefits are payable for only 3 years from the date of accident;
  • Replacement services do not include services that another person, such as a spouse or family member would have normally done themselves for the benefit of the injured person;
  • The benefits received for replacement services are paid to the injured person to compensate them for any payments they made or promised to make to the service provider. The service provider, in turn, may be responsible for paying taxes on this money as ordinary income. Questions regarding the taxability of these benefits to the service provider should be taken up with tax specialists;
  • Anyone can be a service provider including family members, wives, children, cousins or even friends of the family. The law does not require a service provider to have any special schooling, degree or knowledge except that necessary to perform the service;
  • A service provider who works all day to perform every service required by the injured person is only entitled to $20 per day no matter what tasks they performed;
  • The insurance company is not required to pay the $20 today for services rendered to an injured person unless there was a promise to pay on the part of the injured person and a expectation of payment by the service provider.
  • Examples of services that are compensable are to things like doing the dishes, home maintenance, painting, repair work, mowing the lawn, shoveling the snow, as well as childcare. Other examples are laundry, vacuuming, general housekeeping chores and cooking;