What to Do When Your Michigan PIP Benefits Run Out (2026 Update)

Michigan’s 2019 no-fault reforms gave drivers the option to cap their personal injury protection (PIP) coverage at $50,000, $250,000, or $500,000 instead of the previously mandatory unlimited benefit. Half a decade later, a catastrophic injury can exhaust a capped policy in a matter of weeks. A published opinion from the Michigan Court of Appeals issued on March 2, 2026, Mary Free Bed Rehabilitation Hosp. v. Esurance Property & Casualty Insurance Co. and USAA (Docket No. 370846), confirms what injured Michiganders and their treating providers can do when the primary insurer’s coverage runs out: move down the statutory order of priority to a lower-priority insurer that carries higher or unlimited coverage. This article explains the priority framework under MCL 500.3114, the practical effect of the new ruling, and the concrete steps an injured Michigan claimant should take in 2026 when a coverage cliff is approaching.

How Michigan’s No-Fault Priority Order Works

The Michigan No-Fault Act sets a strict order of priority that determines which insurer pays PIP benefits when an accident occurs. The default rule under MCL 500.3114(1) requires an injured occupant of a motor vehicle to first claim PIP benefits from his or her own insurer, or the insurer of a spouse or resident relative, before looking to other insurers in the chain.

For motorcyclists, the rule is different and is governed by MCL 500.3114(5). When a motorcyclist is injured in an accident involving a motor vehicle, PIP benefits are claimed from motor-vehicle insurers in the following order:

1. The insurer of the owner or registrant of the motor vehicle involved in the accident;
2. The insurer of the operator of the motor vehicle involved;
3. The motor vehicle insurer of the operator of the motorcycle; and
4. The motor vehicle insurer of the owner or registrant of the motorcycle.

The order matters because the highest-priority insurer is normally the one expected to pay first. The question that has divided Michigan trial courts since the 2019 amendments is what happens when the highest-priority insurer’s policy limit is exhausted before the injured person’s medical needs are met.

How the 2019 Reforms Created the “Coverage Cliff”

Before July 2, 2020, every Michigan auto policy carried unlimited PIP medical benefits as a matter of statutory mandate. Public Act 21 of 2019 changed that. Drivers may now select among coverage tiers: $50,000 (Medicaid-enrolled drivers), $250,000, $500,000, unlimited, or opt out entirely if covered by qualifying health insurance and Medicare. The reforms were designed to lower premiums by giving drivers price flexibility, but they also created a structural problem: catastrophic injuries do not respect the cap a driver checked off at sign-up.

A traumatic brain injury, spinal cord injury, multi-trauma case, or extended in-patient rehabilitation can generate medical bills exceeding $1 million in the first year alone. Where the responsible policy is capped at $250,000, the cap may be reached within months, leaving a long-term care plan partially funded and the injured person — and the treating providers — looking for payment from somewhere else. Mary Free Bed answers part of that question.

The Mary Free Bed v. Esurance Decision — What Changed

The case arose from a November 12, 2020 collision in Muskegon. The plaintiff, an injured motorcyclist, struck a motor vehicle and sustained catastrophic injuries that required extensive in-patient and outpatient rehabilitation at Mary Free Bed Rehabilitation Hospital. The provider’s charges totaled $1,183,565.59. Esurance, the insurer of the motor vehicle’s owner and the highest-priority PIP insurer under MCL 500.3114(5)(a), paid $113,307.30 and then declined further payment after the policy’s $250,000 PIP medical-benefits limit was exhausted. USAA, lower in the priority chain but the carrier of an unlimited PIP policy, refused to step in. The hospital sued both.

The trial court initially ruled against the hospital. The Michigan Court of Appeals reversed in a published opinion that addressed what the panel described as a question of first impression under the post-reform statute: when a higher-priority insurer’s capped benefits are exhausted, may the injured person or treatment provider continue down the priority list to claim from a lower-priority insurer with greater coverage?

The Court answered yes. Reading MCL 500.3114(5) together with the broader no-fault statutory scheme, the panel held that nothing in the statute prevents an injured motorcyclist or provider from seeking payment from insurers listed later in the priority sequence once the higher-priority policy has run dry — particularly where the lower-priority insurer carries higher or unlimited benefits. The Court emphasized that this construction aligns with the Legislature’s 2019 coverage-choice amendments, avoids rendering related provisions surplusage, and is faithful to the No-Fault Act’s remedial purpose of ensuring adequate and prompt reimbursement for accident-related medical care.

As a result, Mary Free Bed was permitted to pursue the unpaid balance — more than $1 million — from USAA after Esurance’s $250,000 limit was exhausted.

Who Benefits From This Ruling

The decision is narrow on its facts but broad in practical effect. The principal beneficiaries include:

• Catastrophically injured motorcyclists. The Court’s reasoning was anchored in the motorcycle priority subsection, MCL 500.3114(5), where the holding has the most direct application. Motorcyclists are particularly exposed because the insurers in their priority chain are typically motor-vehicle insurers — frequently with capped policies under the post-reform tiers.
• Treating medical providers. Hospitals, rehabilitation facilities, attendant care providers, and case managers can pursue the unpaid balance from the next insurer in priority once the primary policy is exhausted, reducing the risk of unrecovered services delivered in good faith.
• Multi-vehicle households. A household covered by more than one policy may have access to a deeper coverage pool than the primary insurer alone. Identifying every policy in the priority chain has become more important after Mary Free Bed, not less.
• Injured occupants of motor vehicles. Although the holding is grounded in subsection (5), the Court’s reasoning — that exhaustion of a higher-priority policy does not foreclose a claim against the next insurer with available coverage — supplies a strong textual and remedial argument for analogous application under subsection (1) when a motor-vehicle occupant’s primary insurer hits its cap. Trial courts in Michigan are likely to follow the framework while the issue is litigated in occupant cases.

Practical Steps If Your PIP Coverage Is Running Out

If you or a family member is treating for a serious injury and the primary policy’s cap is in sight, take these steps now rather than after the cap is reached.

1. Identify Every Insurer in the Priority Chain Early

Map the full priority order on day one of the claim. For motor-vehicle occupants, that includes your own policy, the policies of any spouse or resident relative, and — where the default rule shifts — the policies of the vehicle’s owner and operator. For motorcyclists, the chain runs through motor-vehicle insurers under MCL 500.3114(5). The Michigan Assigned Claims Plan may also be relevant where no insurer is identifiable. A clear priority map is the foundation for any later move down the chain.

2. Document Exhaustion Formally

When a primary insurer reaches its cap, request a written limits-exhaustion confirmation. Informal cutoff communications are not enough. The next insurer in priority will usually require documented exhaustion before paying, and a clean paper trail is also necessary if litigation is required.

3. Coordinate Claims Across Providers and the Patient

Treating providers and the injured person have parallel rights to pursue PIP benefits, and they often pursue them independently. Coordination prevents duplicative billing, conflicting positions on coverage, and mistaken releases that could foreclose future claims.

4. Watch the One-Year-Back Rule

MCL 500.3145 imposes two limitations: a one-year statute of limitations from the date of the accident or the most recent loss, and a substantive bar on recovery for any portion of the loss incurred more than one year before suit is filed. The 2019 amendments added a tolling provision that runs from the date of a specific claim until the date of a formal denial. The Michigan Supreme Court confirmed in 2025 that the tolling provision applies prospectively only, to claims accruing on or after June 11, 2019. The interplay of the substantive one-year-back rule and the new tolling mechanism is unforgiving; missed dates frequently extinguish otherwise valid claims.

5. Do Not Sign Global Releases

Settlement offers from the primary insurer occasionally include broad release language that, if signed, can be argued to release the next insurer in priority as well. Read the release carefully and reserve all rights against insurers later in the priority sequence.

6. Consult Counsel Before Exhaustion

The right time to involve a Michigan no-fault attorney is before the primary policy hits its cap, not after. Coverage strategy across the priority chain is far easier to execute when the entire chain has been mapped, claims have been preserved, and the medical record is being built with later litigation in mind.

How This Ruling Interacts With Other Recent No-Fault Developments

The Mary Free Bed opinion does not stand alone. It joins a cluster of post-reform decisions that together are reshaping how PIP claims are handled in Michigan.

Andary v. USAA (Mich. 2023) holds that the 2019 reforms — including the medical fee schedule and the attendant care limits — do not apply retroactively to people injured under policies issued before June 11, 2019. Those pre-reform claimants retain unlimited PIP benefits and the prior reimbursement rules. Williamson v. AAA (Mich. 2024) holds that material misrepresentations made during discovery can bar PIP recovery in assigned-claim cases. The 2025 Michigan Supreme Court decision interpreting the new tolling provision under MCL 500.3145 confines the tolling benefit to post-reform claims. Davis v. Baldini (Mich. Ct. App. 2026) refines the constructive-ownership analysis under MCL 500.3101(2)(g)(i), which determines who is required to insure a vehicle and whose recovery rights are affected by uninsured-vehicle status.

Read together, these developments reward early, careful claim management and punish missed dates, sloppy disclosures, and a passive approach to coverage strategy.

Frequently Asked Questions

If my insurer’s policy hits its cap, can I automatically claim from another insurer?

Not automatically. The right exists, but it is conditional. The higher-priority policy must be formally exhausted, the next insurer in priority must be properly identified, and the claim must be presented within the limitations and one-year-back framework of MCL 500.3145. The mechanics matter; missteps are how claims are lost.

Does this ruling apply only to motorcyclists?

The holding is grounded in the motorcycle priority subsection, MCL 500.3114(5). The reasoning, however, is statutory-construction reasoning that has clear analogues in subsection (1) (motor-vehicle occupants). Expect Michigan trial courts to apply the same framework in occupant cases until appellate guidance clarifies the question one way or the other.

How long do I have to file?

For PIP claims, MCL 500.3145 is the governing statute, with a one-year period from the most recent loss and a substantive one-year-back limit on recoverable benefits. For tort claims arising from the same accident — for example, a third-party negligence claim against an at-fault driver — the general personal injury statute of limitations under MCL 600.5805 typically allows three years from the date of injury. Different rules apply to claims against governmental defendants, claims involving minors, and medical malpractice.

Should I hire counsel?

Cases in which the primary policy is approaching exhaustion are the cases in which experienced no-fault counsel adds the most value. Mapping the priority chain, preserving claims against multiple insurers, navigating exhaustion documentation, and coordinating with treating providers are not tasks that benefit from improvisation. A free, confidential consultation costs nothing and frequently changes the trajectory of a case.

Bottom Line

The 2019 reforms gave Michigan drivers a choice. Mary Free Bed v. Esurance and USAA gives injured Michiganders and their providers a path forward when that choice turns out to be inadequate for the injuries actually suffered. If your no-fault PIP benefits are running out — or have already run out — the next insurer in your priority chain may still be on the hook. The path is statutory, the timeline is tight, and the documentation is everything.

For more on related issues, see our Michigan personal injury practice page, our overview of Michigan no-fault insurance, and the broader civil litigation page. Additional Knowledge Base articles on Michigan no-fault topics are catalogued at our Knowledge Base index.