Michigan Motorcycle PIP Priority After Mary Free Bed (2026)

By Attorney Manny Chahal · Updated May 2026 · Reading time: ~9 min

When a Michigan motorcyclist is hit by a car and the at-fault driver carries only the new minimum $250,000 PIP cap, what happens after that money runs out? In Mary Free Bed Rehabilitation Hospital v Esurance Property & Casualty Insurance Co, decided March 2, 2026, the Michigan Court of Appeals held the rider does not lose access to coverage — the claim simply moves down the statutory priority ladder under MCL 500.3114(5).

Why This Decision Matters

Since the 2019 No-Fault reform took effect on July 1, 2020, Michigan drivers have been allowed to pick PIP medical coverage limits as low as $50,000 (Medicaid-eligible), $250,000, $500,000, or unlimited. Most policies sold today are capped. That created a structural problem for motorcyclists, who under MCL 500.3103 cannot purchase PIP on a motorcycle policy itself and must instead borrow PIP coverage from a motor vehicle policy elsewhere in the priority chain. The first policy in line is often the at-fault driver’s — and increasingly, that driver carries a low cap.

Insurers had argued that once the highest-priority insurer paid out its capped limit, the motorcyclist was simply out of luck. The Court of Appeals rejected that view in Mary Free Bed. Priority, the Court explained, fixes the order in which insurers must pay; it does not extinguish coverage that is otherwise available further down the chain. For a catastrophically injured rider whose medical bills can run into seven figures, the difference is the difference between bankruptcy and full medical recovery.

The Facts: $1.18 Million in Medical Bills, $250,000 Cap

The underlying accident occurred on November 12, 2020, in Muskegon. Aaron Slade was riding a motorcycle when he collided with a car driven by Haley Tanner. Slade sustained catastrophic injuries, including a severe traumatic brain injury, and was admitted to Mary Free Bed Rehabilitation Hospital for extensive inpatient care.

Tanner’s vehicle was insured through Esurance, with PIP medical-benefits coverage capped at $250,000. Slade’s father carried a USAA policy on two household motor vehicles with unlimited PIP coverage. Mary Free Bed billed $1,183,565.59 for treatment. Esurance paid $113,307.30 and then refused further payment, asserting that its cap, taken together with the insurer’s reasonable utilization review, exhausted the policy. The hospital sued, demanding USAA pick up the rest as the next-in-priority unlimited insurer.

The trial court ruled for USAA. The Court of Appeals reversed.

How MCL 500.3114(5) Actually Works

Section 3114(5) governs which insurer pays PIP when a motorcyclist is injured in an accident that “shows evidence of the involvement of a motor vehicle.” The four-rung ladder, in order, is:

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 in the accident.
3. The motor vehicle insurer of the operator of the motorcycle.
4. The motor vehicle insurer of the owner or registrant of the motorcycle.

Pre-reform, this priority chain mattered chiefly to identify the single source of unlimited PIP. After the 2019 reform, every rung on the ladder may carry a different cap — or no cap at all. The question Mary Free Bed answered is what happens when rung one writes its last check before the medical bills are paid in full.

Priority is sequential, not exclusive

The Court parsed the statutory text and emphasized that nothing in MCL 500.3114(5) bars a rider from looking to the next insurer once the first insurer’s contractual limit is reached. The text says the rider claims “from insurers in the following order of priority” — an instruction about sequence, not a cap on total available coverage. Reading exhaustion as a forfeiture, the Court reasoned, would defeat the no-fault act’s remedial purpose, which the Michigan Supreme Court reaffirmed in Andary v USAA Casualty Insurance Co, 512 Mich 207 (2023).

What Changed for Riders, Providers, and Insurers

Practical Implications for Michigan Motorcyclists

• Coverage selection on the household auto policy matters more than ever. If a rider lives with a parent, spouse, or sibling, the level of PIP carried on the family auto policy is now the de facto stop-loss for catastrophic motorcycle injuries. A switch from unlimited to $250,000 to save premium can be financially catastrophic if the rider is hit by a low-cap driver.
• Riders with no household auto policy are exposed. A motorcyclist who does not own or live with the owner of a Michigan-registered motor vehicle and who is hit by a driver carrying a $50,000 or $250,000 cap may exhaust available PIP quickly. The Michigan Assigned Claims Plan under MCL 500.3172 is a last resort but is itself capped at $250,000 in most cases.
• Document exhaustion carefully. A claim against the next insurer in priority is contingent on proof that the higher-priority insurer’s cap is actually exhausted. Riders and counsel should preserve correspondence, EOBs, and the insurer’s written denial of further benefits.
• One-year-back still applies. Mary Free Bed does not relax the one-year-back rule of MCL 500.3145(2). Bills must still be paid or claims still filed within twelve months of the date services were rendered, or the bills are time-barred regardless of which insurer ultimately must pay.
• Utilization review remains in play. The lower-priority insurer that takes over after exhaustion can still apply utilization review under MCL 500.3157a. Mary Free Bed opens the door; it does not require the next insurer to pay every dollar billed without scrutiny.

What Riders Should Do Right Now

1. Re-evaluate the household PIP election. If you ride and live with a Michigan-licensed driver, look at the auto policy in the home. If it elected $250,000 or less to save premium, weigh the cost of moving to unlimited or $500,000 against the realistic out-of-pocket exposure after a catastrophic crash.
2. Confirm policy stacking is documented. Tell your agent in writing that you are a household motorcyclist and that you want PIP coverage that will respond if a low-cap driver hits you. Keep the declarations page.
3. If you are already injured, identify every insurer in the priority chain. The owner’s insurer, the operator’s insurer, your motor vehicle insurer, and the motorcycle owner’s motor vehicle insurer (if different) are all potential payors. Counsel should run all four lines.
4. Move quickly on the application. The notice rule in MCL 500.3145(1) still requires written notice within one year of the accident. Do not assume the higher-priority insurer’s payment activity tolls the clock for downstream insurers; it does not.
5. Preserve evidence of medical necessity. Lower-priority insurers will scrutinize bills the prior insurer paid. Treating providers should document medical necessity contemporaneously and prepare for utilization review at the second insurer.

Frequently Asked Questions