Michigan Court of Appeals Landmark Decision Permitting Overflow Priority Coverage
Mary Free Bed v Esurance and USAA (March 2, 2026, Docket No. 370846).
The Michigan Court of Appeals issued a landmark published opinion on March 2, 2026, that materially impacts PIP exposure under the Michigan No-Fault Act following the 2019 reforms. In Mary Free Bed Rehabilitation Hospital v. Esurance and USAA, the Court held as follows:
"This case presents a question of first impression: whether such an injured person or their treatment provider, once their expenses exhaust and exceed a $250,000 coverage limit in the policy of a higher-priority insurer, may move down the priority list and claim additional benefits from a lower-priority insurer that provides unlimited coverage. The answer to that question, we hold today, is yes."
Prior to the 2019 reforms, this was not a question, as all PIP benefits were unlimited and priority dictated which single insurer would be responsible. Here, the Court has effectively permitted an overflow to the next priority level. That result is unprecedented and will very likely be examined by the Michigan Supreme Court.
Unless modified on further appeal, carriers and attorneys should reassess how capped elections interact with downstream priority exposure in each claim.
Mary Free Bed v Esurance and USAA (March 2, 2026, Docket No. 370846).
The Michigan Court of Appeals issued a landmark published opinion on March 2, 2026, that materially impacts PIP exposure under the Michigan No-Fault Act following the 2019 reforms. In Mary Free Bed Rehabilitation Hospital v. Esurance and USAA, the Court held as follows:
"This case presents a question of first impression: whether such an injured person or their treatment provider, once their expenses exhaust and exceed a $250,000 coverage limit in the policy of a higher-priority insurer, may move down the priority list and claim additional benefits from a lower-priority insurer that provides unlimited coverage. The answer to that question, we hold today, is yes."
Prior to the 2019 reforms, this was not a question, as all PIP benefits were unlimited and priority dictated which single insurer would be responsible. Here, the Court has effectively permitted an overflow to the next priority level. That result is unprecedented and will very likely be examined by the Michigan Supreme Court.
Unless modified on further appeal, carriers and attorneys should reassess how capped elections interact with downstream priority exposure in each claim.
| michigan_court_of_appeals_pip_priority_mcl_500_3114_2026.pdf |