March 12, 2026
Before the sweeping reform amendments of 2019, no-fault coverage of medical expenses under any Michigan auto insurance policy was always unlimited. Now that allowable expense coverage under a no-fault policy will often be capped at levels of $500,000, $250,000 or even $50,000, the order-of-priority rules in the statute take on special significance since they determine which policy–and therefore how much coverage–will apply to the injured person’s loss.
From these circumstances emerged the legal issue presented to the Court of Appeals in Mary Free Bed Rehab v Esurance: Do the no-fault act’s priority of coverage provisions identify the policy solely responsible for payment of the loss, leaving other policies inapplicable, or do they merely identify the policy primarily responsible for payment of the loss, rendering those lower in priority secondary policies serving as excess coverage at their respective levels of priority? In a published (and therefore binding) opinion, the Court of Appeals has held in favor of stacking: When an accident victim’s medical expense coverage under the first-in-priority policy has been exhausted, the no-fault act permits the claimant to recover benefits from the insurer next in the order of priorities.
Aaron Slade was riding his cousin’s motorcycle down the wrong way on a highway in Muskegon when he collided head-on, with resulting catastrophic injuries, into a vehicle owned and operated by Haley Tanner. Tanner’s no-fault insurance policy with Esurance provided allowable expense benefits capped at $250,000. Although Slade resided with his parents and thus would potentially be entitled to benefits under the unlimited PIP coverage their USAA policy provided, the no-fault act’s “order of priorities” dictates that an injured motorcyclist must first claim benefits from the insurer of the involved motor vehicle’s owner or operator. Slade did so, but Esurance’s coverage was soon exhausted.
The question that arose was whether, in this new era of capped PIP coverage, a claimant in these circumstances is entitled to proceed to the policy next in the order of priorities and claim its benefits. In a decision published on March 2, 2026, the Court said yes, rejecting USAA’s contention that the priority rules designate which policy pays the loss, not which policy pays first. The Court examined several provisions in the no-fault act, both old and new, and found that while none directly answered the question, the purpose and “spirit” of the act would support its conclusion:
“To deny an injured motorcyclist access to their own unlimited-coverage policy, should a higher-in-priority policy associated with the accident vehicle be capped, runs counter to the spirit of the no-fault act and its 2019 amendments which prioritize personal choice in insurance policies.”
Mary Free Bed Rehab, slip op at 12.
Due to the particular facts of the case, the holding in Mary Free Bed Rehab, applies directly only to motorcyclist injury claims. The Court’s analysis and the conclusion it reaches, however, indicate that it will potentially apply to all PIP claims where allowable expenses surpass the capped coverage of a first-in-priority policy. For instance, no longer will a passenger injured in a business-of-transportation vehicle be restricted to the vehicle’s capped limits. The same would apply to employer-provided vehicles.
Just three days after Mary Free Bed Rehab was issued, the Court followed its holding in Tarhanich v Allstate, unpublished per curiam opinion of the Court of Appeals No. 368735 (March 5, 2026), which presented identical facts and necessarily reached the same conclusion. Both USAA and Allstate will likely pursue appeals to the Michigan Supreme Court.