What Do I Need to Know About Motorcycle Insurance?
Insurance is a requirement that almost nobody likes – until the day they need it
Like bills, deadlines, and taxes in everyday life, motorcycle insurance is something you’ve got to buy and maintain if you want to ride on the street. It’s a hugely complex business based on mathematical models, profit and loss projections, shifting markets and motorcycle types, rider ages, and other fun stuff. If you’re just starting to ride, here’s some of what you may need to know.
The DMV Requires It
In most cases, the DMV that issues your annual registration tag will require proof of liability insurance. If you don’t have it, or let an existing insurance policy lapse, you’ll likely receive a notice from the DMV stating that your registration has been suspended. You gotta pay if you wanna play!
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You Get What You Pay For
As with bike performance, suspension, or overall component quality, with motorcycle insurance the term, “You get what you pay for” is generally true. Better coverage costs more money. The secret for riders is to determine what coverage they most need, and then get the best deal from the best company for that coverage.
For instance, if you’re a young rider paying for all your motorcycle costs yourself but covered medically under your parents’ family medical policy, you might select a motorcycle policy with full coverage for your bike and minimal medical coverage. Or the opposite, you’re a middle-age or re-entry rider with ample bike funds but wary of medical costs if you fall, your policy choice might include minimal coverage for the bike and maximum medical coverage for you and a passenger.
Call Three Agents
Even for lifelong riders, the insurance game can hold mysteries and surprises. But when you’re just starting out, multiply those mysteries into an unfathomable morass of terms, facts, and details. Before you buy a bike, talk to multiple agents or companies, and learn everything you can about what you need. Make notes, charts, or spreadsheets, and compare. Eventually, you’ll find the right person and company to sell you the best policy to protect yourself, your bike, and others with whom you engage on your rides. Note: Be selfish here. Although insurance firms profit from your business, the policy’s purpose is your protection, so insist on it being right for you, or keep shopping.
What’s a “Dec Page?”
Up front in your policy is a declarations page, or “dec page” for short. This one-pager shows your coverage amounts in all categories. An agent may or may not be able to provide this on a sample basis while you’re shopping for a policy. But after you have purchased a policy, it will be provided along with the entirety of the policy.
Motorcycle vs. Health Insurance
Motorcycle and health insurance may seem like two completely different things. And they are, with one exception. They both have provisions for medical care in the event of injury. To understand how they might interconnect, ask both companies straight out: What happens if I’m injured on my motorcycle? Write down their answers and compare from there.
Common to motorcycle insurance in many states are the following coverages. Knowing these basics (particularly the monetary limits!) is essential both while shopping, and after you select and buy the insurance.
- Basic Liability
This essential part of the insurance policy provides coverage if your actions cause injury to another party. For instance, if you misjudge stopping for a traffic light and rear-end a car, causing whiplash to the driver, your policy covers it. Basic Liability numbers are usually expressed in a series. For instance, “$100/$300/$100” means $100,000 per person injured, $300,000 for all persons injured, plus $100,000 for property damage. (See Property Damage below.)
- Comprehensive and Collision
Technically optional, “comp and collision” financially covers your motorcycle in the event it is damaged in an accident (even a tip-over in the driveway counts), is stolen or vandalized, or suffers fire damage. However, when you finance a new or used motorcycle through a lender, they will require this coverage to protect the motorcycle that secures the loan for them.
Now, suppose you own an older machine outright, that’s now worth $3,000. If you can afford the complete loss of the vehicle (for instance, if it’s totaled in a crash or stolen), then you may choose to not add this coverage. It’s your risk.
- Property Damage
As the name implies, this portion of your policy covers damage you might cause to another person’s or entity’s property. For example, if you fall in a turn and your bike slides into and damages a fence or a car, Property Damage coverage handles it.
- Medical Payments
If you or your passenger are injured in an accident, this amount is available to pay for your medical care. A word of warning: Medical care, including emergency evacuation via helicopter or transportation by ambulance, and subsequent hospitalization, rehab, outpatient care, and physical therapy can be extraordinarily expensive. Since motorcycle riding holds physical risk, it is worth considering or choosing as high an amount for medical payments as you can afford. If you ever need this help, you’ll be beyond grateful to have it.
- Uninsured/Underinsured Motorist
Many policies chosen by thrifty car, bike, or truck owners do not include high coverages. This is because certain states have determined that basic, inexpensive policies satisfy legal requirements. But these don’t help much if you are injured or suffer property loss in an accident in which one of these low-insured vehicles is at fault. To protect yourself, you can add a healthy amount of Uninsured/Underinsured Motorist coverage to your policy.
Here’s how doing so might protect you. You have a new $20,000 cruiser that gets totaled when a driver turns in front of you. That driver’s Basic Liability would apply to injuries that you might suffer, as well as lost wages (at whatever low level the policy provides). But let’s say the Property Damage portion is only $10,000 – well, sadly, that’s all his insurance company will pay for your bike. Fortunately, you added a strong Uninsured/Underinsured Motorist coverage to your own policy, and that makes up the difference.
In a worse scenario, the driver who totaled your bike has no insurance, your Uninsured Motorist coverage kicks in to save the day. Importantly, Uninsured Motorist coverage limits are usually no higher than your Basic Liability – another cost/benefit detail to consider!
If you’re a homeowner (or maybe a renter – check with a homeowners’ or renters’ insurance agent), you may be able to purchase a separate Umbrella Policy that provides coverage for certain losses or liabilities above and beyond what your motorcycle insurance covers.
Insurance Follows the Vehicle
Let’s say you have great coverage on your motorcycle. You go on a group ride, casually switch bikes with a buddy, and then get in an accident. Afterwards, you discover that all that great medical coverage you paid for on your policy does not help because your buddy only carried a bare-bones, low-cost policy. No bueno! So basically, insurance coverage is tied to the individual motorcycle, regardless of who is riding it. It sounds a bit confrontive, but before you switch bikes on a ride, it’s entirely reasonable – and smart – to ask what kind of coverage the owner has for it.
Roadside Assistance & Towing
This assistance may be included in your policy, available as a supplemental “rider” at extra cost, or via a separate policy with a specialist company. We discovered once that motorcycles were not covered by our traditional automobile roadside assistance policy unless a rider for RVs was added! Yes, we had to add RV coverage to have tow coverage for a motorcycle. And for that matter, check how many miles of towing coverage is included, then factor that into your ride planning.
To repel endless small claims, insurance companies make it financially attractive for policies to have a damage “deductible.” In practical terms, the deductible is the portion of your bike’s accident total damage that you must pay out of pocket – and the higher the deductible you choose, the lower your premium will be. Example: Someone keys your sportbike in a parking lot, and a new tank and fairing cost $3,000. If you have a $500 deductible, the insurance will pay you $2,500 for the damage. The same deductible rule applies if the bike is damaged in a crash.
So, if you figure your chances of loss are low, select a higher deductible to keep your premium cost down. Conversely, if you think your chances of loss are high, carry a low deductible. The deductible gamble is a personal bet that, honestly, may or may not pay off. Our feeling is to set the deductible based on the question, “Can I handle the deductible if the worst happens?”
As you now know, insurance is a gameboard with lots of moving pieces, all important. And so, heed the suggestions in “Call Three Agents” above! You’ll thank yourself later.
More by John L. Stein