Hidden Costs of Motorcycle Insurance
Rates for motorcycle insurance can vary a lot. Find out how to get the coverage you need—without paying any more than you have to.
Some insurance companies offer discounts to riders who are members of organized riding clubs—especially ones that offer rider safety programs such as BMW's Motorcycle Driver Training.
Before you commit to plunking down all that dough, first make sure you can afford it. The purchase price is but one cost, and in the case of motorcycles often closely chased by insurance premiums.
"Rates really vary a lot," says Ben Sheridan, general manager for motorcycle insurance with Progressive Casualty Insurance Co., the top motorcycle insurance underwriter in the U.S. "From one bike to another, they can be five to ten times different." By way of example, he says a premium of $200 for insuring a small or midsize commuter-type motorcycle can easily balloon to more than $1,000 for a high-horsepower, canyon-racer sport bike.
And remember, you're going to be paying that premium every year you own the bike.
Still, you can minimize that annual hit on the checking account.
"If you're not buying an expensive bike," Sheridan says, "you can avoid collision and comprehensive" coverage, which pays to repair or replace a crashed motorcycle. This coverage, he notes, can account for as much as two-thirds of the premium, depending on the age and model of the bike. (The exception to this is if you're financing the bike. To protect their investment, lenders will require this coverage until the bike is paid off.)
The same goes for medical coverage, what the motor vehicle insurance industry calls Med Pay. Say you're covered by a comprehensive health and medical policy where you work. In that case, "a lot of people suggest you don't need it" on your motorcycle insurance policy, he adds, pointing out that in any event your motorcycle policy's Med Pay coverage is secondary. This means it pays only those medical expenses not covered by any other policy you may have.
There's also a coverage category unique to motorcycles: guest passenger. Automobile policies routinely cover occupants other than the driver, but not all motorcycle policies do. And while some states mandate guest passenger coverage, others make it optional. So consider: If you're willing to commit never to invite someone to ride pillion, you can save a few more bucks.
Finally, and although "it's becoming less and less of a difference," Sheridan notes, you can reduce your premium a wee bit further by selecting a high deductible for the coverage you decide you need.
Safety In Numbers
Some insurers also offer discounts to joiners. Allstate, for instance, posts the following enticement on its Web site: "You might qualify for [a] discount if you are a member of one of the following motorcycle associations: American Motorcycle Association, BMW Motorcycle Owners of America, Gold Wing Road Riders Association, Gold Wing Touring Association, Harley Owners Group, Motorcycle Safety Foundation [and] Venture Touring Society."
Read again the mention of the Motorcycle Safety Foundation. Every major insurance company in the U.S. that writes motorcycle policies offers a discount to graduates of this organization's training courses. Most, however, limit the discount to three years after completion of the course. When you think about it, this is not a bad thing. Take one of the MSF's street-riding courses every three years, have your techniques dutifully refreshed and save money. What a deal.
Allstate, like most insurers, also offers discounts (all of which vary, if offered, by the state in which you live) for bikes insured by existing automobile policy owners and for more than one bike. After all, you're only driving one at a time.
But Don't Skimp
Sheridan tracks trends with Progressive's clients by listening to tapes of telephone calls made to the company's "800" number.
From this, he says he's troubled by the fact people buying motorcycle insurance repeatedly under-insure in two areas: uninsured motorist and medical liability coverage for the person or people injured when the crash is your fault.
Uninsured motorist coverage fiscally makes you whole again when the driver who t-boned you didn't have insurance or enough of the right kind of insurance. Given that in some states as many as one of every five drivers is uninsured, this is a no-brainer.
And Sheridan doesn't understand why people with a fairly standard, $100,000/person, $300,000/incident medical liability coverage for their car routinely buy only $25,000 for their bike. "You need the same amount for your bike," he says, because "you're going to be liable for the same amount of expense."
No Fault, No Way
Virtually every state requiring insurance companies to offer no-fault auto insurance either excludes or allows companies to exclude motorcycles from a no-fault policy.
Although this may not seem fair, when viewed from the insurance companies' perspective, it's understandable. It's also directly related to one of the idiosyncrasies of no-fault insurance. No-fault insurance, known in some jurisdictions as Personal Injury Protection, or PIP, essentially turns traditional liability insurance on its head.
At its most basic, no-fault insures you against losses you may suffer in the event you're in a crash regardless of who's at fault. Traditional liability insurance covers the losses you may inflict on another in a crash for which you're at fault and expects you to recover from the other driver when you're not at fault.
Thus, a 20-year-old with no mortgage, no family to support and a minimum-wage job stands to "lose" much less than a 40-year-old with a mortgage, a couple kids in college and a lifestyle supported by a six-figure income. Thus, the kid will generally pay less for a no-fault policy than the 40-something.
This is precisely the opposite of traditional liability insurance, where the kid is considered the higher risk and more likely to be at fault in a crash and be liable for the significantly greater losses the 40-something will suffer.
But because motorcyclists are more often seriously injured or killed in a crash regardless of who's at fault, insurance companies prefer to write the coverage as traditional liability.
"Motorcycle insurance is simplified by not having no fault," says Sheridan.
Pay Your Bills
Insurance companies have found that people who don't take risks with their money generally take fewer risks with their life and limbs. For this reason, insurance companies look at factors like "how well they pay their bills," says Sheridan. It's called, in the trade, a "financial responsibility score," and those who score well score.
"We give them lower rates," he says, "and dramatically lower." How much lower? In some cases, "by more than 50 percent," Sheridan says.
Buy only the coverage you need, but buy the coverage you need. And compare costs, between insurance companies and on different bikes. "That's the number one by far best suggestion I can make," Sheridan says.
Depending on your state, many of the major insurance companies' Web sites let you get quotes online. And for those states, comparing quotes from different companies requires only a few clicks. Otherwise, it means dialing a toll-free telephone number. What do you have to lose?
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I had a great experience with Progressive. When my 6 month old bike was stolen they paid up right away. My claims contact, Bert was very professional and I was only out my deductable. I felt like Bert and I worked as a team to clear up the mess. Since my deductible was so low, thanks to my salesperson, I could go right out and start looking for another bike.