Part III - Insurance
Whether you're buying one of the shiny, new bikes in this issue's 2008 Buyer's Guide or a well-kept used bike, you need insurance.
Think about this: The Insurance Research Council reports that in 2004, nearly 15 percent of drivers were uninsured, with some states having 25 percent or more uninsured drivers. A report by the AAA Foundation shows that unlicensed drivers (no license, revoked or invalid) were five times more likely than licensed drivers to be involved in fatal crashes (and were unlikely to have insurance). It's risky enough out there for us motorcyclists, but against those odds, it's foolish to go without insurance-and almost every state requires you to carry it, anyway.
You need coverage from the moment you finish signing the transfer of ownership documents and fork over the money for your newly purchased motorcycle. Fortunately, insurance companies can provide a "binder" that activates your coverage, starting the policy on the date you request. The binder is usually sent by e-mail or fax; these days, nearly every company has the capability to provide a quote and binder on weekends, too.
Insurance Policy Coverage Basics
The key elements of insurance coverage:First, you must have liability coverage for bodily injury and property damage. It comes in to play when you cause an accident and injure other people and property. It does not cover your own injuries or motorcycle damage.
Uninsured/underinsured motorist coverage (both bodily injury and property damage) is your protection against the irresponsibility of others. If another motorist injures you or damages your motorcycle, the odds are about 1 in 5 that they will either be completely uninsured or have such low coverage limits that your damages won't be fully reimbursed. This coverage, which you pay for, protects you in just such circumstances.
Comprehensive coverage covers your loss by theft and damage caused by flood, fire or animals.
Collision coverage covers your vehicle loss or damage for accidents you cause, accidents caused by another and accidents caused by circumstances where no one is left to take responsibility (like gravel or a fluid spill in the road).
Let's look at two typical examples to see how it all works. The rates were obtained from real quotes from five large insurance companies.
Bob Smith is 25 years old and has been a licensed motorcyclist for three years. He took a Motorcycle Safety Foundation course, has one speeding ticket, is single, is a renter in Glendale, California, and commutes to work, riding about 5000 miles per year. He owns a 2004 Yamaha V-Star 1100 Custom. As a young person with no family and few assets, Bob felt comfortable getting lower coverage limits of $15,000/$30,000/$10,000 liability (per person/all persons per incident/property damage), un/underinsured motorist coverage of $15,000/$30,000 and comprehensive and collision with a $500 deductible (meaning in the event of loss or damage, Bob is responsible for the first $500). The rates ranged from $802 to $1941 per year.
John Doe is 46 years old and has been a licensed motorcyclist for 11 years. He's married, has a clean driving record over the last five years, owns his home in Glendale and rides for pleasure, about 5000 miles per year. He bought a 2008 Kawasaki Vulcan 1600 Nomad. Because John has a family, a home and more personal assets, he chose higher coverage limits of $100,000/$300,000/$50,000 for liability, $100,000/$300,000 un/underinsured motorist coverage and the same $500 deductible for comprehensive and collision coverage. His rate quotes ranged from $675 to $1708 per year.
The range of rates is pretty dramatic, but actually quite typical. The point is that it pays to shop around. However, just like with a motorcycle, you shouldn't buy insurance strictly on price. Examine things like a company's claims history, complaint history and availability if you're involved in an accident.
There aren't many things you can do to lower your insurance rate, but one of the best ways is to take an MSF riding course. Most companies give a discount for three years or longer that will more than justify the cost of the course, and the course will improve your riding skills.
A note about motorcycle value: Motorcycle insurance policies vary as to what is covered in the event of loss or damage, whether it's just the motorcycle or also accessories attached to the motorcycle. Ask the agent and read the policy carefully. We've seen policies that cover no accessories, $2000 worth and even as much as $7000 worth at no extra charge. If you've ladled on $10,000 worth of parts, you'll want to price the extra cost for covering them.
When comparing rate quotes, make sure they have identical coverage limits, and be truthful-insurance companies will access databases with your driving history, and if it turns out you have lied on something material-whether you've had accidents, for instance-they may simply ask you to pay the difference, but they can also terminate your coverage for cause. Finally, make sure you always carry proof of insurance either in your wallet or under the seat.