MOTORCYCLE INSURANCE 101″

THIS WAS WRITTEN FOR MASSACHUSETTS, BUT WILL HOLD TRUE IN OTHER STATES. CHECK WITH YOUR STATE TO SEE IF COVERAGE LIMITS AND MECHANISMS ARE DIFFERENT.

Please check with your respective state to see if the coverage works the same. Reason being, in certain states the rider is never covered; but the passenger is!

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 I’ve revised this since we’ve gone to “competition” here in Massachusetts

“Motorcycle Insurance 101 revisited 2013”

Most Motorcycle Insurance is written on a standard Mass Auto Policy, but please know this: it  works differently than the Auto Policy in some cases.

There are 12 coverage items on the Mass Auto policy and it might seem very intimidating if you don’t have any insurance savvy…and even though and they each work independently of each other, remember this.

There are basically only two type of auto coverage: BODILY INJURY & PROPERTY DAMAGE!

DEFINITIONS:

Bodily Injury is injury that you do to someone’s body, be it yours or someone else’s.

Property Damage is damage you do to property, your property on the auto policy would be your vehicle (auto or motorcycle or whatever is scheduled) and property of others could be their car or their fence, a streetlight, a lawn, a house. etc.

Compulsory: Coverage that is mandated by the State

PIP: Personal Injury Protection – goes out the window once you’re on the bike in any way, shape or form!

Collision: A crash with another object (other than an animal)

Comprehensive:  Fire, theft, vandalism, falling objects, and hitting an animal

That should make it easier to understand coverage a bit, to know that there are basically just two types.

Before I embark upon the actual breakout of coverage, please be sure to include Guest Coverage on your policy. Currently, there’s no place designated on a policy to know if you’ve received this coverage or not; so check with your agent to make sure they’re provided it for you. ( In Massachusetts it’s generally included unless specifically requested to be excluded; and I do not recommend excluding it.) For those of you with single seats, take the coverage anyway! It doesn’t cost anything to give coverage for that one time that you put your buddy on the back and take them to the dealership. If you haven’t opted to take guest coverage, your passenger could have no coverage in the event of a loss.

Coverage #1:  Bodily Injury to Others: Is Compulsory in Massachusetts with limits of $20,000 per person and $40,000 per accident. This coverage does not cover you on private ways or on roads out of Massachusetts, or include your passenger; and you’re not able to increase the limit. (This coverage can be bought under Optional Bodily Injury, Part #5, and the limit can be increased to cover your assets).

Coverage #2:  PIP – Personal Injury Protection, another compulsory coverage, hereafter known as PIP; note that there is no PIP Coverage while you are on your bike. Meaning that, the minute you position yourself on your motorcycle, the PIP goes out the window!! Yes, even while you’re stopped and not moving; even if the bike is locked, you are not covered under the PIP portion of the policy. You are however, covered if you are standing beside your bike and someone knocks the bike over on you, or you walk away from your bike and are hit as a pedestrian. You’ll note that the premium charged for this coverage is much less than the charge for your automobile. The limit available is $8000; and I don’t recommend taking a deductible here, the savings just isn’t worth it.

Coverage #3: Uninsured Motorists Is Liability Coverage for Uninsured Automobilist, with a compulsory limit or $20,000/40,000. I recommend you buy as much as you can afford, and that state will allow with limits of at least $100,000 Per Person, $300,000 per accident; and strongly suggest limits of $250,000 Per Person, $500,000 Per Accident, or more even. The cost to increase in minimal. This coverage will cover you in the event of a loss where Bodily Injury in involved; and the other party has no insurance. If you don’t give yourself sufficient limits here, you will have nowhere to go to recuperate your loss; and could ruin yourself financially!

Coverage #4: Property Damage. This covers other people’s property; be it their car, their bike, their home, a street light, etc. The statutory limit mandated by the state is $5000. I recommend that you purchase at least $100,000, and more if you can afford it, and get it. In Massachusetts we can now purchase up to $250,000, and the cost for the increase is under $10.00! It’s one of the best buys that there is in the industry. This coverage will pay for damages you cause to other people’s property. If you are the last bike in a pileup, you could be held responsible for the damage to all the other vehicles; which could mount up rather quickly. If you don’t have sufficient limits, you’ll have to pay the damages out of pocket. That usually means liquidating your assets to pay. For $10.00 a year, why put yourself in that position?

Coverage #5:Optional Bodily Injury to Others and will cover Bodily Injury you incur to others. This is the portion of the policy that responds to lawsuits. As in #3, buy as much as you can afford, and as much as the state will allow. Protect your assets and make sure you don’t have to liquidate them to satisfy a claim. ( I don’t want to hear that you’ve got your home protected by the Homestead Act, that will not help! I’ll address that at the bottom of this article.) Limits of $250,000 Per Person, $500,000 Per Accident is a nice place to start these days; and the cost annually is not prohibitive.

Coverage #6: Medical Payments: This is currently the only no-fault coverage left in Massachusetts, and because there’s NO PIP coverage once you’re on the bike;  you should purchase some! ( You’ll note the premium here has increased significantly, which means that the coverage gets used.) That will help pay for medical expenses in the event of Bodily Injury. Please remember these limits will be shared with your passenger; and most likely not picked up by your health carrier. (There are two questions that are asked when you enter the emergency room at the hospital..”Is this incident the result of a vehicle related incident? Or, are these injuries related to a work related incident”. If the answer is yes to either of those, your health carrier generally stands aside.  And should they pay? Don’t be surprised if they slap a lien against the insurance or request reimbursement from you! It’s not unusual!)

Coverage #7: Collision will cover your bike in the event of a “Crash” or Collision. To keep the cost down, I suggest entertaining a higher deductible of $1,000 as it will save you some money. If cost is not a concern, buy a lower deductible and make sure you also include the waiver or deductible so if the accident is not your fault, and you have the information on the other party, you can get your deductible back. Be sure to insure your bike for its proper value. Failure to do so could result in a lesser payment in the event of a claim. Motorcycles are written on an ACV “actual cash value” basis taking into consideration depreciation; so if you’ve customized your motorcycle to the point where it’s worth a lot more than the actual cash value; it would make sense to get an appraisal, and have your bike written on a “Stated Value”.  (There’s a tutorial on my web site https://listerins.com that explains this further.)

Coverage #8 Is Limited Collision. If you’ve taken full collision, you cannot opt to take this. It’s one or the other. Limited collision, by virtue of its name, is a very limited coverage; and there is certain criteria involved to be able to collect with this coverage. One is the fact that you have to know who hit you, and the other is that they have to be at fault. In other words, if you run a red light, and someone hits you, because you’re at fault, there would be no coverage. This is the only physical damage coverage that can be sold without a deductible. (Some carriers do not offer the “no deductible option.)  Full collision is always sold with a deductible. The cost for limited collision is a lot cheaper than full collision, but then again, the coverage afforded is a lot less also.

Coverage #9 Comprehensive is fire, theft and vandalism, and also includes FREE glass coverage. This coverage is always sold with a deductible, and be reminded that unlike collision there is no recuperating the deductible on comprehensive. There is a glass deductible of $100.00 available, but I don’t suggest purchasing it. It only saves about $10.00-$12.00 a year. Under comprehensive, you will also be able to rent a vehicle after 48 hours, if your vehicle is stolen and not recovered. However, you must get authorization from your carrier to do this. Check with them for the allowable limit and length of time allowed.

Previously Collision and Comprehensive coverage items were only written on an Actual Cash Basis; which resulted in many an insured not receiving payment for the correct value or their bikes when a loss occurred. In 2003; after much prodding from a group of concerned bikers, the commissioner changed this ruling. It is now possible to write the coverage at “Stated Value”; which means you will be able to recuperate the funds you’ve spent on upgrades to your bike; in most cases. You will need an up to date appraisal from a licensed appraiser to be eligible for stated value; and always keep your receipts!  (A list of licensed appraisers is also elsewhere on this web site at   appraisers.) The appraisal needs to be submitted to the carrier for approval before the coverage can be written at “stated value”.

Coverage #10 is rental; and this differs from company to company these days. Generally for a motorcycle it’s a lot more expensive than it is for an auto. Certain carriers now will allow you to rent for a mechanical breakdown, others won’t! Check with your carrier to see what they offer.

Coverage #11 is Towing. Towing will reimburse you in the event of a breakdown of your vehicle, up to the limits allowed on the policy.  The maximum amount generally  is $100.00. You will not be reimbursed for towing, when your vehicle is illegally parked; so don’t bother sending in the bill to the company.  Be reminded, that in most states AAA will not tow motorcycles; so you might want to purchase this coverage unless you’ve made provisions for it elsewhere. Again, certain carriers offer higher limits, so check.

Coverage #12: Is liability coverage for underinsured automobiles, and again I recommend you buy as much as you can afford, and the state will allow with limits of at least $100,000 Per Person, $300,000 Per Accident; and strongly suggest limits of $250,000 Per Person, $500,000 Per Accident. The cost to increase is a bit higher than #3 but well worth it. This coverage will cover you in the event of a loss where Bodily Injury is involved; and the other party has less coverage than you do. If the other party has statutory limits of $20,000 Per Person, $40,000 Per Accident, and you carry the same, there is no stacking of coverage allowed in Massachusetts, and you will have no where to go to recuperate your loss and pay your medical bills or get compensated for pain and suffering. You’ll only be eligible for their $20,000 Per Person, $40,000 Per Accident, and that’s it! That’s why it’s recommended that you carry sufficient limits to cover yourself. ( Note here, you cannot carry a higher limit than you have on the other two liability coverages, underinsured must be the same or less.)

Betsy E Lister
BELister@aol.com
President, Lister Insurance Agency
781-393-9330

***The Homestead Act: For under $75.00 you can put your home in the Homestead Act. Once this is done a party cannot attach a lien directly against your home; however, if you get a judgment against you; you’ll still be forced to pay it; meaning that you’ll have to liquidate your assets to pay the judgment. In most cases, your largest asset is your home! So don’t be fooled into thinking that your home will be safe and not subject to problems by doing the Homestead Act.

*** HIPPAA The Health Insurance   Portability and Accountability Act of 1996. Under HIPPAA, the industry has issued a statement saying that they consider motorcycling to be a dangerous and hazardous sport! Health insurer’s are hanging their hats on this phrase and are denying coverage for claims arising from motorcycle accidents. Traditionally they do not pay for automobile accidents, and if they do, they request reimbursement. They contend that your health insurance is intended to pay for sickness, and accidents not caused by motor vehicles, and they’re refusing to pay!  In the event they should pay; be assured that they’ll slap a lien against any and all proceeds you receive from your motorcycle insurance and demand reimbursement.

More insurance information:

It’s true though, most folks hate to pay for insurance because they’re not buying something tangible, like a car, or a piece of clothing, or furniture; That…they can understand! But the concept of “buying piece of mind” is not something that’s readily understood; until there’s an un insured loss!

So, when purchasing coverage, work with YOUR agent and try to look at your whole picture; homes, autos, motorcycles, business, IRA’s, banks accounts, retirement,  other recreational vehicles, etc., if possible, and figure out what you’ve got to lose if someone gets a judgment against you;  or you injure someone and purchase your insurance coverage limits accordingly.

Purchase as much liability as you can afford, and as much as the law will allow is a good concept; but not one that’s always feasible. Finances seem to get in the way here…but try not to leave your ass and your assets out there swinging in the breeze. The cost to increase liability limits to 250/500 across the board is about $100.00 or so extra a year! That’s nothing, when you think of the thousands of dollars more coverage you purchase for that outlay.

Again, work with your agent in purchasing coverage; insurance is like a suit “off the rack” it can be tailored to the individual that’s purchasing the coverage, and seeing as everyone is different and has different needs and issues, buy YOUR coverage to suit YOUR needs.

For those with lots to protect, check with your agent about the availability of purchasing umbrella coverage, and again, make sure that your motorcycle will be covered under that policy.

Fact: Did you know that colliding with a deer is considered a comprehensive loss; not collision?