When you take your motorcycle for a spin, you will face accident risks. It doesn’t matter whether you are pulling out of your driveway or heading down the interstate. Whether minor or major, a wreck might cause significant recovery costs. However, if you have the appropriate collision insurance for the physical damage, then your policy might help you pay for the repairs. Consider a few of the best ways to insure your bike against significant collision damage.
What is Collision Insurance?
Motorcycles are motor vehicles. As a result, they need many of the same types of insurance as other cars and trucks on the road. However, standard auto insurance won’t adequately insure the bike or rider. Motorcycles will need a specialized motorcycle insurance policy.
In most states, a basic motorcycle insurance policy will not pay for wreck damage to your bike. To get such coverage, you will likely have to buy additional coverage called collision insurance. This is coverage that will specifically pay for damage to your bike if you have a wreck or other collision. It pays regardless of whether the wreck was your fault. Your agent can likely help you add collision coverage to your policy in a way that keeps your overall premium affordable.
Collision insurance is a great benefit for any motorcycle owner to have because it can significantly lessen their cost burden of wreck repairs. However, just buying this coverage isn’t enough. You also should take the time to review the collision coverage to see if you need to make augmentations to it. The better you tailor your coverage, the better it will cover you in case accidents ever happen.
Know What a Standard Policy Covers
Standard motorcycle collision insurance will help pay for many repair costs. However, it will include limits, exclusions and deductibles, too. These terms might restrict when or how you can make a claim.
- Your collision coverage will only pay for damage from wrecks. Damage from vehicle theft, weather, fires or other hazards will need coverage under a separate type of coverage called comprehensive coverage.
- Policies will usually include deductibles. You must pay the deductible before your collision policy will cover remaining claim costs.
- If you total your bike, then standard collision insurance likely only pays the bike’s actual cash value (minus the deductible) as a settlement. The bike’s cash value is not the cost of a new bike, but is the bike’s depreciated value. Therefore, a cash value settlement might not pay you the full cost of replacement.
If you know the precise limits of your own policy, then you can rely on a few tips to increase your coverage to your benefit.
Tip 1: Ask about a Replacement Cost Coverage Policy
You might be able to buy a replacement cost value (RCV) policy in place of a cash value policy. RCV coverage will compensate you for the approximate cost of a new bike of similar make and model. The deductible will still apply, but your final settlement will closely match the cost of a new bike.
Tip 2: Get Gap Insurance
If you have cash value coverage, the settlement may not be enough to pay off a loan or lease on the bike. Yet, just because you total a bike that doesn’t mean you won’t owe the bank money. If you carry gap insurance on the bike, your coverage will pay the difference between the bike’s cash value settlement and the remaining cost of the loan. That way, you can free yourself from the debt.
Tip 3: Carry an Affordable Deductible
When you file a collision insurance claim, your policy will include a deductible. This is a cost that the insurer subtracts from your final payment before cutting your check. The deductible is the policyholder’s responsibility to pay.
For example, suppose that your collision insurance includes a $1,000 deductible, but in a wreck your bike sustains $5,000 in damage. Under the terms of your collision overage, you pay $1,000 towards your repair costs and your insurer pays the remaining $4,000.
It is true that if you choose a higher deductible, you might be able to save on your insurance premium. However, by increasing this deductible, you make yourself responsible for a higher out of pocket expense. Therefore, only choose a deductible you can afford to pay on your own.
Tip 4: Insure Special Accessories and Custom Parts
Most collision policies only cover the standard parts that come with an insured bike. If you spruce up your bike with custom parts or accessories, then you might find that the policy provides limited or no coverage on these items. To increase your collision coverage, ask your agent about adding an endorsement to your policy for custom parts and equipment.
While this coverage will not include a deductible, your standard collision deductible will still apply. Your agent can make sure that the endorsement adequately addresses the necessary accessories.