Although it is not frequently discussed, the fact remains that you need motorcycle insurance to protect you from the overwhelming loss that can occur in an accident. Such a loss could result in financial disaster if you aren’t properly protected. There are different kinds of coverage that pay for different kinds of losses.
A lot of people think they have a full coverage policy but when they make a claim, realize they don’t really have what they thought they did. A full coverage policy only means coverage in all categories, but equally important is the amount of coverage in each category. It is important to understand how each category of coverage works so you don’t find yourself in a situation in which your personal assets are on the line or in which you cannot be fully compensated for damages you sustain at the hands of another.
The standard motor vehicle coverage’s are liability, property damage, uninsured/underinsured, collision, comprehensive and medical payment . You can also purchase an umbrella policy for additional protection.
Liability covers you if you are found responsible for injuring another party with your vehicle.
Property damage covers you if you are found responsible for damaging somebody else’s property with your vehicle.
Uninsured/underinsured covers you if you are injured by another party whose has no insurance or insufficient insurance to fully compensate you.
Collision covers repairs to your vehicle irrespective of who is responsible for the damage.
Comprehensive covers theft of your motorcycle and its parts and damage caused by vandalism and, generally, by flood or fire.
Medical coverage pays for your medical bills.
Umbrella insurance provides additional liability coverage for those rare situations in which the damages are extensive.
Liability insurance covers you for personal injury damages (bodily injury, medical expenses, loss of earnings, and pain and suffering) you cause to someone else. Many states require minimal coverage such as $15,000/$30,000. The “$15,000/$30,000″ limits means that if you are found responsible for causing injuries to someone, there is $15,000 available for each person injured up to a total of $30,000 for each accident if more than one person is injured. These minimal limits are very low and even a minor accident could result in damages exceeding those limits.
Property Damage covers you for damages you cause to someone else’s property. Many states require minimal coverage such as $5,000. Again, these limits are very low and even a minor accident could result in damages exceeding those limits. If you have assets to protect, or don’t want to risk paying for the damage out of your own pocket, you should reevaluate your limits (see below for recommendations).
UNINSURED AND UNDERINSURED COVERAGE
Uninsured/underinsured coverage provides coverage if you are injured or your bike is damaged by somebody who has no liability or property insurance or insufficient limits to fully compensate you for your damages. Of course it has to be shown that the other party was at fault. This coverage is extremely important because there are hundreds of thousands, if not millions, of drivers out there with no insurance or with the minimal or low limits. And most people with low limits do not have any assets to go after.
With uninsured/underinsured coverage if you are injured by a negligent driver who has no insurance, your own insurance company will pay for your proven damages up to your uninsured limits.
If the other party has some insurance but insufficient limits to fully compensate you for your damages, your insurance company, in some states, would pay up to your underinsured limits, over and above the other driver’s liability limits. For example, if you had $100,000 in underinsured coverage (see below for recommendations) and the other party only had $15,000 in coverage, and your proven damages are at least $115,000, your own insurance company would pay you your full $100,000 limits for a total recovery of $115,000.
In other states, your insurance company will only pay the difference between the coverage extended by the other driver’s policy and the underinsured limits of your policy. For example, if you had $100,000 in underinsured coverage (see below for recommendations) and the other party only had $15,000 in coverage, and your proven damages are at least $100,000, your own insurance company would pay you the difference of $85,000 after the other party’s limits are paid to you. Your total recovery would be $100,000.
Collision insurance covers damages to your bike. Make sure you have sufficient coverage to fully repair your bike. We frequently see riders get the short end of the stick because the insurance company will not pay for added custom equipment or a custom paint job. Chances are those items are not covered unless specifically spelled out in your policy. Some insurance companies offer this additional coverage as an option, but generally, you have to ask for it. Most policies have a deductible of $250, $500, etc., which requires you to personally pay the deductible amount before your insurance kicks in.
Comprehensive covers theft of your motorcycle and its parts and damage caused by vandalism and generally, by flood or fire. Comprehensive is usually subject to a deductible also.
MEDICAL PAYMENT COVERAGE
Medical payment coverage pays for medical expenses related to the accident up to the limits of coverage. If you have good health insurance, you may want to opt out of this coverage.
Depending on your assets and net worth, you may want to consider an umbrella policy that provides additional liability coverage of, generally, one million or two million dollars above and beyond the limits of your underlying policy. These policies are relatively inexpensive relative to the protection they provide. Generally, you must maintain high underlying limits to qualify.
THE BOTTOM LINE
The bottom line is that you really need to understand your coverage and your limits to know whether they are sufficient for your individual situation. You should discuss your needs with a qualified insurance broker or insurance agent, or several, who understand how coverage applies and can advise you accordingly. We strongly recommend minimum bodily injury liability limits and uninsured/underinsured limits of $100,000/300,000 and minimal limits of $50,000 for damage to others’ property. It’ s also important to discuss and understand the areas in which your insurance company specifically excludes coverage. You should also discuss how the insurance may apply differently in no-fault states.
Remember a full coverage does not necessarily mean sufficient coverage. Make sure you are properly protected. For a free review of your insurance policy with one of our experts, contact us!