Insurance Corner: An Insurance Primer

Why do I need auto insurance?

Your motorcycle is likely one of the most expensive things you own. Insurance protects your investment and guarantees you a way of coping with the expense of accidents, vandalism or theft. It also secures your financial responsibility to the institution lending you money to buy your motorcycle.

When you ride you are responsible for the safety of your passenger, your fellow drivers, other people’s property, pedestrians and yourself. Insurance helps ensure your ability to cover the costs of potential damages or injuries.

You are also required to be financially responsible by state laws, which are best satisfied through your insurance coverage. In most states insurance is a prerequisite to registering your motorcycle. So if you want to ride, you must be insured.

What are the different types of policies and what do they cover?

Motorcycle insurance is divided into several types of coverage:

General liability covers damage you cause to other people’s property and injuries to the people themselves.

Collision covers damage to your own motorcycle in an accident.

Comprehensive (i.e., fire, theft and other non-collision damage) covers fire damage to your motorcycle, vandalism or theft, as well as natural disasters (earthquake, hail, hurricane, flood, etc.

Medical payments insurance, usually in the range of $5,000 to $10,000, covers medical expenses for injuries. This “good-faith” coverage guarantees immediate medical payments for you, your passenger and other parties, regardless of who is at fault. It also covers you and members of your household in any accident involving an automobile, whether you are on foot, on a bicycle, in a friend’s car.

Uninsured motorist (UM) and underinsured motorist (UIM) coverage protects you if you are injured in an accident with others who themselves carry insufficient or no liability insurance.

Extra coverage includes expenses for towing, labor, temporary replacement vehicles, etc. These are generally defined as add-ons or “endorsements” to your policy.

Why and how are policies priced for different riders?

Factors that are considered in setting rates consider the following risks. Rides can be categorized by:

Sex—Men have more accidents on the road than women.

Age—Drivers under 25 (and, for some insurers, under 30) are considered at higher risk of having an accident.

Marital Status—Married drivers tend to have fewer accidents than single drivers.

Personal Driving Record—Years of driving experience, accidents, speeding tickets and drunk-driving offenses are all factors in determining how much of a risk you pose as a motorist.

How You Use Your Motorcycle—If you commute by motorcycle during rush hours, you’re at greater risk of having an accident than if you only ride for recreation on the weekends.

Type of Vehicle—The value, size, weight, age of your motorcycle, even the cost of replacement parts, are essential to determining the price of your insurance. More expensive motorcycles are...

We hope that you enjoyed reading this excerpt from "An Insurance Primer". If you would like to read the entire article and more, you can order a back issue of Mar / Apr 2006 where this article was originally published.

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