Understanding Motorcycle Insurance
As most people know, motorcycle insurance covers you and your motorcycle in the event of an accident or theft. However, many people are unaware that motorcycle insurance is required by law — even if you have car insurance!
Your motorcycle is NOT covered by your auto insurance unless you specifically add it to your existing policy!! Clients frequently call us after an accident and are surprised to learn that their motorcycle is NOT covered by their auto insurance. As will be discussed further below, this can have disastrous consequences for any injury claims you may have.
In this article, we will go over the various types of insurance that are available to motorcyclists.
Liability Insurance.
“Liability” insurance protects you if you are at fault in an accident, i.e., it helps pay for any damage you cause to other people or property in the event of an accident. Most states require vehicle owners to have some form of liability insurance. The minimum liability insurance required by California law is $15,000.
However, I am only a weekend rider – What Is the Purpose of Motorcycle Insurance?
This is a frequently asked question. First and foremost, it is the law. Motorcycles, like cars, must have the bare minimum of insurance required by the state. Unless you specifically add your motorcycle to your current auto insurance policy, your auto insurance does not cover your motorcycle.
The most serious consequence of not having insurance, however, occurs in the event of a serious accident. According to California law (Prop 213), if a driver of a vehicle (including a motorcycle) does not have insurance, the majority of their claims are forfeited. They cannot, in particular, be compensated for any pain and suffering. Assume a motorcyclist is paralyzed from the waist down as a result of a big rig truck accident. If the motorcyclist did not have insurance on his/her bike, nearly all of the motorcyclist's claim for this devastating injury (permanent paralysis, never being able to walk again, complete life change) would be forfeited!! Unfortunately, we've witnessed similar incidents firsthand. It exacerbates an already tragic accident for the rider and his or her family. So, we'll say it again: PLEASE... make sure you have motorcycle insurance. It's relatively cheap, but if you don't get it, it could end up costing you millions of dollars.
Amounts of Liability Coverage
The amount of liability coverage is typically expressed in terms such as "15/30" or "50/100." The first number represents the amount of coverage for a single person in an accident with you. A “15/30” policy, for example, means that your insurance will pay out a maximum of $15,000 to any single person who makes a claim against you. A "50/100" policy will cover you up to $50,000 for any single claim made against you.
The second number is the total amount that the insurance company will pay out per accident, regardless of how many people were injured. So, in a “15/30” policy, your insurance company will pay out a maximum of $15,000 to any one person and a total of $30,000 per accident. Assume you hit an SUV carrying six people, all of whom were severely injured. The insurance company would only pay out $30,000, which would be divided among six people. (Of course, it's unusual for a motorcycle accident to injure half a dozen people.) As a result, liability insurance for motorcycles is less expensive than for cars or trucks.)
So, how much liability coverage do you need? That is dependent on your circumstances. If you don't own a home or have a lot of assets, it's probably not a good idea to get a lot of liability insurance. High liability limits, on the other hand, are required if you have significant assets.
Collision and comprehensive coverage.
In the event of an accident, “collision” coverage will pay to repair or replace your motorcycle, regardless of who is at fault. If you are found to be at fault in an accident and do not have collision coverage, you will be responsible for the cost of repair or replacement. However, you may be liable for a portion of the repair costs. This is referred to as your "deductible." For example, if you have a $500 deductible, the insurance company will pay for any damage that exceeds $500. So, if your bike needs $3,000 in repairs, your insurance company will only pay $2,500. The remaining $500 will be your responsibility (the amount of your deductible). However, if the other party was at fault for the accident, you can file a claim against them to recover your deductible. We do this all the time for our clients.
Damage to your bike that is not the result of an accident is covered by "comprehensive" coverage. This includes things like theft, vandalism, and natural disasters. If you own a valuable bike, you should have comprehensive insurance. Most finance companies require you to have both collision and comprehensive insurance if you have financed your motorcycle. They want you to safeguard their assets!
Finally, if your bike is totaled or stolen, collision/comprehensive insurance will only cover the current, fair market value of your bike, not necessarily what you paid for it. You may have paid $15,000 for your bike a few years ago, but if it was only worth $10,000 at the time of the accident/theft, your insurance will only compensate you for $10,000. (minus your deductible, of course). You can get “Gap” insurance to protect yourself from this. This is frequently offered when you buy or finance a bike. The difference between what you owe for the bike and what your insurance company pays out as the "value" of your bike is covered by gap insurance. Calculate the cost. Gap insurance may be worth considering depending on the value of your bike and the expected depreciation.
Coverage for the Uninsured/Underinsured – The Safety Net
Is it worthwhile to purchase uninsured/underinsured coverage? Is it even worth your time? YES!!!! Purchase as much uninsured/underinsured coverage as you can afford! Riding without insurance is equivalent to riding without a helmet. It's not a good idea.
The majority of motorcycle accidents involving cars or trucks are the fault of the other party. Many car/truck drivers are uninsured or have only the state minimum insurance of $15,000. The state's minimum coverage will not even begin to cover common motorcycle accident injuries.
Uninsured/underinsured motorist coverage (also known as "Un and Under") is your safety net: it protects you if the other driver is unable to pay for your injuries. We'll say it again because it's so important: carry as much uninsured/underinsured coverage as you can afford. Because this coverage only adds about 5% to your annual premium, almost everyone can afford it. Furthermore, “maximum” coverage rarely costs much more than “minimum” coverage – usually only a few dollars more per month – so you should maximize it if possible.
We see a lot of cases where a motorcyclist has suffered a terrible injury in an accident, such as paralysis or limb loss, and the person who caused the accident has no insurance or assets. Many of these riders failed to obtain uninsured/underinsured coverage, and we had to inform them that, on top of their horrific injury, there was no money to cover all of their suffering or future expenses. It's a terrible situation to be in. Please do not take this risk; instead, purchase as much un/under coverage as you can.
What Exactly Is “Full Coverage”?
Insurance agents frequently use the phrase "full coverage." But what exactly does this mean? The quick answer is: NOTHING.
You should be aware of the types of coverage you have, as well as the maximum dollar amounts of coverage per accident and your deductible. When getting or reviewing your insurance coverage with your insurance agent, avoid using the lazy shorthand phrase "I want full coverage." Examine each of the available coverages (Liability, Collision, Comprehensive, Uninsured/Underinsured) to ensure you understand EXACTLY what you are getting.
Thousands of motorcycle riders who BELIEVE they have "full coverage" are shocked to discover that they have far less insurance than they thought.
How Much Insurance Do I Need?
So, what's the final word? In terms of liability coverage, everyone on the road is required to have at least the state minimum amount of insurance. It is up to you to decide whether you should purchase additional coverage. It makes no sense to purchase $1 million in liability insurance if you are a "starving student" or make minimum wage.
Similarly, whether you get collision or comprehensive coverage is determined by the value of your bike. If you're riding a $800 bike you got off Craigslist, you probably don't need collision or comprehensive insurance. It's a different story if you just purchased a brand-new Ducati Panigale.
When it comes to the uninsured/underinsured, the answer is the same for everyone: get as much of this coverage as you can afford. Every motorcycle rider requires un/under coverage. You may have a strong case against the driver of a car who cut you off and injured you, but if that person lacks insurance or assets, you will receive nothing. Un/Under coverage safeguards you against this unfortunate scenario.
Some people believe that purchasing more insurance than the minimum required by law is a waste of money because they will not be involved in an accident. Don't be like that! As motorcycle lawyers, we witness numerous accidents on a daily basis, the majority of which are not the riders' fault.
It is the best money you can spend to pay a little extra for additional insurance coverage. Consider yourself extremely fortunate if you go your entire life without having an accident and all those insurance premiums were *wasted! * We preach this mantra at StrongInsurance until we're blue in the face: