Motorcycle Insurance (Part One)

[Oscar]

Righto ho, someone on the "Motorcycle Finance" thread asked for a similar one on insurance. Now by sheer coincidence, this is something that Johnny Forsyth and I just happen to write for KR in 2001.

Before I post it, I'd just like to point out that it is a general overview, so the pedants out there need not apply.

MOTORCYCLE INSURANCE

Picture yourself... The ink is still wet on your cheque and the motorcycle dealer passes you a wad of triple-self-carboning forms to sign or initial next to the ‘X’. One of them is probably an insurance proposal - how much do you know about it (apart from the fact that it cost you three times more than the family tin-top and is full of print you’d need a microscope to read).

This article is designed to inform you of the basics of motorcycle insurance. It’ll help you avoid some of the pitfalls and prepare you for the ones you can’t avoid. If you’re not familiar with your policy (and lets face it, who ever has read those little words) then you should at least read this and get some sort of a grasp on what you’ve signed your life away to.

Your motorcycle is an expensive piece of equipment, and by the very nature of its use, can be exposed to damage or loss in a number of ways. In addition, your motorcycle is capable of causing considerable damage to other vehicles or property (commonly referred to as the third party). For these reasons it is important that you insure your bike to reduce the risk of personal financial loss.

An insurance policy is a CONTRACT between yourself and an Insurance Company - you pay a fee (called a premium) and the insurer agrees to cover your damages or loss, (less the inevitable deductions), provided you abide by all the policy rules. The excess is a contribution from you towards the claim, (normally about 10 -20% of the sum insured) and it is intended to discourage you from claiming small sums.

HOW TO GET INSURED

Your Insurance Company (or a motor vehicle dealer acting as an agent for the company) will get you to complete a PROPOSAL and collect the premium from you. A proposal is an application from you, to the insurer, to cover your motorcycle against peril. The Insurer will consider your proposal, and provided you have not shown yourself to be a bad risk, will then issue you with a POLICY. Be sure to answer all the questions on the proposal truthfully and accurately. Failure to do so could effect the acceptable of the proposal and any subsequent claims you may make.

The Insurer may ask you to pay a higher premium if you have a poor driving record or bad claims history. Likewise, you can get a premium discount if you can show that you have been a good risk; i.e. a claims-free track record from a previous insurer.

TIP #1: Ask for larger excess to get a smaller premium (I never had a small crash in my life, they were all HUGE).

The Company will post you out your policy in due course, so be sure to inform them immediately should your address change. The policy is an important document - read it, then store it away somewhere safe. If you don’t understand it, then talk to someone who does, and read through it with them.

TIP #2: (Do I really have to say this?) Shop around! The cover you get tacked onto to your hire purchase at the bike shop is designed to cover any bozo (yes, even Harley riders). Go to your usual Broker or Insurance Company - Motorcycle Insurance is usually an “accommodation line”, which means you’ll get better rates from the people that do your other insurance. If you don’t have any other insurance, see if you can coattail on your Parent’s or Bosses insurance.



INSURANCE LAW – Part 1.

The law defines the proposal ("application form")you complete as the basis of the contract between you and the insurance company. This means that you must disclose anything that is material to the insurance on the proposal. This means you must ‘fess up all speeding tickets, claims and any other motor accidents (even if you didn’t make an insurance claim).

This means that if you don’t tell them about that huge speeding ticket in ’98, the insurance company could decline your claim, on the basis that if they had known all the facts you may not have got the cover in the first place.

RENEWALS

Near the end of the term of your policy you should get a RENEWAL notice in the post. This is an invoice for your next year’s premium and should include a “no claims” discount if applicable. The insurer has no legal obligation to send you a renewal and likewise you don’t have to accept it. Work on the assumption that cover will cease on the expiry date if you don’t pay by this date.

Compiled by John Forsyth & Stuart Hamilton. Copyright 2001

[Oscar]

In our last episode, we had insured our scoot, but now things get messy:

CLAIMS

The claims department of the average insurance company is staffed by spotty little oiks whose idea of a good time is to give you gyp when you can least afford it. They really believe that it is their own money they’re paying out. They are evil, duffel coat clad bastards jealous of anyone as windswept and interesting as a motorcyclist. Having said this, don’t be annoying them - crawl to them, as they can hold your claim up for weeks if they want to. Be nice.

There are certain procedures laid down for the handling of claims and provided that these are followed, the whole matter can be dealt with quickly and efficiently. Failure to follow these simple procedures can mean delays in claim processing or even the declining of a claim in certain circumstances.

* Fill out the claim form answering ALL the questions truthfully and accurately, sign it and return it, along with a photocopy of your driver’s licence, to the Insurance Company.

TIP #3: Photocopy your drivers licence and put the copy in the lining of your helmet (only marginally to do with insurance, but a goody anyway).

* If and when repairs are done to your motorcycle, you will have to pay your excess to the repairer before you can ride it away - they have a legal right to hold your bike until you pay them.

In the event of a “write off” damaged beyond economic repair), or theft, they will send you a RELEASE form for you to sign and return.

In a theft situation this gives the Insurer legal ownership of the bike, should it be found after they have paid out on the claim. If your bike is a write off, the release form gives the company legal right to dispose of the wreck by tender.

After all this has been done, then payment procedure can be initiated. If the bike is still on Hire Purchase, the cheque is sent to your Finance Company who will take what is due to them, then send you the remaining balance. If the payout does not cover the remaining finance you are still liable to pay the balance to the financier.



THEFT OR BURGLARY

* Notify the POLICE immediately by going into the nearest Police Station. They will give you a Police acknowledgement form and notify you in the event of them finding your bike - not as likely these days as it used to be!

* Notify your insurer immediately by telephoning, writing to them or calling into their offices. The company will also be able to supply you with the appropriate claim form, or alternatively your motor vehicle dealer should have one.

* Notify your motor vehicle dealer if your motorcycle is still on Hire Purchase.

TIP #4: If the claims person says “we can’t pay on your theft claim until your bike is missing X months”, ask them whereabouts this is written on the policy. You see it isn’t, they are just concerned about your baby being recovered the day after you cashed the claims cheque. They are liable to pay your claim in a reasonable period (i.e. as soon as the claim can be processed).

ACCIDENTS

* First and foremost never admit fault - even if you know you are in the wrong! Your contract with the insurer not only covers damage to your own vehicle, but also to the Third Party’s vehicle if you are at fault. If you admit liability, you are speaking on behalf of your insurer and this is a breach of the contract and may result in your claim being declined. On the other hand, if the other party admits liability, try to get a written statement signed by them, otherwise they will invariably change their mind the next day.

* Make sure you call the Police to the accident scene because unless there is injury, or they are requested to attend, they will do nothing. Unfortunately it is a fact of life these days that the police may not have the resources to attend. Accidents involving injury MUST by law be reported to the Police.

* If your bike is immobilised you must take all reasonable steps to secure it e.g. call a salvage firm or motorcycle dealer to tow it away and store it safely (the insurer will pay for this if your claim is accepted).

A SHORT TRIP TO BASTARDLAND

If your pride and joy is written off, you will be paid the market value of the motorcycle, less the applicable excess. Yes folks, the amount you get paid is hardly ever the amount written on your policy next to the words “sum insured”. What were you thinking?

Most policies pay out the market value as determined by the Assessor (who usually obtains three valuations from local dealers). If you are not happy with this, tell the Assessor! They will usually ask you to obtain valuations to support your figure and negotiate from there.

TIP #5: Check your sum insured at each renewal, it will probably be the same as last year. Insurance companies do this because they claim that they haven’t the resources to value every vehicle on their books. Of course it doesn’t hurt their premium income, either. If the old nail ain’t worth the money, get the insurer to change it. It will reduce your premium (but not by much).

THIRD PARTIES

Sod’s Law will guarantee that the third party (the other guy) is a bastard. Either an ordinary bastard, who will blame you (“you were going too fast / I didn’t see you”), or a complete bastard, who will not only blame you but turn out to be uninsured.

Regardless of who is at fault in the accident you must deal through your own insurer and pay your excess. If you were not at fault, your insurance company will endeavour to reclaim your excess from the third party or their insurer. Your company will appoint an assessor to inspect the damage and authorise repairs if the claim is accepted.

Even if your vehicle is not damaged and you think it wasn’t your fault, MAKE A CLAIM. This way the insurance company can deal with the annoying little twerp in the Mazda Bongo who not only knocked you off your bike, but also keeps calling you about the repairs to his heap of crap.

TIP #6: Sometimes when the other guy IS at fault but ISN’T insured, they will end up paying off the damage to your vehicle to your insurance company. As the excess you paid is stated to be the FIRST $1,000 (or whatever) of the claim, then it’s the FIRST part of the recovery. The cheques should be applied to your excess, then the rest of the claim.


INSURANCE LAW – Part 2.

On what basis can an insurer decline a claim? Aside from the usual stuff like war risks, wear and tear and such like that are printed in the policy, if you fail to acquaint them with all the relevant facts you could be in trouble. The law uses the “prudent underwriter” test – this is along the lines that if these facts had of been known from the start, would it have caused a ‘prudent underwriter” to change their decision to accept the insurance?

Something-similar works for claims. For an insurer to decline a claim, their reasons must have something to do with how the claim occurred (known as the “proximate cause”).

A classic example:
Your motorcycle has no warrant of fitness (it’s booked in next week) but is roadworthy in all respects. You are hit by a drunken driver whilst minding your own business. Are you covered?

Yes you are. The lack of a WOF had nothing to do with the cause of the claim.

CANCELLATIONS

If you sell your bike or don’t wish to continue the policy for some other reason, you can cancel it and get a refund. This amounts to the portion of the policy left to run.

TIP #7: If you bike is still on HP, don’t cancel the insurance. Cancelling your insurance will put you in default and make your baby liable to repossession (and the Insurance Company is obliged to tell the Finance Company if you cancel your policy).

INSURANCE FRAUD

Industry sources revealed recently that as many as 25% of all claims are fraudulent to some extent. If an Insurer is in the least bit suspicious of a claim in whole or part, it will be looked at very carefully. This would involve seeking police reports and sometimes the hiring of Private Investigators. If proven fraudulent, your claim will be declined, your policy cancelled without refund and you will probably be prosecuted. You would find it difficult, if not impossible to get insurance every again in your life! If there were no fraud, insurance would certainly be cheaper for everybody.

SO REMEMBER:

- Be honest!
- Know the road rules and stick to them!
- Secure your bike when unattended!
- Be careful out there!

Compiled by John Forsyth & Stuart Hamilton. Copyright 2001

[What?]

...so the pedants out there need not apply. [/i]

Spoilsport!
Good info, Oscar.

[Oscar]

Spoilsport!
Good info, Oscar.

Thanks man.
The irony of this story is that soon after I wrote it, I got knocked off me BMW by a Stationwagon full of Surfies. The insurance claim was a nightmare, despite the fact that I work in the Finance Subsidary of one of the largest insurance brokers in NZ. The assessor was a complete wanker, at one stage he lost the shock adjuster he was trying to have repaired...

[k14]

What company was that with?

What one's do you recommend? I am currently with AMI, but am going to change in a few weeks to some other one.

[Oscar]

What company was that with?

What one's do you recommend? I am currently with AMI, but am going to change in a few weeks to some other one.

IAG (State).

[Kwaka-Kid]

im considering changing mine too, im thinking i pay more then most? but being 18 sucks and has something to do with that im sure. Advise Oscar? where in Auckland is there a good broker? or is every insurence broker a good one?

[duckman]

I would also suggest IAG (for car insurance at least).

I had my car stolen a few months back and I got my money with one month with no trouble at all.

For the bike, I still use Swann.

[Oscar]

im considering changing mine too, im thinking i pay more then most? but being 18 sucks and has something to do with that im sure. Advise Oscar? where in Auckland is there a good broker? or is every insurence broker a good one?

Yep, you guessed it - 18 year olds wid motorcycles aren't the flavour of the month when it comes to insurance.

You need some leverage. Try and piggyback on family or work connections.
There are some very dodgy brokers out there (a lot of them are disguised life agents) -ask around.

[Firefight]

im considering changing mine too, im thinking i pay more then most? but being 18 sucks and has something to do with that im sure. Advise Oscar? where in Auckland is there a good broker? or is every insurence broker a good one?

Hey logan have you tried Honda riders club ?, they have great deals on insurance done by a underwriter in the south island, he is a rider as well, does not have to even be a honda, they will insure all makes of bike.


F/F

[riffer]

Does anyone here have any experience with losing licence for 3 months due to excessive demerits?

What effect does it have on rating/excess/premiums?

[Oscar]

Does anyone here have any experience with losing licence for 3 months due to excessive demerits?

What effect does it have on rating/excess/premiums?

It would depend on your age, and other factors such as previous accidents/claims...

[Rocket]

It would depend on your age, and other factors such as previous accidents/claims...

If people here are in the finance / insurance business why not set up a group for Kiwibiker.co.nz and give group discounts?

[riffer]

It would depend on your age, and other factors such as previous accidents/claims...

37yo, licence for 20 years. No accident claims. Full no claims discount. Clean record (never lost licence).

[Oscar]

37yo, licence for 20 years. No accident claims. Full no claims discount. Clean record (never lost licence).

I spoke with the guys at ClassicCover (who were the best in the KR survey that accompanied the article above) and they should be able to help. PM me if yer interested.