What You Need to Know About Motorcycle Insurance: What are all the Kinds of Coverage? Jeff Boyd+ November 13, 2016

So what are all these kinds of coverage?

What DO you need so that you are protected from the nightmares? First, you need to really understand those eight kinds of coverage I listed above.

1. Bodily Injury Liability Coverage
Liability Coverage is for the damage you do to the other guy. When you run a stop sign and smash into somebody, your Liability Coverage steps in to take care of your legal responsibility to that other person. In a bodily injury claim (also known as personal injury claim), that is coverage for the other person’s medical bills, lost wages, and what is generally called “pain and suffering”. Also – and few people know this – your Liability Coverage pays for a lawyer to defend you if you get sued.

2. Property Damage Liability Coverage
This is Liability Coverage for the damage you do to the other guy’s vehicle or its contents, and for their “loss of use” claim (think “rental car”).

3. Uninsured/Underinsured Motorist Bodily Injury Coverage
If I can tell you one thing it is that you MUST understand the difference between Liability Coverage and Uninsured/Underinsured Motorists Coverage!

These types of coverage, also known as “UM” or “UIM” Coverage, are insurance for YOUR benefit. When some fool falls asleep at the wheel and drills you, and when that fool does not have any insurance (he is “uninsured”) or does not have enough insurance (he is “underinsured”) your UM/UIM Coverage will pay you for what his insurance would have paid you if he had insurance. Let me repeat that – if someone causes a wreck and doesn’t have any, or enough, insurance, your UM/UIM Coverage will pay what the other person should have paid, up to the limits of your  coverage.

This is a big deal. Although Washington law says you have to have insurance to drive, a LOT of people don’t have any insurance, and a LOT MORE don’t have very much insurance. But a lot of people scrimp on their UM/UIM Coverage to save money. DON’T! Uninsured/Underinsured Motorist Bodily Injury Coverage is for your medical bills, your lost wages, and your pain and suffering.

4. Uninsured/Underinsured Motorist Property Damage Coverage

Uninsured/Underinsured Motorist Property Damage is for the damage the fool did to your vehicle or its contents, and for your “loss of use” claim (think “rental car”). With this coverage, the deductible is limited by law to $250. This coverage can apply instead of Collision Coverage or in addition to it.

5. Personal Injury Protection (PIP) Coverage
Very few people understand what Personal Injury Protection is all about – and that’s a shame, because it is like liquid gold. This coverage pays for medical bills, funeral and burial bills, income continuation, and loss of services incurred because of an accident. PIP is a no-fault type of coverage. It does not matter how you got hurt – the other guy’s fault, your fault, no one’s fault.
Insurers providing automobile insurance policies must offer minimum personal injury protection coverage for each insured with benefit limits as follows:

  1. Medical and hospital benefits of ten thousand dollars;
  2. A funeral expense benefit of two thousand dollars;
  3. Income continuation benefits of ten thousand dollars, subject to a limit of two hundred dollars per week; and
  4. Loss of services benefits of five thousand dollars, subject to a limit of two hundred dollars per week.

You want this coverage! Your health insurance may pay some of bills from an accident, but
you may not have health insurance, or it may not pay for some types of treatment that you
need, or there may be deductibles and co-pays. The other guy’s insurance may pay the bills
in the long run, but usually not until the end of the case – which may be too late to save you
from bill collectors. If no one is at fault, PIP may be the only coverage under your policy that
pays anything. Trust me – PIP is one of the best, and relatively cheapest, coverages you
can have. Get it.

6. Collision Coverage
Collision Coverage kicks in when you wreck (“the upset or collision with another object of your covered cycle”). This coverage is no-fault, and covers the damage from almost any collision regardless of the reason (well. . . there are some exceptions written into every policy). BUT, what does “cover” mean? If you think it means you get paid what you think your bike is worth, you are dead wrong.

First, the difference between a wreck where your bike is “totaled” and where it is repairable: “Totaled” means the cost of fixing the bike is higher than the “value” of the bike. No matter how much you love your ‘ol Hardtail, if it would cost $12,000 to fix it, and it is only “worth” $8,000, it is going to the dump. Also, insurance only pays for your bike. Insurance companies have no responsibility to replace your bike.

What does “value” mean? It means “ACV” or Actual Cash Value (also known as “FMV” or Fair Market Value). ACV is the amount that someone would pay for your bike if you put it for sale in the paper or on e-Bay. Put on your “buyers” hat, and think what a stranger would pay for your baby. Odds are, it’s not what you think it is worth – but you may be stuck with the “stranger’s” value.

Since very few riders keep their motorcycle in its original condition, this “value” issue is often a big problem as to custom work, too – and one you may not even know about until it’s too late. The value of your bike is not cost plus the amount of money or effort you have invested. Putting $25,000.00 worth of paint and chrome on a $5,000.00 bike does not necessarily mean the end result is worth $30,000.00. It is a rare modification that results in a dollar-for-dollar return in the value. It does not matter how much you “have in it”, if someone walking up to the bike would not pay you as much as you “have in it”.

Most of the time, loss or damage to any custom equipment or paint/chrome, optional equipment, or added equipment not included as standard by the manufacturer is not covered (or is covered only up to a very low amount, say, $500) unless there is a specific endorsement to the policy.

Talk to your agent about this! Get the coverage you want and expect! There are special coverages or special policies available that will cover a bike and its accessories based upon an agreed value, or a value from an appraisal done before you wreck. This kind of coverage is not what you get in standard policies. If you haven’t dealt with this when you get your policy you may be in for a nasty fight after a wreck. These claims are very tough to fight in court, as a practical matter, because of the dollars involved and slow court calendars.

7. Comprehensive Coverage
Comprehensive Coverage takes care of damage to your bike from accidental losses other than those caused by a collision (fire, theft, etc.). However, “comprehensive” does not mean “everything.” There are often exclusions for many things, such as your clothes, your tools, or custom items. Helmets are often covered (although some policies are limited to a “Department of Transportation approved helmet”). Insurance companies, at least, believe it is in your best interest to wear a helmet and will “reward” you for wearing one.

8. Towing & Storage Coverage
You had to put it down. What now? You can’t just leave it by the side of the road. And after someone charges you to tow it somewhere, storage charges can be $20/day or more. These charges usually are not covered in your Collision Coverage or Comprehensive Coverage. Cover these risks by getting insurance for them.