(NOTE:) After seeing how many people don't fully understand their policies, I decided to throw together a basic explaination of the coverages. Please keep in mind that 99.9% of this information could be different depending on where you live and what insurance company you're with. This is a basic explaination of insurance and NOT a legal document that explains everything 100% accurately. If you want something like that, it's called your INSURANCE POLICY. Open it, read it, learn it.
First, I'll explain what the basic parts of your policy are, what they mean and what they do for you.
Bodily Injury / Property Damage: This the liability portion of your policy. Let's say you were out riding at hit someone else and you are at fault. This is how much your company will pay person and per accident for anyone you hurt as well as any property you damaged. It's usually listed in tens of thousands of dollars. For example, your policy could be referred to as a 25/50/10 policy. This means your insurance company will pay out a maximium of $25,000 for each person you injured up to $50,000 per accident. They will also provide $10,000 worth of property damage coverage. Property would consist of auto damage (to their vehicle, not yours), any street signs, guide rails, telephone poles, yards, fences, etc. that you damaged. In New York State this is the least amount of coverage you can get. Many people feel this is enough, expecially when riding their motorcycle. Personally, I feel it isn't even close. Rather than go into a long debate about it here, I'll give just one example:
You're running late for work and run a red light. As you cross the intersection at 45 MPH you hit a 3 year old sedan right in the passenger side hurting three passengers. All three are taken to the hospital. The driver's medical bills come to about $14,000. Passenger 1 has about $38,000 worth of injuries and Passenger 2 was hurt for about $20,000. The estimate for the car itself is about $14,500. You think to yourself, "I'm insured. I've got $50,000 worth of coverage, I'm fine. Hold on there. The driver is covered because you had up to $25,000 per person. Passenger 2 is covered too. Passenger 1 is where the problems start. They have $13,000 in injuries your insurance doesn't cover anyway PLUS the total damages are $72,000. You have a limit of $50,000 per accident. You will be paying $13,000 OUT OF POCKET for Passenger 1. And because your property damage was limited to $10,000, you’ll be paying an additional $4,500 for their wrecked car. This doesn’t include anything they may sue for in addition. So now you’re up to $17,500 worth of damages you need to pay out of pocket and we haven’t even considered your injuries, loss of work, bike damage, etc….. You then say, “How is this possible? I’m INSURED!” Yes, but you’re only covered up to the limits of your policy. Anything over that is your problem. Having “Bare minimum” coverage doesn’t sound so good now does it? This coverage generally doesn’t have a deductible.
Comprehensive: This is also known as “other than collision” coverage. Meaning, fire, theft (common for motorcycles), vandalism or other non-collision losses are covered. Let’s say you live in a high crime area. If your bike gets stolen, this is what will allow your company to pay for your loss. Another example is if you store your bike somewhere in the off season, like us New Yorkers have to. While it’s stored away for the season a huge snow storm causes the garage, building or shed it was in to collapse destroying your bike. Without comprehensive coverage, your loss won’t be paid for. Most homeowner’s policies won’t pay for damage to motor vehicles stored within structures. Did you know that? If not, now you do. So don’t take your coverage off during the non riding months! Plus, most companies are smart enough to know your motorcycle won’t be ridden in the winter months so the policies are pro-rated for this. Any savings you think you may get won’t be very large considering the amount of risk you are taking. This coverage is subject to your deductible. The higher the deductible, the lower your premium but the more you will have to pay out of pocket if a loss occurs.
Collision: Most people know this one. If you wreck your bike, and it’s your fault, this is the coverage that pays to fix it. Like comprehensive, it is subject to a deductible.
Uninsured/Underinsured Limits: This coverage pays YOU in the event that someone else’s insurance doesn’t cover the extent of your damages when another motorist was at fault for your accident. This is your biggest friend as a motorcyclist. Trust me. This coverage usually can’t be any higher than your liability coverage (Bodily Injury/ Property Damage explained above) and is done with per person, per accident limits too. If you have 25/50 coverage for liability, then all you can have is 25/50 coverage here too. Do you think that’s enough? It isn't.
Example: You’re riding to work again but this time someone else runs a red light and hits YOU. You’re busted up badly and end up in the hospital for a few months in a wheelchair learning how to walk again. In the meantime you’ve lost your job along with your medical benefits. The bills keep racking up. By now you’re up to well over $150,000 worth of medical bills and no way to pay for them. “The other guy's insurance has to pay!!” Yes it does. What if they only have $25,000 in liability coverage like you? What if you live in a state that doesn’t require insurance and they don’t have any? The usual answer is, “I’ll sue them!” Well, good luck. If I sued you for a million dollars and won, would I get it? Probably not. Why? You don’t have a million dollars.
Do you want to go to court and take a percentage of someone’s income for the rest of your life? That won’t pay your bills right now and the money won’t come in like you expect it to. This is where uninsured/underinsured motorist coverage helps you.
Take the same example as above but the motorist hits you and then takes off! It happens more often than you’d like to admit to yourself. Now there’s no insurance and no one to sue because you don’t know who hit you. Same coverage applies. This money goes to you. You’ll want this coverage as high as possible. Generally, the people with the least amount of money to throw around are the people who need the most amount of coverage you can get.
I know this was a lot of reading. Keep in mind I barely scratched the surface here. I kept it very, very basic. These parts of your policy are most important and you want the limits as high as you can afford. Keep in mind increasing your coverage from $25,000 per person, $50,000 per accident to $250,000 per person and $500,000 per accident may cost a few hundred dollars a year more but I’m hoping I’ve explained why it’s a SMART thing to do.
Later on I’ll write up more on insurance. Topics will include, “Why is it so much where I live?” “Why does someone pay more than I do?” Stay tuned.