The 4 coverages every motorcycle insurance policy should have
In recent years, motorcycles have become more popular than ever in the U.S. According to a 2009 report from the Motorcycle Industry Council, a nonprofit trade association, 10.4 million American households now own a motorcycle, compared to 6.6 million households in 1998.
The Motorcycle Industry Council also reported that more than 55 percent of today’s motorcycle owners are older than 40. For this group, motorcycles may be a luxury purchase, as opposed to a necessary way to travel. Younger riders often buy motorcycles because they’re a much cheaper form of transport than cars. With motorcycles made to suit differing needs, the cost of motorcycle insurance varies. Your insurance cost will be determined by your particular motorcycle in addition to state laws, lender requirements, and the coverages and limits of your policy.
When you buy motorcycle insurance, your policy should contain the following four coverages.
1. Liability insurance.
Liability coverage protects you if you’re found at fault for an accident where another person’s property is damaged, or they are injured in the crash. Your liability coverage will pay out for medical bills, lost wages, and damages – but only up to the limits set on your policy.
If you’re sued, liability insurance can pay for your defense. However, if the liability limit of your policy is $20,000, and you’re sued for $50,000, you will be responsible for the difference out of pocket. For this reason, you should purchase as much liability insurance as you can afford.
GEICO product manager, Lisa Hamilton, says, “Many bikers think their motorcycle is small and can do little damage, but the reality is that motorcycles can cause accidents with significant damages. Carrying higher liability coverage is often less expensive than customers think.”
2. Uninsured/underinsured coverage.
Uninsured / underinsured coverage provides financial protection for you and any passengers if you get into a crash involving an uninsured motorist. And there are millions of uninsured and underinsured drivers on the road. In April 2011, the Insurance Research Council reported that about one in every seven drivers is uninsured.
Underinsured coverage protects you against drivers that don’t have liability limits that are high enough to cover your damages — even if they’ve purchased the minimum amount of liability insurance as required by state laws.
3. Collision coverage
Collision coverage is often a mandatory requirement by lenders if you take out a loan to purchase your motorcycle. This coverage insures your motorcycle if it gets damaged in a collision with other vehicles, or if you fall off your motorcycle and it gets damaged by the road or another object.
If your motorcycle costs more to insure than it’s worth on the market, you may no longer want to pay for collision coverage. However, motorcyclists should always keep comprehensive coverage, as it protects against risks such as vandalism, theft and fire.
4. Medical payments coverage
Medical payments coverage is an optional coverage and pays for necessary medical treatment for you and any passengers up to the chosen dollar limit. This can be important if you don’t have health insurance to cover your medical expenses, or you have a high-deductible health plan.
It’s important to note that in some states if you already have health insurance, the medical payments portion of your premium may not kick in until you have exhausted all other medical coverage.