How to buy motorcycle insurance

Motorcycle insurance: It’s an expense most riders dread, but it’s a necessity in Canada. Given that everyone has to sign up for insurance to legally ride on the street, there are many opinions on how to go about it, ranging from “admit nothing, pay as little as possible,” to “make sure you’ve covered your butt for every eventuality.”

Like any purchase, signing up for motorcycle insurance involves a certain amount of personal discretion and understanding of risks and rewards; however, we’ve got a few tips to help make the process easier.

How to buy motorcycle insurance

1). Make sure your application is accurate

Do you have any speeding tickets in the recent past? How many licensed motorcyclists are in your house? Will you be storing the bike inside, or outside? The sales agent will ask you all these questions, and more; if you give an incorrect answer, you could pay the price. The last thing you need is to have insurance on your new sportbike canceled a couple of weeks after buying it, when the insurance company finds out you neglected to mention a few speeding tickets. And you certainly don’t want to have your bike stolen, then have your payout denied because you had the machine under a tarp in the backyard instead of locked away in a garage.

“Sometimes riders will exaggerate the amount the bike is worth or their level of experience when buying insurance,”  says Daryl Brown of www.motorcyclelawyer.ca. “Sometimes this is an innocent mistake and other times it is not. If someone attempts to falsify information on their application and later makes a claim, they risk losing the policy or being found liable for fraud. Applications for insurance are legal documents and everyone should take care when filling out the forms.”

Make sure you purchase enough third party coverage, and be careful when you’re filling out your application forms, says motorcycle lawyer Daryl Brown. We didn’t ask if his insurance policy covered riding through freezing weather over Bear Tooth Pass, but as he’s a lawyer, we figured he’d covered his bases.

2). Make sure you’re covered by your policy

How much will your policy pay you, if you’re injured in a crash and the other motorist’s insurance is insufficient, or they don’t even have insurance? Your policy’s Accident Benefits (or some similar name) will cover your lost wages, your medical expenses, and (in a worst-case scenario) death and funeral expenses. Take a look at this number; if it’s not high enough, talk to your insurance agent about upping the coverage.

“An additional ‘excess’ or ‘underinsured’ policy can help protect an injured motorcycle rider from an underinsured or uninsured motorist,” says Brown.

“In Canada, most of us live near the border to the United States. Drivers in the US can operate their vehicles with little or no ‘third party coverage’ … If the driver has little or no insurance, the ‘excess’ or ‘underinsured’ policy will increase the offending motorist’s coverage to a much higher amount. This is very important because if someone doesn’t have enough insurance, they usually don’t have any assets to pay for the rider’s injuries.”

You may already have something like this on your policy, under another name (my insurer calls it the Family Protection endorsement), but you should ask.

Another factor to consider: Even if you’re not at fault in an accident, your insurer may not pay out immediately if they don’t know who to pursue for damages. For instance, if your motorcycle is damaged in a hit-and-run, you may have to wait for your money if the at-fault driver makes a successful getaway, and your insurer can’t find them. This may be a good reason to run a helmet cam or dash cam. Just don’t do anything on-camera that your insurer can use to deny you coverage.

Know your insurance policy’s ins and outs before you have an episode like this. What’s covered and what isn’t? A call to your agent and a look through your paperwork can save you a lot of headaches later.

3). Make you have sufficient third party coverage

If you’re on the hook financially in the aftermath of a crash, after running into another motorist or a pedestrian or some similar incident, you want your policy to cover the costs. If you’re held responsible for $1 million in damages, and you only have $500,000 in coverage, you’re in trouble.

It’s true that a motorcycle can’t wreak as much damage as a car or truck, but don’t fool yourself into thinking you should carry minimal coverage as a result. Any insurance representative I’ve ever asked recommended $1 million as the minimum liability coverage, and it doesn’t necessarily cost much more than paying for the least amount possible. Many companies won’t even insure your motorcycle with less than $1 million liability coverage.

Another factor to consider: If you’re riding frequently in the US, you might want to beef up your coverage, as the exchange rate means a crash in the US could be very expensive (not to mention US health-care and litigation costs). My own insurer recommends maximizing third party insurance if riding in the US. It cost me only $13 a year to jump from $1 million in coverage to $2 million, so I did so.

Depending what bike you ride, you could find it much more expensive to maximize your third party coverage, but it’s worth looking into.

Even though a motorcycle does much less damage in a crash than a car, you’re still wise to max out your third party coverage, especially if you’re riding in the US. Not every crash with a car is the cager’s fault, and you want to make sure you’re covered if you’re held liable.

4). Payment options

Month to month, bi-monthly, or yearly? Most insurance outfits offer a few different payment plans. Sometimes you pay a bit less with a yearly payment; otherwise, we’re not really sure of any advantages to paying in any specific fashion, unless you’re using it as a way to build a credit rating.

A good disc lock might make more sense than fire/theft insurance, if your bike isn’t worth much. But, if you’ve got an expensive bike, the pricier insurance is probably worth looking at.

5). Fire/theft coverage

If you’re financing your motorcycle, there’s a good chance you may be required to carry this coverage. If you’re not required to carry fire/theft coverage, then do a cost-benefit analysis. How likely is your motorcycle to be stolen, or burned? If that did happen, how much would it cost to replace? Would it be cheaper to invest in a good bike lock, or a storage shed?

If fire/theft costs you $500 extra a year, and your bike is only worth $2,000, then it might not make much sense, especially if you have a high deductible. If it’s worth $20,000, then it’s a different story.

6). Collision coverage

Just like fire/theft coverage, you will be required to carry collision coverage if you finance your motorcycle.

Then, again, it comes down to a cost-benefit analysis. Is it worth paying $500 a year to have your beater bike replaced after a crash? Probably not. Is it worth paying $500 a year for collision insurance to fix or replace your CVO Wide Glide? It probably is.

Remember, just like fire/theft coverage, if you have a high deductible, it will keep your payments down, but if you actually make a claim, you’ll have a big chunk to pay out-of-pocket first.

7). Find out if your gear is covered

Many insurance policies cover some of the cost of replacement motorcycle gear. Others lump it into your motorcycle coverage, which really doesn’t offer much benefit, as you’ve also got to pay for damage to the bike out of that money. If you’ve paid for a quality jacket, riding pants, helmet, and gloves, then you know the cost to replace this stuff can be high. See what competing insurers have to offer and weigh the value of gear replacement before signing on the dotted line.

13 thoughts on “How to buy motorcycle insurance”

  1. In the September 2015 issue of ConsumerReports magazine there was an article called “The Truth About Car Insurance” that applies to motorcycle insurance. They studied more than two billion price quotes and found evidence of “Price optimization.” A policy that bases prices on achieving maximum profits, not cost statistics. Since insurance is a legislated service, there are laws against price optimization, but insurance companies have made the data so opaque and complicated, government agencies do not have the resources to regulate them.

    This article was shocking but familiar. Every year I would get my motorcycle insurance from a new company. I would be offered a lower rate than I was paying but when renewal time came the cost would rise about 12% even though I had no claims or tickets. Exactly the pattern price optimization takes. Insurance companies have done surveys to see how much they can raise premiums before a customer will bother looking for a new insurer.

    I suggest people research this ConsumerReports article. It is some of the best investigative journalism I have ever seen. It will provide insight into an industry that is exploiting legislation to fleece the public.

  2. Once insurance becomes mandated by government, all resemblance to a market economy goes out the window. The seller has absolute control over the transaction. Transparency is at the option of the insurer. The insured has only the option of insuring with a different company. It’s the same old song and dance.

  3. What about Quebec coverage? — how are non-Quebecers covered in Quebec? what if a Quebecer has an accident outside Quebec? There are some who won’t ride in Quebec because they don’t understand the coverage.

    1. Something else to consider is whether or not you are bound to an “early cancellation fee” or “minimum length of coverage time”. I am currently in a dispute with AVIVA over this type of situation. I purchased a policy and agreed to monthly payments, which AVIVA thru Dalton Timmis readily provided. I was made aware of an alternate insurer at a significant savings in premium for identical coverage. I contacted the first insurer and informed them of my wish to terminate my coverage on a specific date (3 months after sign up) and was not informed of any surcharge for termination of my policy on the date I requested. My termination date would be on the date of my next regular payment. Two weeks prior to my last payment I received a letter stating that the insurer was going to remove a sum of money from my bank account one week before my requested termination date. The payment was stopped by me.

      Long story short, I am waiting for a response from Dalton Timmis providing written proof that there is a legal requirement for them in the insurance documents entitling them to a minimum of six month’s coverage. Had there been any such statement in their policy or had I been notified when I spoke to the broker I would have waited for the six month time frame to elapse before swithing to another provider.

      1. Hello Al, sorry for the confusion regarding your Policy with our office. Dalton Timmis does not govern the automobile that is in legislation in Ontario. There is a standard OAP1 (Ontario Auto Policy) that all insurers write their automobile type business on. There is not one motorcycle Insurer in Ontario that we know of that does not follow the Seasonal Rate table. The rate table is quite old and probably does need to be updated, However, the idea was that the premium would be used up during the riding the seasonal.

        Month Retained Premium
        January nil
        February nil
        March 5%
        April 10%
        May 10%
        June 20%
        July 20%
        August 20%
        September 10%
        October 5%
        November nil
        December nil

        1. Dan, in the your outline you assume that nobody rides their bike(s) year round when the weather permits. I was out personally a few weeks ago when the weather and road conditions allowed. Is your assertion that I was not covered by my current insurance provider or would have been with your company had I remained with you for those rides? This formula (payment structure) has never, in all my years of riding (49 this year) been explained to me.

          Dalton Timmis should be in receipt of a letter from me outlining this very scenario claiming that I owe $277.07 for my early cancellation. The progression of circumstances is outlined in this letter. My concerns over owing the monies is also outlined. I would appreciate that since you responded to my post that you obtain my letter and address my concern personally. The addition of a simple line expressing the intention of both the carrier and the insured to appreciate a minimum six month term is all that is required. Since to my knowledge, there is no such statement in the contractual information and no personnel were able to provide this information when I applied for and was accepted by your company I feel I am under no obligation to pay the described amount.

          I agree that the insurance situation in Ontario needs to be revamped as the insurance companies are driving people away from many leisure activities including motorcycling.

          1. Hello Al, Your policy is an annual policy term, there aren’t any 6 month policies available anymore from any Insurer. The premium is only earned over the months where it is indicates a percentage. The same goes, if you had an existing motorcycle policy that ran from February to February. Say that the premium is $1000/year for each bike. If you added a second bike to your policy in November there would actually be no charge to you for the second bike as no premium is earned over the months of November, December, January and February. The second bike still would be covered and you could ride it during those months. In fact depending on the company you would even see a premium return if they offered a multi bike discount.

            I hope this helps Al, and again this is the common practice currently with Motorcycle Insurance.

            I completely agree with your sentiments about leisure activities we do everything we possibly can to give back to the motorcycling community across Canada.

            1. Dan, You have explained the position of the insurance companies better than anyone has before. I was speaking with a former broker this morning and he explained the reasoning of the insurance companies to me as well. I suppose I will have to pay the requested amount due to this “short term strategy” that is employed industry wide in Ontario. I just wish someone knowledgeable had been forthcoming with this information because I would have simply remained with the previous carrier, Dalton Timmis, to avoid the surcharge. However I am still ahead of the game monetarily with my current provider.

              Thank you for your information.

              Al

    1. Shop around, shop around and shop around some more.
      Then when you find a carrier, don’t be afraid to ditch them in a year or two when the premiums start to go up (again).
      There is no rhyme or reason to it – a total clusterf*ck.
      I’ve asked repeatedly the MCC,MMIC and CMA to urge provincial inquiry (at least in Ontario). What’s everyone afraid of ? No reply.
      Transparency in the insurance business could be demanded just like in banking. Too bad we can’t move our policy carriers to Panama….(?)

      1. TK4, I agree 100%. We are getting screwed completely in Ontario. I have asked the same questions over the years as well. Don’t even think about asking the people at the bike shows in the kiosks, they don’t seem to know anymore than we do. But, they do a good job handing out pens.
        Then I ask why can one insurance company offer up a policy with identical coverage to all others I have tried at 50% of the price. I checked and they have excellent reviews from brokers and clients alike in all facets of their product. Hmmmm?

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