Welcome the the OMI guide to buying motorcycle insurance. Here we try to lay out all the factors that you should take into account when buying insurance to the best of our knowledge and abilities. However, things change, we make mistakes, and verbiage may be misunderstood.
Because of this, we do not take responsibility for the accuracy of this information and urge you to confirm any specific information before purchasing your insurance.
Thanks to Allan Johnson of the Canadian Vintage Motorcycle Group (with some additional notes by Avi Singh of
Cornerstone Insurance Brokers Ltd) for supplying the guts of this guide.
GETTING THE RIGHT COVERAGE
1) Mandatory Insurance
Insurance coverage on road using motor vehicles, including motorcycles and mopeds, is mandatory in Ontario, as it is in every other province of Canada.
The coverage which is required by law is in four parts:
- Third-party liability (also called Public Liability and Property Damage, or PL & PD) coverage of at least $200.000. in case the driver of your vehicle injures or kills someone or damages someone’s property.
- Uninsured automobile coverage, in case the owner of the vehicle that injured you or caused damage to your vehicle does not have insurance or is not traceable (hit-and-run driver)
- Statutory Accident Benefits coverage, which provide for a basic level of income replacement (disability benefits), supplementary medical and attendant care benefits, death and funeral benefits. Some of these benefits are only provided if you have no other wage replacement or supplementary medical benefit plan. Death benefits are only paid if you have a surviving spouse and/or dependent.
- Direct Compensation for Property Damage coverage, which allows you to claim from your own insurance company for damage to your vehicle caused by someone else. To the extent that you are not at fault in an accident with another vehicle in Ontario, your own insurer will pay for damage to your vehicle.
Riding without the mandatory insurance levels can result in stated fines from between $5,000 and $50,000, depending upon the vehicle involved, the history of the person stopped, etc.. The judge has some latitude in what final amount is assessed and it can apparently be lower than the guidelines, but in practice you can probably expect to be hit for between $5K and $6K.
Don’t do it, if you ever hope to ride again. Cars generally don’t get stopped for “document checks”, motorcycles routinely do.
2) Optional Insurance coverage
Optional coverage is not required by law, but is available (at extra cost of course) and is offered generally as follows (note, the mandatory Direct Compensation part of your policy already covers physical damage loss of your motorcycle in a collision when someone else is at fault, to the degree they are at fault) :
- Higher third party liability coverage limits – Can be upped to $300,000, $500,000, $1 million or even as high as $2 million.
- Increased Accident Benefits coverage – This may pay a higher weekly income replacement amount, index the wage replacement to inflation, increase the supplementary medical payments and attendant care expenses, pay increased benefits to unpaid caregivers, increase the death benefit to survivors, and increase the funeral benefit limits.
- Coverage to insure the motorcycle for physical damage or loss – This can be coverage against loss by:
- Specified Perils (which usually includes fire, theft, attempted theft, lightning, windstorm, hail, rising water, earthquake, explosion, riot or civil disturbance, falling or forced landing of aircraft or parts of aircraft, or the stranding, sinking burning, derailment, or collision of any kind of transport in, or upon which, the insured motorcycle is being transported).
- Comprehensive (includes Specified Perils, falling or flying objects, missiles and vandalism).
- Collision or Upset (Covers damage when an insured motorcycle is involved in a collision with another object or tips over).
- All Perils (Combines the Collision or Upset and Comprehensive coverages into one package)
3) What Coverage Should You Buy?
Briefly put, you have to buy the mandatory coverage at the minimum $200,000 liability limits in order to be legal on the road (though good luck getting a quote on this amount).
You can reduce the direct compensation portion of this mandatory premium by taking a higher deductible (indicating that you will pay the deductible amount of any accident damage to your motorcycle caused by someone else).
Purchase of optional or additional coverage beyond the government mandated level depends on what you would feel you need in case of an accident, and in what your insurance agent or insurance company salesman can convince you that you need. Individual needs vary, and not all people need or should pay extra for certain coverage. For example:
– a retired and unemployed pensioner does not need to purchase an optional accident benefit for a higher wage replacement amount, since if disabled by an accident, there would be no eligibility for wage
– a person who has a wage replacement plan and long-term disability coverage either provided by their employer or purchased privately may be duplicating coverage since only one plan will pay and the automobile insurance is not the plan which pays first.
– people with no spouse or dependents would gain no benefit from purchasing additional increased death benefits since these are only paid to a surviving spouse or dependent.
– motorcyclists may well feel that the risk of a third-party lawsuit exceeding $200,000 for damage caused by a motorcycle to other persons is less probable than with an automobile. This may be especially so in the case of riders who never take passengers or who ride a motorcycle which has no provision for carrying a passenger.
– a motorcyclist may well feel that the need for physical damage coverage such as fire, theft or collision insurance on a motorcycle is not needed either because of the low value of the motorcycle or the fact that it is not being financed by a loan, or because of its limited exposure to the risk of theft or damage.
Beyond the legal requirements, there are others. For instance if you’re financing a purchase and the lender has a lien against the bike, then you’ll be required to carry “all perils” insurance. Your bike is the only sure way that they can get their money back if you default on your loan, so they want that asset protected. Check your loan paperwork.
If there’s a lien on the bike and you DON’T fully insure it, then you would be in breach of the contract. The remedies to the lender in cases like that can include calling the loan due immediately, among other
WHERE TO BUY
Motorcycle insurance can be purchased from independent insurance brokers, insurance agents, direct from an insurance company, or through a group insurance plan. While all may seem the same at first glance, it is important to understand the differences.
It is important to note the basis upon which motorcycle insurance is sold in Ontario. Independent brokers, insurance agents and companies are all for-profit companies and individuals intent on making a living. The old saying. “Don’t ask the barber if you need a haircut” applies here. Very few sellers of insurance (or anything else) will tell you that you don’t need to buy more of their product. In fact, insurance sellers are often the most highly insured people around, having convinced themselves that more insurance is always better.
Independent insurance brokers are people who are licensed by the province of Ontario to sell insurance and authorized by one or more insurance companies to sell their products on commission. For selling motorcycle insurance, the usual commission is 12.5% of the gross value of the policy, although some companies have recently reduced this commission to 5% on certain models.
Therefore, an independent broker’s income depends on the amount of insurance sold. As a result, the advice on how much insurance coverage to buy may not be that which is always the least expensive for the consumer. A broker may well represent four or five auto insurance companies, but usually only one or two companies which sell motorcycle insurance without resorting to tied selling (requiring your car and/or house insurance business as well).
In some cases, a broker who wishes to retain your long-term business will certainly not “steer you wrong” as to the coverage you need or should have. But it must be remembered that the “independent broker” is not truly independent of the insurance companies and is, in effect, a commission agent.
Insurance agents are people who represent a single insurance company (such as Co-operators or State Farm). These agents can only sell the single company’s insurance and are, in fact, employees of the company. As employees of a company, there is the same pressure to sell more insurance coverage to increase the income of the company.
As with the broker class of salespeople, their success depends on more sales, so their advice as to the necessary coverage cannot exclude their own and their company’s interests.
Purchasing insurance direct from an insurance company is now commonly done by telephone to a centralized telemarketing operation. In this situation you are dealing directly with a company who also has the aim of selling you as much insurance as possible; although in doing it directly and cutting out some of the expense of agents and their offices, or brokers and their commissions, the company may be willing to pass some of the savings on to you.
The fourth means of buying motorcycle insurance is the type which requires you to belong to a special group (usually a low-risk one) which the company has identified and markets to at exclusive rates. Group auto insurance has been around for some years and usually you had to belong to a union, professional association or similar group. Occasionally these plans would also write motorcycle insurance to those who also had car insurance in the group plan.
Some companies combine home and auto with bike insurance for clients who meet their eligibility requirements (may require you to be over 30 years old to qualify) and so premiums are usually reduced. However, some companies may also require you to have home and auto insurance policies with them before they will even consider covering a motorcycle
Another advantage of bundling is that if ever you have a claim that involves more than one policy (for instance a fire in the garage, burns a portion of the house, damages a car and a bike) you only have one company to deal with, and in most cases they will only levy the highest applicable deductible once on the entire claim.
WHO TO BUY FROM
While price is important, also check out the reputation of the company, the broker or agent that you are dealing with. Ideally look for one who specializes in motorcycles, who has a good reputation and who has been in the business for some time.
Make sure that the quotations you get are firm, preferably written, with commitments as to price and coverage details. Be sure that the quotes that you may be comparing are for exactly the same coverage and then shop your business around.
Also be sure that the broker or agent is giving you the benefit of any lower rates for having completed a rider training course, have a full motorcycle licence and a number of years of ticket-free and claim free history.
Make sure the person you are dealing with knows the correct year, make and model of motorcycle you
are insuring. Too often in the complex list of makes and models the wrong one (not yours) gets chosen … almost always a model in a higher rate group which is more expensive to insure!
Some riders find the convenience of telephone shopping has worked out for them, but telephone service people may arbitrarily categorize a rider’s record and motorcycle as unacceptable. In a personal interview
with a broker or agent this attitude by the seller is much less likely to occur. But in this busy world, many people are not always able to take the time to go to a broker’s or agent’s office.
A rider should remember to read carefully every document connected with their taking out of insurance, to understand what they are committing to and what they are getting in return. Insurance is complicated, much more so than many people think it should be. As with all purchases, it is really buyer beware.
PERSONA NON GRATA
You may be refused insurance for various reasons, most commonly if you are trying to insure a sport bike. Because insurance companies see this category as a higher risk, most will either include an additional charge to cover them or refuse to cover them altogether. For a listing of insurance companies and their so-called Blacklists, go to our Insurance Blacklist Guide page.
If you are looking to buy what could possibly be interpreted as a sportbike, we thoroughly recommend getting an insurance quote for the bike BEFORE YOU BUY IT. You may find the cost of insurance to be more than the cost of the bike!
If you have problems at the purchase stage and think that you arc being oversold on coverage, or refused coverage for unacceptable reasons, or any such-like complaint or problem, you can contact the Provincial Ombudsman’s office at 1(800)668-0128. There is also a website which is run by the Financial Services Commission of the Ontario Government which has much advice on buying insurance.
Addresses, Emails and telephone numbers of all Ontario elected officials and civil servants are also on their website. Let your elected MPP and the Minister of Finance know of your problems if you cannot get insurance or get it at what you feel is a reasonable rate.