Market viewpoint: Motor insurance-factors at play
Internet cannot be a viable option unless expenses can be reduced considerably
The Internet could be the cause of the next motor market cycle downturn. The question is whether this will happen before full recovery has been made from the last fall, an event that can be traced back to the advent of the direct insurer.
So how did the direct insurer affect the market? Certainly there were inefficiencies within the traditional insurance companies, especially with regard to expenses. But you also have to question the direct insurers’ levels of premium and their vast advertising spends to attract business. There was little evidence of accurate underwriting practices being adopted
Many direct operations were set up with a costly infrastructure. Most assumed they would quickly acquire a minimum client base of 500,000. The direct arms of existing insurers were often permitted a “honeymoon period” during which premiums would only have to fund claims, with all expenses including staff and advertising costs funded by the parent.
Most of these companies or divisions were marketing led, where “underwriting” was replaced by “pricing”. At least one insurer adjusted their premiums depending on the conversion rate. They wanted a greedy 40%. If it fell below, rates were cut. If it went over, they were increased. Needless to say rates had to be slashed to achieve 40%. Often the cost of acquiring a policy exceeded the premium collected. They were often driven by the misguided belief that you had to be big to make money.
Many have failed to survive. Others have been taken over, merged with other direct operations, or have converted to a panel approach. Unfortunately it was often the case that those in control were more interested in their over-generous bonuses based purely on premium growth than they were on making a profit.
And profit is very elusive in motor. One wonders just how many more years will pass before motor insurers manage to achieve an overall underwriting profit. The days of the three-year cycle now seem to be well and truly over, with only one year in the last ten being profitable. While there are signs of improvement, there is little evidence of market profitability being achieved in the next couple of years. Certainly insurers have found it easier to implement rate increases, helped no doubt by the reduction in the number of insurers.
Yet overall competition remains very high, despite the changes seen in recent years. The direct market rates have come more into line with those available to brokers, although there remain far too many examples of the totally indefensible practice permitted by some insurers where the gross rate offered by their direct arm is well below even the net rate offered to brokers for the same risk.
Insurers have sought affinity relationships as a means to reduce acquisition costs and we have even seen some direct writers join the broker market by making their rates available on broker panels. There is no longer the stark contrast between the direct writer and the rest of the market.
Without any new market influence there is every sign that within two years the market could return to profitability, but will the Internet create a downturn before that can be achieved? We are already seeing pricing in favour of the Internet customer, without which there is little prospect at this stage of reasonable volumes. A discount in premium can only be justified if lower costs are incurred but there is little evidence yet of any such savings.
That will only come with time as customers gain the confidence to complete all their policy transactions on the”net”. Most, however, still expect the full support of call centre staff once they have obtained a quotation. It will be interesting to follow the success or otherwise of an Internet only insurer. Huge development costs are being quoted which will need to be recovered. The question that has to be asked is how much of that figure is being set aside to enable discounted rates to be quoted to attract business?
So with this background, can brokers expect to survive? Despite past suggestions that brokers would not survive against direct insurers, they are now maintaining their market share. They have also taken business back from direct writers, thus overturning the myth that such insurers would retain any client once on their books. There is no such thing as a direct client. They are all motorists and there is little insurer loyalty. Brokers therefore remain in a very strong position, but they need to take care if they are to compete successfully.
Brokers must develop systems and processes that minimise expenses. Their processes need to imitate those of the direct insurers. Larger intermediaries can do this by adopting centralised administration, and working with delegated authority from insurers. They can build all functionality into one system to avoid re-keying, and ensure the system produces all required documentation based on a standard policy wording.
Rock-like Zenith
Brokertalk
AN: Zenith grabbed the headlines recently with the news they are moving their motor account out of Lloyd’s and going to Gibraltar. Zenith are not the first to do this, but nevertheless gave their brokers the reasons behind the decision at a presentation given by chief executive Ken Acott at the London Underwriting Centre.
The Zenith management team remains unchanged, but they will now furnish capital into a new company called Zenith Insurance plc (ZIP), registered and authorised in Gibraltar.
Motor has a roller-coaster profit cycle, and bringing capital to bear just at the right moment requires speed and flexibility. Lloyd’s historical three year accounting does not suit motor, as the release of profits necessary to finance growth rarely becomes available until the result cycle is in decline.
At the LUC presentation, Gibraltar Finance Centre director James Tipping outlined their regulatory standards, which coincide with FSA and EU regulation. Consumer protection is said to be in no way diminished, and I hope to report in more detail on the Gibraltar scene at a later date. The 70 or so Zenith brokers at the LUC appeared satisfied with the arrangements. Only motor is currently affected - the rest of the Zenith portfolio remains with its Lloyd’s syndicate.
One requirement for Zenith’s Gibraltar operation is for the decision making process and regulatory reporting to be carried out on the Rock; hence the establishment of an underwriting and pricing unit in those sunny climes. But all other processes will continue from Zenith group’s service company in Haywards Heath.
Where’s the logic?
Maggie Litster, underwriting and pricing director of Groupama Insurances, discusses pricing in the motor market, and asks if logical thinking will win through.
Logic and motor cars are often strange bedfellows. That’s why people in flat cities drive 4WDs that sup petrol at 16mpg. Or tootle around with their fog-lights on when it’s not foggy. Or think that the rules regarding the use of indicators somehow do not apply to them…
But perhaps the widest gap between road-sense and nonsense exists within the insurance market. Why else would the industry seem willing to step over the precipice and initiate another damaging turn of the cycle that sees reckless competition push prices to unrealistically low levels until underwriting chaos reigns?
It is not as if we do not have plenty of mistakes from which to learn. Throughout much of the 1980-90s, the motor market suffered negative technical returns. The grim truth was that we were paying out L120 or more in claims for every L100 of premium income. It was only a healthy flow of investment income that kept us afloat.
That lifebelt has now been punctured by the downturn in global equity markets and the prevailing low interest rate environment. More than ever, it is incumbent on motor books to pay their own way. What folly then, to pursue market share with prices that have only a distant relationship with underwriting reality.
The situation is all the more frustrating because it seemed we were learning from our mistakes. After underwriting losses in every year since 1995 the market almost secured an underwriting profit in 2001, and 2002 was even more encouraging - until the spectre reappeared at the feast in the form of a slowdown in rating activity. Research by the AA shows that rate increases over the last quarter were less than 0.025%, and over the last year were just 2.91% - less than the rate of inflation.
This is where logic ceases to operate. We have just started to see adequate rates delivering satisfactory results. So what do we do? We render those rates inadequate at renewal. It seems the most wilful sabotage imaginable.
The problem of course, is that the insurance market can never act as a single entity because it is made up of many separate interests. And it is a competitive environment, which means individual organisations will constantly strive to gain ground on each other. But if the net result is market-wide carnage, should we not strive to pursue a common interest? Other industries manage to remain viable while providing good value to their customers - is there some intrinsic quality of the motor sector that prevents us doing the same?
There is growing urgency for corrective action. While premiums stagnate, the industry’s cost base is about to rise. We could see corporate casualties - and we know how much trouble that would cause for the market as a whole.
These fresh costs will arise from a number of factors. For example, there is an increased willingness of people generally to pursue compensation claims. No-one objects to valid claims. But what about the additional and inflated legal and administrative costs that have arisen as the compensation industry has developed? What about the growth of the fraudulent accident industry? We are getting better at spotting illicit claims, but who knows how many still slip through the net?
The demise of the Accident Group may bring a fundamental change to way the compensation market conducts itself, but are we yet ready to call the top of the compensation culture spiral?
We are also seeing substantial rises in the NHS costs we are expected to bear. Given the current political climate and the state of public finances, that situation is hardly likely to be reversed any time soon.
So much for the human element of accidents. What about the vehicles themselves? There are suggestions that the repair industry is itching to bump up its prices - and if repair costs increase, insurers will have to find the money from somewhere. It would seem logical to look to premium income but will logical thinking win through?
Motor insurance must be one of the very few retail products where customers are regularly promised savings each year. To advertise low prices is one thing - most sectors see such campaigns - but to advertise lower prices year on year is another matter entirely. It confirms consumer attitudes about the supposed inefficiency and unfairness of the market, and it condemns the market to a continuing reduction of income against a backwash of rising costs.
So while we may not be able to act in concert, we should at least recognise the threats we all face. We stand together over the issue of the sensible, realistic and logical pricing of motor policies, or we run the risk of falling apart. And we surely owe ourselves and our customers better than that?
by Maggie Litster
Underwriting and Pricing Director, Groupama Insurances
Letter: Blaming the victims of car accidents
Sir: The victim-blaming approach of Sean O’Grady’s article “Cyclists don’t own the road” (5 September) is breathtaking. No activity is utterly safe, but even taking risks into account, cycling is beneficial to health. In the rare event of an incident, in the vast majority of cases it isn’t the fault of the cyclist, but of the errant motorist.
And what is this “road fund licence” O’Grady refers to? I own a car and I don’t pay “road fund licence” because there is no such thing. There is no specific tax or licence revenue ring-fenced to pay for roads. In the UK, roads are funded out of general and local taxation and as such, are just as much paid for by non-motoring taxpayers as by motoring ones.
As for nsurance, the fact that cyclists don’t have to have specific insurance reflects the low risk they pose to other road users.
Indeed, many a cyclist does have third-party insurance, as it’s often included as part of home insurance. As the real risk caused by cyclists is so low, the insurance is effectively a “freebie” contained in other policies.
A new year’s resolution?
Marketing men would give their eye teeth to have the magical mix of the broker’s advantages
I’ve been doing some work in and around the intermediary/broker market over the last few months primarily on motor but encompassing household too. The thing that I still find surprising is that, a few years ago, with your livelihood being threatened by direct writers, generally the intermediary sought to fight it out on motor; when the rating cycle hit its worst, they still sought to fight on the uneven territory of motor, even though costs of doing business were increasing; net take after placing the business was (is still) dropping; customer retention was dropping considerably; and the premiums were being chased down by those insurers with deep pockets and maybe not so deep a thought process.
BUT, what about household? My work recently still shows that the proportion of business in household is tiny, for the personal lines broker, compared with the number of customers with motor insurance. Nothing new, then?
So many brokers and intermediaries tell me (and have consistently told me over the years) that they actively “cross sell” other products. Now, either they’re trying real hard and have got something wrong, or some, at least, are kidding themselves. ost marketing and selling people would give their eye teeth to have the magical mix of advantages that you have:
A product that people need (and recognise that they need); Available at a price that is considerably cheaper than the major (and seriously dominant) competitors (banks and building societies); Ready access to a distribution channel.
Now, this is a description of your circumstances:
The customer has to have building insurance of there is a mortgage involved and outright ownership invariably means a live household policy, anyway; The customer has, if prudent, a contents policy (certainly around 80% do anyway);
The available price from a broker is substantially lower than the loan providers offering materially the same product;
The distribution channel is your existing customers, your potential customers - i.e. all those that approach you for a quotation for any OTHER TYPE OF INSURANCE.
So, you have the tools - perhaps you don’t have the skill to use them. It’s called knowledge of product and ability to sell and close the sale - stuff that’s written about all over the place. There is one thing for sure - if your staff don’t know the product and don’t know how to close a sale, then you’re probably wasting your money in employing anyone.
You have the products - and you don’t have to sell the cheapest. Concentrate on getting familiar with a couple of household products (and this goes for your staff, too).
And, you have the regular flow of customers and enquiries.
Get weaving!
Let me give you an example. I rang around, (as I do this time of year, every year) for motor insurance - it’s called “mystery shopping”. (Incidentally, you should do the same - and pick out the good bits of the conversations and documentation/letters etc. and use them yourselves. At worst you’ll get free pens and calculators for life and be blocking their incoming telephone lines!)
Anyway - the third question into the conversation, in each instance, was about my household renewal dates. This is important: it was not an afterthought, not a question only asked of those that took up the motor quote and almost guaranteed a sensible answer. Think about it! How would you be able to refuse to give the data? Difficult, without being rude - and you have yet to get the motor quotation that you called for.
The key to being able to offer your customers (and potential customers) a quotation is undoubtedly to know their various renewal dates. Direct marketers would give their eye teeth to get hold of this information.
The timing and positioning of those questions has been designed by experts - COPY IT! And, that’s just one example.
You can bet your bottom dollar that, come the renewal dates (no I’m not telling), I’m going to be hit with quotations or pleas to call them. Are you doing that?
Let’s say that you want to try this. Then tell your staff why and show them how - both important!
Quotation A is TPF&T on a 15year-old Cavalier, unemployed 19-yearold.
Existing customer B has a BMW, aged 40 and lives to the west of town.
Quotation C is comp on a Transit van for a builder.
Customer D is comp but a pain when it comes to collecting premium.
Etc., etc.
Gather the information and then target the people most likely to have, or to want or have, the product and the willingness to pay for household insurance. Which two examples would you go for? So why waste your money going for the low, or no, hopers?
That’s what direct marketers do, but they use big numbers and fancy named data bases. Try it small: keep it personal.
Why bother? Premiums are going up; decent levels of renewal retention on motor are more and more difficult to obtain; loss ratios for insurers are frighteningly high. Yes, and the good news is that it is easier tQ gain business from the direct writers.
Motorcycle Insurance
Motorcycle insurance broadly covers all styles of two-wheeled transportation on the roads including mopeds, touring bikes and high-performance sports motorcycles. Some companies can exclude some form of motorcycle as they may not fit within their risk category. As an example, conservative insurers may not cover modified motorcycles. They will normally have a modified motorcycle insurance plan, moped plan or scooter plan that can be taken as an alternative with a different set of inclusions.
Who needs motorcycle insurance?
Anyone who rides a motorcycle needs to have motorcycle insurance. It doesn’t matter if you are an occasional weekend rider or spend every day on your cycle, you need to be covered. The law for motorcycles is the same as for other motor vehicles.
What typically does motorcycle insurance policy cover?
Motorcycle insurance covers the motorcycle from damage caused by an accident as well as liability to other vehicles or injury caused to another party. Typically, you would make a claim through your motorcycle insurance policy in the same way you would an auto insurance policy.
You also get coverage for a number of accessories with are associated with motorcycle riding. As an example your helmet, leathers, saddlebags and backrest should all be covered. However, the insurance on these accessories is limited so if you have an expensive helmet or other accessory it is recommended to insure it separately.
You should receive roadside assistance as standard as well as a trip interruption payment to ensure you can get home if you are traveling interstate.
What typically does motorcycle insurance policy not cover?
Damage to your motorcycle caused by weather is not typically covered unless the damage is caused while the motorcycle is stored correctly (eg in a garage or a covered car park).
Damage to custom work completed on your motorcycle is also not covered unless you have stipulated to the insurer that the custom work has happened and have provided photographic evidence of the work. This is becoming increasingly common as more people are making large claims for custom work.
Damage caused to you by another party who is uninsured is not covered in the event of an accident. You normally have to request an ‘uninsured motorist’ inclusion.
Motorcycle insurance packages vary massively between states so check the policy carefully as it may different from the advertised package.
Additional insurance products that policy holders might need in this area
Motorcycle insurance tends to be comprehensive as it covers damage, public liability, roadside assistance, medical expenses and travel expenses. However, those expenses are limited to assisting you in that immediate moment. You may need more comprehensive medical insurance and roadside assistance policies to benefit fully from a claim.
Additional coverage for a motorbike insurance policy
As in auto insurance you can be comprehensively insured on your motorcycle but as a standard policy is so comprehensive there is no real extra coverage you need unless your state has any glaring omissions for their standard cover list.
What will motorcycle insurance typically cost?
Motorcycle insurance is determined by your experience, your auto record, the motorcycle you would like insured and the amount of cover you need. You could pay up to 5% of the value of your motorcycle per year as insurance but it is likely you will pay less than that as discounts are always offered for clean driving records, age, gender and a whole host of other reasons.
Why You Need Uninsured/Underinsured Motorist Coverage
Hope you’re covered if you get into a fender-bender and discover that the at-fault driver is uninsured. In that unpleasant situation, your auto insurance will kick into gear if you have uninsured/underinsured motorist protection, and among those who would steer you in the direction of those sentiments are auto insurance industry representatives such as Nicole Mahrt, Dave Snyder, Dan Kummer and Sharon Cooper.
Think of uninsured/underinsured motorist coverage as an important self-help tool that generally is pretty affordable. It’s important for people to protect themselves in case they get into an accident with someone who either has no auto insurance or doesn’t have enough coverage, says Mahrt, western regional public affairs director for the American Insurance Association. “You probably can’t afford to drive without it.â€Â
“Everyone does need it if you live in a state that mandates that coverage, and about a dozen states do,†says Mahrt’s colleague, Dave Snyder, vice president and assistant general counsel for the American Insurance Association in Washington, D.C. “Your auto insurance provider should be able to tell you whether that coverage is mandated or is optional. Beyond that, if you buy it, you need to determine how much coverage you need. How much you need depends on whether you have health insurance and whether you want to be compensated for ‘pain and suffering,’ which you get with UM/UIM.â€Â
“You can protect yourself from being hurt financially by buying uninsured/underinsured motorist protection,” points out Kummer, director of auto insurance for the Property Casualty Insurers Association of America in Des Plaines, Ill. “Without uninsured/underinsured motorist coverage, you have little likelihood of gaining payment for damages you or your vehicle sustain if you’re involved in an accident with a driver who is either underinsured or driving without any coverage,†says Kummer.
Selective Insurance Senior Vice President Sharon Cooper characterizes uninsured/underinsured motorist protection as “an important coverage for consumers because it protects them in situations they can’t plan for. Without the coverage, their only recourse may be to sue an individual to cover their losses if (that other driver) doesn’t have insurance or enough insurance.â€Â
Uninsured coverage also covers you if a hit-and-run motorist hits your vehicle. “With this coverage,†Kummer continues, “you and your passengers receive compensation for medical expenses, lost wages and other injury-related losses. You can sue that person, but if that driver has nothing, you’ll get nothing even with a favorable judgment.â€Â
Underinsured motorist protection pays you for damages that surpass the amount of coverage carried by a driver who is underinsured. “That’s valuable, because many drivers carry minimum limits, and that may be insufficient to cover your injuries and lost wages,†notes Kummer.
The Insurance Information Institute’s Carolyn Gorman extolled the virtues of such catastrophic coverage. “You absolutely need this coverage, because, if you get into an accident with someone who is driving without insurance or doesn’t have enough of it, you want to be made financially whole again. You have to protect yourself fiscally and physically, and uninsured/underinsured motorist protection can help you in that regard.â€Â
Motorcycle Insurance Advanced
Definition of a Motorcycle for Insurance Purposes
There’s very little chance of mistaking a standard motorcycle for anything other than what it actually is. There are, however, plenty of motorcycles that get redesigned, customised and modified to such an extent that they would outwardly appear difficult to classify, especially when it comes to buying the insurance for them. But in the world of motorcycle insurance it’s all very straight forward and the rules of classification are crystal clear. The definition of a motorcycle is simply any two wheeled vehicle that is powered by a mechanical engine. This two wheeled vehicle can also include a side car or a trailer. However, a three wheeled vehicle will also be classed as a motorcycle if any two of its wheels are found on the same axle.
Motorcycle Insurance Policy Types
Third Party Only is the most basic of the three policy types. It only gives the motorcyclist cover for injury to others (including pillion passengers) and damage to property. It does not cover any repair costs to the motorcycle or its replacement if stolen.
Third Party, Fire and Theft policies give the motorcyclist the legally required third party liability cover, plus it also insures the bike against fire and theft.
Fully Comprehensive is normally the most expensive insurance you can buy for your motorcycle. However, it does cover the loss or theft of the bike plus any repairs needed for damage sustained in an accident. Fully comprehensive also incorporates everything that is included in a third party, fire and theft policy
Motorcycle Insurance Pay as You Go
With the pay as you go system being a success story for car insurers it was only a matter of time before the idea was applied to motorcycle insurance. Consequently, some insurers now offer the choice of buying their motorcycle insurance on a pay as you go option rather than having to buy it for the whole year. These policies are paid for on a monthly basis enabling the policyholder to have complete flexibility over the length of time they require the insurance. To keep the insurance valid is simply a case of paying the monthly premiums for as long as it is required.
The advantage of this is that it allows you to stop and start your motorcycle insurance to suit your needs, and also enables you to receive the benefits that insurance companies often attach to these kind of schemes. One that is often featured with the pay-as-you-go concept is the bonus accelerator. With this you get rewarded a one years no claims discount for keeping the insurance policy open for a period less than a year. So, for example, you might find 8 months of insurance bought on a pay as you go basis will actually reward you with a one year’s no claims discount.
Taking Your Motorcycle Abroad
All motorcycle insurance will give some basic cover for traveling in Europe. It does, however, require the country you are visiting to be part of the EU, and if it is you are automatically insured for the minimum amount demanded by the laws of that country. Though, if you prefer, you are normally able to increase the level of insurance for the duration of any travels by asking your insurance company. However, in most cases you will be expected to pay a small extra charge for doing so, but it will bring your insurance levels up to the same as they are in the UK. If anything, the risk of accident and theft abroad is far higher, so it can be quite reassuring to know that you have an insurance policy that won’t let you down while you’re traveling abroad.
If you have ever traveled through Europe in the past you may have been advised to take with you an Insurance Green Card. This was once a necessity in EU countries to prove you had insurance cover, but it is no longer required as your insurance certificate and policy schedule are now considered valid proof of having the legal minimum insurance for those countries. But, if you are taking your motorcycle to Europe, do remember to pack these documents because if you are involved in an incident you will have a lot of explaining to do if you cannot easily produce them.
Motorcycle No Claims Discount
Possibly one of the most important aspects for getting cheaper motorcycle insurance is the No Claims Discount. Although it generally won’t reach the same levels as that of car insurance, you will normally still find insurers offering you as much as 50%. The way you build a motorcycle no claims discount is exactly the same as it is for a car. You will need at least 12 months to elapse without making a claim on your insurance before you can even begin on the discount ladder. The following claim free years will then see your discount increase until it reaches the maximum of 50%, or whatever the insurers happen to be offering.
As with car insurance you can normally protect yourself against losing your motorcycle no claims, but there will obviously be a small extra charge for this privilege. It is worth it though, as a no claims discount is one of the most valuable tools in reducing the overall cost of motorcycle insurance.
Motorcycle Insurance Tip
Motorcycle No claims Discount is non-transferable and very rigidly fixed to the named person on the policyholder. In that respect you cannot gift it to another person as each individual has to build up their own discount. Also, if you have both car and motorcycle insurance then these are treated as different entities, and you will have to build a separate no claims discount for each.
Optional Legal Expense Cover
Many motorcycle insurance policies have optional extras you can add on to further increase the amount of cover, and these are generally offered to you when you buy the main policy. One such addition is legal expense cover. This additional insurance will cover you for any legal costs that may arise from claims where the accident might not have been your fault. This also has the great advantage of ensuring your no claims discount remains intact. If you are unfortunate enough to be involved in an incident then legal expense cover will ensure you get appointed a professional representative to carry you through any proceedings and negotiations.
Be aware, though, that despite professional representation you still have obligations to meet, and one of these is to inform the insurers immediately of any settlement payments made in respect of the claim. However, this and any other responsibilities that fall on you are always stated in the small print, so do read them carefully for failing to uphold your side of the contract could nullify the entire insurance policy.
There are often exclusions found in Legal Expense Cover, and one of the most common ones is when your motorcycle is used for other purposes. For example, you will normally find exclusions in legal cover when the motorcycle is used in competitions, speed trials and rallies etc.
Insurance Tip
If you know you’re going to be using several different motorcycles then a multi bike policy could very well be your best choice. This allows the policy holder the flexibility to add extra motorcycles onto one insurance policy.
What You Need to Inform Your Motorcycle Insurance Company About
Nobody expects a keen biker not to tinker with his machine, but there are several things often done in all innocence that can actually be classed as alterations. Under your insurance policy conditions you have a duty to disclose any changes made to your motorcycle, so therefore you would have to tell the insurance company about these. This could be anything from tweaking the engine to enhance it’s performance to making slight cosmetic changes to the bike’s bodywork, for example. Basically, anything you change or enhance that wasn’t already standard when the motorcycle came off the production line. Of course, the biggest fear is that this will push up the price of the insurance, but this isn’t always the case and quite often you will find it does not affect the insurance in any way at all.
You are also expected to inform your insurance company if you change the usage of the motorcycle. For example, by adding a trailer and then using it to make deliveries could result in the motorcycle falling into an entirely different category, so in cases like this you are duty bound to disclose this information.
Also, if you are allowing other riders to use your motorcycle then you need to inform the insurance company of this as well. By naming them on the insurance you have covered yourself in the event of one of them being involved in an incident, and once again you will also have fulfilled your legal obligations attached to the insurance.
Insurance Tip
If you have a motorcycle stolen while the keys are still in the ignition then you will normally have a difficult time when it comes to making a claim, so remember to always remove keys and secure the motorcycle to the best of your ability. This way if the worst happens and it does get stolen you will not have to argue your case with the insurance company.
Reducing Your Motorcycle Insurance Premium
In most cases motorcycle premiums are dependent upon individual circumstances, however there are a few things you can do in order to keep insurance costs to a minimum. For a start you could limit the usage of your motorcycle. For example, if you have other transport you could choose to use this and the motorcycle only at weekends, and by doing so you may well be offered a limited mileage discount from the insurance company.
When choosing a motorcycle try and avoid the high powered ones. A sports bike compared to a standard cruising one will bring with it higher risks on the road, therefore the insurance company will need to cover those risks by making the insurance premium more expensive. Finally, consider the security of your motorcycle and reduce the risk of it being stolen as much as possible. By safely storing it off-road or in a lock-up overnight you will have made it much harder to steal, and by doing so the insurers will probably offer you much cheaper insurance.
Motorcycle Insurance
The trend for owning a motorcycle has increased dramatically over the past few years, especially for the smaller scooter/ moped type that the young fashion conscious like to be seen on. But, despite the rise in popularity for two wheel transport a lot of insurance companies still steer clear of offering motorcycle insurance. The few that do offer bike insurance tend to manage the increased risks involved with motorcycles by making their insurance premiums quite expensive.
Fortunately, though, there are several specialist companies that do offer insurance specifically for the motorcyclist, and as they are geared for doing so then their policies are often cheaper too. These companies give the bike rider an opportunity to buy good value insurance based on individual circumstances, and enable them to satisfy their legal obligations on the road. Of course, not all policies are the same and the key thing to remember before buying any type of motorcycle insurance is to always get several quotes, compare the cover, then choose the policy that best suits you and the particular motorcycle you want to insure.
Types Of Motorcycle Insurance
There are two main types of motorcycle insurance. The first one, which is the most common, is the specified rider policy. This insurance covers only the rider and not the actual motorcycle. It will also normally specify the size of motorcycle that you are insured to ride.
The second type of policy is quite the opposite and gives cover to only the motorcycle and not the rider. This type of insurance is therefore ideally suited to situations where several people all ride the same motorcycle.
Motorcycle Insurance Discounts
Unlike car insurance, providers of motorcycle insurance do not tend to be overly generous with their no claims discount. So, when applying for quotes consider yourself lucky if you find a company offering you the chance to reach 50% no claims discount. It is normally only after the first year of claim free biking that you can start to build up your no claims discount. But, just as you can with car insurance, you can often pay a small extra on your premium to protect losing your no claims. This is often worthwhile as even a 50% discount will give you significantly cheaper insurance, and the small extra fee will easily be regained through the savings you make.
Canceling Motorcycle Insurance
A common mistake made by a lot of bike owners is to cancel their motorcycle insurance during the winter months, or when the motorcycle is likely to be left unused for long periods. Statistics show that approximately 10,000 bikers do this each year while they store their motorcycles until the warmer weather. Bike thieves are also very aware of this fact and take advantage by stealing approximately 600 bikes per month from garages and lock-ups. So, canceling motorcycle insurance may seem cost effective at the time, but maintaining the insurance throughout the year could quite clearly be the most sensible thing to do.
Calculating Motorcycle Insurance Premiums
One factor taken into account by insurers offering motorcycle insurance is your location. For example, inner city areas tend to attract higher insurance premiums than suburbs and more rural locations do. This is partly due to the increased risk of theft attached to inner city areas.
There are, however, many other things used in calculating the cost of a motorcycle insurance over and above your location. Some other things considered are: the make of motorcycle, its engine size, the value of the bike and any overnight parking facilities you might have.
Women Bikers
Statistically, women bikers tend to be less of a risk on the road than their male counterparts. The result of this is that women’s motorcycle insurance is often discounted to reflect the element of reduced risk. Therefore, it’s sometimes possible for female motorcyclists to pick up an insurance policy that is discounted by around 15%.
For any keen biker though, finding motorcycle insurance is not as easy as finding car insurance. But, when you do find insurers the rules will always remain the same: Do get several quotes and compare them on a like-for-like basis, read the policy small print with an eagle eye to understand the inclusions and exclusions, and finally remember it’s always better to be over-insured than under-insured.
Safety Tips for Riders
Enjoying riding your motorbike is essential, but so is safety! At Express insurance we care about your safety. It’s a shame that you have to share the road with cars and trucks, but as there are other people on the road, it is important that you do as much to keep yourself and others safe.
As a biker you are already aware of the importance of what you wear whilst riding. Comfortable helmet, gloves, boots and protective leathers are a must. There are also certain things that you can do to your appearance, for instance wearing bright and retroreflective material can help you be seen by other road users that can enhance your safety.
Before you start, check the weather forecast and inspect your bike. Tyres, petrol and oil checks are a must - check your owners manual to see what they recommend. It’s also worth planning your route, especially if you are riding with others. Whilst driving, always assume that other drivers don’t see you, so that you ride defensively and are ready to take evasive action. Riding near the centre of the lane, and staying out of others drives blind spots will help too. If you can’t see their mirrors they probably can’t see you! As with all road users, staying awake and sober is vital for a safe trip. And you should obviously obey the law.