RBHeadShotRonny Bush is a local State Farm agent, First City Cycling Team member owner of Bush Acres, home of Crazy Joe Cross, YGR advertiser and supporter of everything cycling. Today he’s here to explain bike insurance, if we have it already, whether we need it and what it actually covers. Feel free to contact Ronny with further auto, home, life and bike insurance questions.  https://goo.gl/DBSDZ9

It’s a very broad and dry topic, bicycle insurance that is. Insurance policies are contracts between the insurer and the insured. They may give the insured something in paragraph 3 and may take it away in paragraphs 6, 9 and 12. Paragraph 3 may say that everything you own is covered anyplace in the world. But, paragraph 6 may say that coverages is limited on some item as to where, when and how it’s insured. Paragraph 9 may go on to say that some items are excluded from coverage, and Paragraph 12 may say that no payment will be made until certain conditions are met. A single sentence does not tell the whole story. A policy must be considered in its entirety.

I was writing a renter’s policy of a guy with normal items of personal property. He asks me if it’s just his property or does it include coverage for his roommate’s property too? The policy says that coverage is for YOU and YOUR SPOUSE. So my follow-up question was, “Are you two married?” He turned to her and a brief discussion took place. They agreed in the office that “for insurance purposes we could say that are married”. I made note of that on the application, I reached into my drawer and tossed rice announcing that they are now Husband and Wife. You see, in Colorado, if a couple declares publicly and before a witness (one witness is enough) then they are considered married. Bam! They were married right there in my office! I saved them a ton of money. There is no time period required for a common law marriage in Colorado. All that is necessary is to declare it and share.

A bicycle is covered by homeowner’s insurance if it is not being used in the act of committing a felony or for business. (Note: in this discussion, homeowner’s, renter’s and condo unit owner’s insurances are all the same) The question of intentional damage or intentional loss must surely be raised because I know first-hand how tempting it is to toss the bike over the cliff or into the river in frustration. No policy will cover neglect so don’t think about leaving your bike in Old Town Fort Collins unchained overnight. Can a bike be misplaced, like misplacing your keys? Yes, and misplacing a bike is not covered by any policy that I know of. Most policies require proof of lose and misplacement is not a covered loss.

There are four issues to the coverage question. What deductible is reasonable? How many bikes need to be covered? What perils need to be covered? What is the cost?
Let’s do the deductible first. A $1500 homeowner’s deductible is almost no coverage at all for the average bike rider. Unless someone cleans out your garage of all the bikes you own, you will most likely lose only one bike at a time. Most thefts involve just one bike. So really, a $1500 deductible is almost worthless for most casual bikers. For the few who ride $5000 and up bikes, a $1500 deductible is proportionate to the value of the bikes. Some specialty policies carry a $100 deductible.

Question 2, how many bikes are exposed to a loss at any one time? Do you need blanket coverage or will a policy covering only specifically named bikes be Ok. Are loose parts covered, as in a bucket of bolts, frames, cranks etc.? How do you insure a custom built bike? Be sure to list all the parts and take photographs of the assembled bike. Twenty photos would not be too many, showing the parts clearly enough to identify make, model and in some cases the serial number.
Homeowner’s policies don’t need to have bikes scheduled (named and listed). All of the bikes are insured under blanked coverage as is the rest of your personal property. Extra coverage can be obtained for specific bikes under a separate policy or by an endorsement to a homeowner’s policy (if one is offered). The separate policy can carry a lower deductible ($100 is a common deducible for a separate bike policy).

Question 3, what perils need to be covered. Peril is a term used frequently in the insurance industry but is not used in our daily lives outside a conversation about insurance. If someone uses the word peril in conversation you can almost be sure there is an insurance agent present. Peril is the cause of the loss. Bikes can be damaged by a peril such as by fire, theft, crash, neglect, submersion in water, rust, intentional damage, and so on. What perils are cyclists concerned about? Obviously theft is a top priority followed by a crash. How about rust, wear, stretched chain, lost computer and the like? These are perils too.

Crashes fall into several categories. Solo: going down and hitting the dirt, tree, fence, and/or guardrail (Editor: I think guardrail was added for specifically for me) without touching or making contact with any other vehicle (bike, car, and train). Vehicle crash is when the bike makes contact with a vehicle (and that includes contact with another bike). A typical Homeowner’s Insurance policy will cover the damage to a bike caused by a crash with a vehicle but not an object like a tree, guard rail or fence. Consider this, three riders are descending a hill and one rider clips the rear wheel of the biker in front. Both rider lose control and go down. The third rider avoids hitting the other two bikes and careens off into a guardrail. All 3 cyclists have high end carbon fiber bikes. The two bikers who collided can file claim with their Homeowner’s policy for coverage within their own policy under the “Collision with a Vehicle coverage” (each subject to their policy’s deductible and disregard fault in this example). If you are going down in a group ride, taking out another rider may trigger coverage that a solo crash would not….. I’m just say’n. Most bike owners are concerned about theft and crashes.

Question 4, cost. Your personal risk management and risk tolerance will dictate your willingness to pay for the coverage. If the insurance of a single bike is $400 a year with a $500 deductible for a $3000 bike, you may need to figure another way to protect our asset. That’s something you need to decide.

Caution: Most insurers will not be willing to keep insuring a person with a history of claims. If you have a $500 deductible and a $700 bike that is stolen, you should file a claim, after all, you paid for insurance and you should use it if you have a loss. Just don’t be surprised if you get non-renewed. While you my consider 3 loses in 3 years to be a pattern, some companies may say that 2 loss in 5 years show a pattern.

Replacement Cost vs Actual Cash Value (or RC vs ACV for short). RC is the cost to replace a bike with one of like kind and quality. ACV is the value of the bike at the time of the loss. Say that you bought a bike for $3000 on sale 5 years ago. The used bike may be worth $1500 today. That same bike may be offered new for $4000 today (not on sale) and maybe $3500 if you can work out a deal. It would be said that the ACV is $1500 and the RC is $3500. So you see, there are several prices associated with the bike: 1) Original price you paid for it, 2) ACV and 3) RC.
There is another figure that could come into the discussion. That is the policy limit. I’m not going to get into details about underinsurance. It’s complicated and not worth the ink to discuss it. Just don’t underinsure it if you are scheduling a bike.

The name BigRing Insurance came to my attention recently. It offers coverage specifically for bike owners. I’ve reviewed their website (https://www.bigringinsurance.com/whats-covered/faq) and it appears that this is the type of coverage that many of you have asked me about (my company doesn’t have a similar policy). Check out their website and especially pay attention to “What’s Covered” page. From what I read on their website this is very good coverage.

The Homeowner’s policies provide different coverages including liability, loss of use, additional living expenses, and more. Liability coverage protects you in case you case injury or damage to people or property. BigRing Insurance does have liability coverage. Other than that, it looks good.
I hope this is helpful.
Ronny Bush