We need to talk about bike insurance. I know, I know, I don’t want to talk about it either. It’s hard to imagine anything more boring. Or confusing.
But we already know that no bike lock is unbreakable. And reports suggest that that up to 50% of cyclists will have their bike stolen at some point.
So there’s a good chance we’re going to be robbed. The question is: should we take out bike insurance to cover it?
I’ve got to be honest here: I knew very little about insurance when I started researching this article. I find the whole concept depressing (paying month after month for something that might never happen). I find the language confusing (premiums? underwriting? liabilities?). And I find the prospect of comparing lots of different policies very, very boring.
But I was determined to find out enough to make an educated decision. And now I’m going to document it here in the most simplest form imaginable. Then I’ll get back to doing more interesting stuff like riding my bike.
What is Insurance?
I did say this was going to be basic didn’t I? If this is too basic jump to the next section. But if like me, you struggle with some of the concepts and terminology, keep reading as I cover it all here.
So when you take out insurance you’re basically agreeing to pay a company a small amount of money every month in exchange for a guarantee that should you suffer some type of larger financial loss, the company will pay part or all of that loss.
The monthly payment is called the premium. The agreement that details what’s covered, what’s not covered, and the conditions under which they will (or won’t) pay you, is called the insurance policy.
Insurance Premium: The cost of your insurance
What Sort of Things Can I Insure?
For bikes, that “larger financial loss” that your insuring against will usually be the result of theft, damage or medical bills resulting from an accident. So you pay the insurance company a small amount of money every month and then when if there’s a crash or your bike is stolen, they will pay for a new bike and any medical costs.
Simples? Well yes, but the devil is in the detail. Or at least in that insurance policy which will document in great detail and confusing language all the situations where in fact the insurance company won’t pay for a new bike or hospital bills!
That’s fair enough. There needs to be rules. There needs to be conditions as part of any agreement. But in order to decide whether it’s worth taking out an insurance policy you need to make sure you’re completely aware of what those conditions are.
But I’m getting ahead of myself here because there are actually four very distinct ways of insuring your bike. Let’s have a look at each one in order of cost…
1. The Default Option: Self-insurance
This is basically having no bike insurance, and means you will need to cover your own costs in the event of theft or injury. This has the advantage of being completely free, until your bike gets stolen! The problem with this is that if you ride an expensive bike, you might be not able to cover the cost of its loss, which doesn’t exactly give you peace of mind.
One option is to put aside the money that you would spend on insurance in a savings account each month. This will give you a fund for a bike replacement if something was to happen, and if nothing goes wrong then you end up with a nice chunk of change.
|Self Insurance: Pros and Cons|
|Cheap if nothing happens!||Can be very costly if something does happen!|
2. The Cheap Option: Bike Lock Anti-theft Protection
Certain bike lock manufacturers, (specifically Kryptonite and OnGuard) offer anti-theft protection as a sort of guarantee of the security of their lock. This comes at an extra cost of around $1 to $30 for 3 years cover.
The idea is that if the lock is broken by a thief and your bike taken, then they will give you a compensatory payment.
In practice, relying on this type of insurance might be problematic – especially since they require that in the event of theft you supply the broken bike lock to verify your claim. This could be a problem as many bike thieves like to dispose of evidence!
What’s more, you are often not eligible for these schemes if you live in bike crime hotspots like New York, and there are several other pesky conditions which allows them to offer it at such a cheap price. You can read my full review of anti-theft protection here.
|Anti-Theft Protection: Pros and Cons|
|Relatively cheap||Difficult to claim in the event of theft!|
3. The Generic Option: Homeowners / Renters / Vehicle Insurance
Since over 50% of stolen bikes are taken from the owner’s home, you may well be covered under one of your existing policies.
Make sure to check the fine print, but the chances are that your homeowners or renters insurance will cover the theft of a bicycle from your property, or even from a vehicle associated with the property.
However the coverage doesn’t tend to be very extensive. So while some policies will cover your personal property regardless of its location, they’re usually designed to only cover against things that happen in the home and won’t reimburse you if your bike was stolen in the street, and certainly not for crash damage!
What’s more, homeowners policies are unlikely to cover property at full value, and will have a high deductible, meaning that if you have a particularly pricey steed, you might as well not bother, as you’ll end up having to cover a large portion of the loss yourself.
Deductible: the amount of money you will need to pay in an insurance claim before the insurance coverage will give you anything. (Yes I know this is bizarre but this is how they work!)
For example, if your bike is worth $700 but your deductible is $300 you would only receive $400 even if the claim was successful. And this might come at the cost of losing your no claims discount, which over a few years might be worth more than the cost of your bike!
No claims discount: For every year that you don’t make a claim you get a discount on the cost of your premium. Several years of no claim discount can really make a difference!
However, there is a way around this. If you can schedule your bike as a valuable item of personal property on your insurance policy, then it increases the limits of what the insurance company can pay out on your bike if something happens.
The process of scheduling valuable items is different for each insurance company, but this added protection means you will generally not be required to pay a deductible.
The only way to know for sure is to read your policy to find out exactly how the coverage for personal property is worded, and speak to an adviser about scheduling your bike.
The advantage of using homeowners or renters insurance is that you’re probably already paying it, and it’s likely to include other handy benefits like Personal Liability (although this won’t be as extensive as that from a specialist cycling policy).
Personal Liability Cover: If you damage someone else’s property or cause them bodily harm, your insurance will cover the cost. This means that you won’t be held financially responsible if you end up scratching up a Mercedes on your way to work one morning.
Each insurance policy is different. So, check the fine print of your policies to find out if you can schedule your bike, if they cover personal liability and how bicycle theft is covered.
|Homeowners / Renters Insurance: Pros and Cons|
|No additional cost for many people||Only covers theft from house or vehicle|
You will still have to pay a high deductible
The Specialist Option: Bike insurance
Specialist bike insurance is your best bet if you want to cover all eventualities relating to both theft and injury. So, let’s have a quick look at what it actually covers:
What Does Specialist Bike Insurance Cover?
- Your bicycle and accessories
- Personal injury and loss of income
- Personal Liability
Most specialist insurance policies will cover the full value of your bike in the event of theft or damage in an accident and you will have the added benefit of talking to people who are experienced in dealing with cycling incidents, which should make your claims process as smooth as possible.
This means if anything should happen to your bike anywhere, you will most likely be covered.
But there are a few exceptions…
If your bike was stolen from a situation that invited it. Like if you left it at home unattended with the door open, or left it tied up with only a piece of string because you couldn’t find your lock! If you are careless with your bike and can be seen to have ‘invited the theft’ in this way, then of course neither specialist insurance nor homeowners will cover you.
If your bike was not been locked to an immovable object with an approved lock. Specialist bicycle insurers usually have lists of locks that they approve and if your bike was not secured with one of these locks when it was stolen or it was locked badly, then you won’t be covered.
This is probably the most important part of any bicycle insurance. Ask around your cycling friends and try to find one who’s come out on top after a collision with a vehicle!
Most people will already have some form of health insurance (even if it includes a deductible), but bicycle insurance will typically provide more extensive coverage than medical insurance, including work-loss coverage to recover the wages lost from inability to work due to injury.
Liability cover means that you are not liable for costs when you have been involved in an incident in which physical injury to third parties was caused by your actions, or damage to third party property was caused by you.
The whole idea of third parties is slightly confusing, so to clarify:
First party: The insured person
Second party: The insurer
Third party: Anyone else who is involved
So for example, if you crashed into a pedestrian and then the two of you went flying into a shop window smashing it to smithereens, you would be the first party, the insurer would be the second party, and the pedestrian would be the third party.
While this might be an unlikely situation, it does happen! And third party liability covers your ass should anyone try to litigate because of an accident that you were involved in. Anyone who has tried to reconcile an angry motorist over his bent bodywork will know that this could be useful!
Is Specialist Bicycle Insurance for me?
There are two circumstances in which I think specialist bike insurance is definitely a good choice: if you’re a regular racer or if you ride a very expensive bike that you depend on and couldn’t afford to replace immediately.
If you race regularly (whether on the road, on a trail or up a mountain), then your risk profile is far higher than most cyclists. You’re more likely than most to have a crash at some point and far more likely to seriously injure either yourself or your bike. This means it’s probably worth paying out the extra cost of specialist insurance each month.
If you own a really nice bike that you depend on every day and couldn’t afford to replace, then paying that little bit extra on specialist insurance will give you a bit more confidence and peace of mind that should something happen to your bike you’ll be able to replace it fully and quickly.
However, even if you don’t fall into one of these categories specialist bike insurance may still be worth considering…
Lets take the example of Nako Nakatsuka. It only took one negligent driver to cause brutal devastation. On a personal level a crash can have seismic implications for the poor families involved, but financially who the hell is gonna cover lost wages, meteoric medical bills, and the damage to personal property?
Road culture is tipped in favor of the powerful, and the dominant force on the road is cars. Unfortunately cyclists often tend to be put in a bad light in a collision, regardless of who is at fault.
Having specialist bike insurance might just make the difference.
|Specialist Insurance: Pros and Cons|
|Extensive enough to cover most eventualities|
Covers personal injury, property damage, and third party liability
|The most expensive option!|
Homeowners vs Specialist Bike Insurance
I know it can be a bit confusing, so if you’re still trying to decide between homeowners or specialist insurance, let’s break it down very simply…
Homeowners insurance will generally cover theft from anywhere on your personal property (including your car with some policies). However, it will not cover theft from anywhere in public (like on the street), or anyone else’s personal property.
Some homeowners insurance policies will include an element of personal liability to cover potential damage to other people and property, but this won’t be nearly as extensive as that which you’d get through a specialist cycling policy.
Whereas, along with a decent personal liability element to protect from claims against you, specialist bike insurance will fully cover theft wherever it might happen and the full extent of damage to your bike, damage to your body, and damage to someone else’s body or property.
Recommended Specialist Bike Insurance Policies
The two big players in the bike insurance game are Markel and Velosurance. These provide damage/theft coverage for your bike, personal injury insurance, and third party liability should you damage other property or people.
Both of these companies have decent customer service reputations and can provide customized policies to match your specific circumstances.
For Racers: Markel Insurance
Markel is aimed more at racers and along with the normal crash, theft and injury cover, they’ll also cover things like replacing kit that gets torn up in a race and the costs of events you paid for but couldn’t compete in due to theft or bike damage.
However, it is worth remembering that the cost of these items is unlikely to be more than the deductible which tends to be around $100, so unless the sum of your claim is more significant than that, it might be a waste of time.
For the Rest of Us: Velosurance
Velosurance is actually a subsidiary of Markel insurance, but they have a good reputation among cyclists for providing decent cover at a reasonable price and actually paying out in the event of a claim!
Are there any other alternatives?
One alternative to purchasing a insurance policy could be setting up your own social insurance! Cycle Syndicate is one such group in the UK that has formed what they call ‘Bike Protection fuelled by friendship’.
The idea is that instead of paying a premium, you get together with a group of people and agree to help pay for each others bikes if they are stolen. This takes profit out of the equation and means that you only have to pay when something has actually happened.
This hasn’t yet made its way to US shores, but if you are part of a cycling group then why not start your own Cycle Syndicate? You can get in touch with the original group via twitter @cyclesyndicate.
I think the important thing to take away here is that there are plenty of options. And as always: the best one for you will depend on your personal circumstances.
If you’re a serious cyclist. And by that I don’t just mean someone who belongs to cycling clubs, races in competitions, throws themselves around trails or down mountains. You could also be someone who rides and depends upon an expensive bike that would be difficult to replace. If you’re any of these things, then specialist insurance is definitely something you should be considering…
Because it will cover you and your bike far more comprehensively than any of the other options. Wherever your bike’s stolen (and don’t forget nearly 50% of bikes are stolen from outside the home) and however it is damaged or damages others: you should be covered.
For those of us that don’t consider ourselves serious cyclists, the other options will certainly seem more attractive. Most of us will probably opt for self insurance (simply by not opting for anything else), with the vague hope that we might be covered under our homeowner or renters insurance should the worst happen!
And for most of us, this will probably be enough. But if you need a bit more peace of mind then specialist insurance is certainly worth thinking about. Just make sure you have the best bike lock for your needs as well!