The motorcycle insurance excess question always irritates me. How to I answer it? I have two conflicting requirements. Here’s why.
Having thought recently about buying another motorcycle, how much it would add to my motorcycle insurance bill was one of necessary the considerations.
Having answered the ever-extending list of questions that insurance companies ask, I arrive at the one about the excess on the policy and I’m conflicted.
On the one hand, I want to set this at £1,000 and on the other hand, I want to set it at zero.
The £1000 argument
If misfortune arrives, a low side in the snow or the bike falling off the side stand – both of which I have managed by the way – then I’m not going to claim on my insurance.
The insurance company will want the bike repaired at a dealer, and at dealer labour charges. What would cost me less than £1,000 in parts to repair the cosmetic damage, will cost twice or three times that at a dealer.
The problem isn’t the dealers, they have overheads and wages to pay. It is simply how much it increases the repair bill by that is the issue.
For less than £1,000 I’m not going to call my insurance company, and spend the next five years explaining my claim every time I renew my insurance.
The Zero Argument
If my bike is stolen or that thing that shall not be mentioned occurs, and my beloved motorcycle is gone forever, then I would like the insurance to pay me what the bike was insured for, without any deductions.
When I sign up for my annual motorcycle insurance, the insurance company asks me how much the bike is worth. It is part of their calculation when working out the premium.
So if my beloved motorcycle is gone forever, I don’t wish to be paid out less than it is worth, hence, in total loss situations, wanting my motorcycle insurance excess to be zero (no deductions).
Not being an Insurance Company, what follows, is me guessing. Hopefully, one of the insurance brokers, Carole Nash, Bennetts, MCE, Mackenzie Hodgson or one of the many others will chip in with some facts, but my theory – such as it is – goes like this.
I would think the motorcycle insurance companies would say, when I state that my motorcycle is worth £5,000 when applying for the insurance policy, they deduct the excess and calculate their maximum risk to me as the value less the excess. In my example £5,000 less the £1,000 excess equals £4,000.
So ignoring all of the other reasons we have insurance, I’m only ever going to see £4,000 for a £5,000 motorcycle.
If I set the excess even higher, the insurance companies risk to me goes down and the same the other way around. As the insurance companies risk is changing, so does the cost of my policy.
But none of that actually gives me what I need. I did consider setting a £1,000 excess and setting the value of my bike £1,000 higher, but it seems that doesn’t work as the insurance company will use “market value” when settling a claim.
Zero Excess for Total Loss only
What I’m looking for is an insurance policy that has a £1,000 excess EXCEPT in the case of a “total loss”, be that through theft or the thing that shall be mentioned. In those cases, the excess on my insurance policy would be zero. I get the value of the bike.
Logic verses emotion
There are all sorts of logical arguments that say I’m wrong. If I can find the money to repair the bike, why can’t I add the same money to the payment from the insurance company when replacing it?
It makes sense, but there is something about claiming on my insurance and getting less than the value of the bike that feels wrong.
One answer I’m told is to take out another insurance policy and insure the excess on the motorcycle policy. That way, if you claim and the excess is deducted from you final payment, you claim on the excess insurance to get that money.
Is it just me? Ever onwards …