I recently needed to purchase motorcycle insurance for the first time. After researching, and finally purchasing a motorcycle insurance policy, I have some lessons learned. Particularly on how to save money on the policy. There are actual some easy things you can do to save money on motorcycle insurance. Saving money on motorcycle insurance entails three basic principles: buy only what you need, compare, and take advantage of discounts.
1. Shop Around: Ok this seems obvious, but seriously, there can be HUGE differences amongst insurance providers for the same coverage. Even if all you do is compare some of the large national names (GEICO, Progressive, State Farm, All State, etc.), go ahead and do the comparison. I guarantee you that you will be surprised. In my experience, a 6 month premium could be TWICE AS MUCH at one provider.
2. Motorcycle Safety Classes: Most insurance providers will give a discount if you have completed a motorcycle safety class. In some cases, this may be the same class you took to get your license! Make sure you get credit for the class. Forewarning though, if you're thinking of just taking a class to save on insurance...classes can be $300 or more. The discount is also only valid for 3 years from safety class completion date.
3. Drop Comprehensive Coverage: Comprehensive coverage, which is normally a "must" for cars and trucks, can be totally dropped for motorcycles. Particularly if your bike is older, or inexpensive. Comprehensive covers the bike in case of theft, flood, etc. Obviously check the terms, but for the most part comprehensive focuses on the bike itself. This will also have a deductible attached to it. Something like $250/$500/$1000. That's the share you pay in the case of a claim. So when bikes are older and less expensive, and you have a deductible, it doesn't make much sense to pay a bunch of dough monthly for comprehensive. The numbers aren't in your favor.
4. Drop Collision Coverage: Collision coverage, also normally a "must" for cars and trucks, can be dropped for motorcycles. Again, this is especially true if your motorcycle isn't worth that much money. Collision coverage takes care of the motorcycle in the case of an accident. But, it also has a deductible attached to it. So again, when your bike is cheap, it doesn't make sense to purchase collision either. Just buy a new bike.
Now, before I continue, some of you may thinking "dude screw you, you're telling me the best way to save money on motorcycle insurance is basically cut out all the good coverage". No, that's not what I'm saying. Consider the following scenario:
The average starter motorcycle (say 250cc or 500cc...something like a used Kawasaki Ninja, or Honda Rebel) costs around $2000-$3000 today. Obviously, not a super expensive bike, and of course, it's used when you buy it. Still, that's about what most people spend starting out, and the Ninja 250 is, by far, one of the most popular starter bikes. Ok, so we've got a bike for 2 grand, we need insurance. It's safe to say the average new rider (age 20-40, single, etc.) is probably going to pay anywhere from $50 to $100/mo, depending on coverage. Let's pick the middle, $75/mo. Let's say the rider goes full coverage, and opts for both Comprehensive and Collision. And let's say their deductible is $500. That might be low, because a lot of people choose $1000 deductibles. Remember, the deductible is what you have to pay, regardless, when you file a claim. So, to recap,
$2000 starter bike.
Full coverage, paying $75/mo, with a $500 deductible.
That means your 6 month bill for insurance coverage is $450. After one year of coverage, you've paid $900 for insurance. At this point, when you consider the deductible, an accident/fire/theft/damage will still cost $500...regardless.
$900 insurance for one year + $500 deductible = $1400
Compare that to the value of the bike, when you bought it, $2000.
You're one year insurance bill alone is 45% of the bike value. If you figure an actual claim triggers the $500, and add that in, your one year insurance bill is now 70% of the bike value!
Why the hell would you pay $75/mo for full coverage on a bike that only costs $2000?
Now that's just one scenario, but you can run the numbers for yourself. Just compare the cost of the full coverage plan in 6 mo and 12 mo increments to your bike value.
Drop collision and comprehensive for your bike if the numbers aren't in your favor. Use a 6mo and 12mo insurance premium value, and compare it to the value of your bike.
Remember, Collision and Comprehensive can be as much as TWO THIRDS of your policy cost!
Dropping collision and comprehensive can cut cost substantially. If you are financing the bike, unfortunately, this won't be optional and you likely can't drop either Comprehensive or Collision.
5. Join a big bike club: Most national insurance providers give modest discounts for joining motorcycle associations and clubs. No, not like the a discount for the Hells Angels. More like a discount for the American Motorcycle Association, Harley
Owners Group, Gold
Wing Road Riders Association, Gold Wing Touring Association, Motorcycle Safety Foundation [and] Venture Touring
Society, BMW Motorcycle Owners of America.
6. Have good credit: All of the national insurance carriers are going to be checking your financial history. All of them also state pretty clearly that the better your financial history (i.e. pay your bills on time), the lower the rates. Sometimes it can be as much as half!
7. Drop Med Pay: Motorcycle insurance typically has something called "Med Pay", or Medical Coverage. This is basically coverage for your health and medical. So why drop it? Simple, you're probably already covered under your primary health insurance policy, and Medical Coverage like this is SECONDARY. That means it only pays when another health insurance policy doesn't. In the case of an average joe with health insurance at work, Med Pay will only pay AFTER his primary health insurance pays!
If you can take advantage of the above seven tips, you can easily get your motorcycle insurance down into the $50/month range with a national provider. The best part is, if you can take advantage of these tips, that $50/month can be buying you some kick ass insurance. You should be able to pick up $100k/$300k on medical liability, and good coverage for uninsured/underinsured. Defeinitely pay attention to these two areas in particular (Medical Liability and Underinsured/Uninsured). You want to go big here, if possible. A lot of people on the road don't have insurance, and that could leave you high and dry. At the same time, motorcycle accidents are often nasty, so having a high medical liability is wise!