Shopping for insurance is a good thing, however, when comparing premium prices be sure to compare apples to apples concerning coverage.

Hopefully all of you have insurance on your scooters.  It is interesting that each year I tend to get more and more requests for me to check the rates on companies trying to attract new customers.  The offer of substantially lower rates can be compelling.

However, it is wise to understand some of the issues you may run into while investigating insurance alternatives.  For one, companies trying to attract you as a new client often offer rates 10-20% below what you are currently paying.  The rates are real, and here is why.  In the years from 2000 to 2003 the investments the insurance companies made with your premium dollars simply did not provide a sufficient return to for needed profits (some of you may have noticed the same affect in your own equity portfolios).  Most insurance companies raised their rates during this time to make up for the profit short fall.  In the last couple of years, the investments have returned to the pre-dot-com levels.  With past rate hikes AND current investment returns the insurance companies are doing much better.  Now many insurance companies would like to build their client base and they do that by offering attractive rates for insurance while attempting to lure you away from your current company.  Nothing wrong with that, it is the American way and often you can get a better deal.

Unfortunately it is unlikely your current insurance company will offer you an attractive rate to remain with them.  They pretty much figure it is a hassle for you to acquire new insurance and just assume that you will renew and continue to pay the higher rates you have been paying for the last couple of years.  Companies in many industries are willing to spend lots of money attracting new customers, but very little keeping the old customers.  So it is up to you to spend a few minutes and get your best deal.  It is out there for the taking if you invest a little time of your own.  By all means, you should shop for insurance.  Rates for similar risks are all over the map.  A couple of years ago Consumer Reports tried to do some comparison shopping for their subscribers and found it extremely difficult to make meaningful recommendations because the underwriting differences for differing companies are a very much a deep dark secret based on current underwriting requirements of a company at any point in time.  So shop!!!

As I shop around I find some interesting issues that you should all be aware of.  The first is that nothing really counts except how well you are serviced in your time of need.  Basically, how well does your insurance company perform in terms of making you whole in an efficient and fair manner?  No matter how much you may save on the premium, if the company does not pay off in your time of need then you paid too much.  So having some sort of “loss” experience, either your own or knowledge of someone else’s is very valuable.  The second is that you actually get the coverage you intended to get.  Here in hides a major disaster waiting to happen.  You really should read the policy you are considering.  The insurance industry would like you to believe that all the policies are pretty much the same but they are not!

Lets look at a recent example of my own discovery.  I am currently insured with Progressive (renamed Drive).  I moved to this company a couple of years ago while looking for a better deal from the company I was with.  I used the Harley Davidson Financial Services group and I must say that they were extremely helpful in my search.  These folks are Brokers in the insurance trade.  They represent several different companies, and presumably are working for you and seeking the best product for your circumstances.  At the time, HD and I looked at 4 different companies.  In the case of HD they tend to do a lot of homework prior to your first call in assuring the companies they represent provide a minimal set of required services (do they offer coverage on safety clothing, etc?).  However, they may not represent the best company for your situation.  They get paid for placing a client with one of the company’s they represent.  As a broker they may represent a number of different companies, offering you a specific selection and may not represent others for any number of reasons.  HD spent about 45 minutes on the phone with me exploring these 4 different companies.  The one I selected was not the lowest cost of the 4 but I knew several people who had made claims against the company and were very satisfied.  So I selected Progressive (Drive) and have since made my own claim and was satisfied with my settlement.  Some insurance companies choose not to use brokers, instead using their own agents, or some like Geico pretty much use the Internet and extensive advertising.  

In the case of Geico they focus on massive advertising and offer lower rates by passing the commission savings on to their customers.  Not better or worse, just different.  Progressive advertises also; their pitch is they will give you the lowest offer, even if it is not their own!!!  Sounds like a real deal until you understand that if Progressive CANNOT offer you the lowest rate, then they would really prefer that you buy from another company.  If for some reason your profile does not fit into their underwriting methodology then they actually want you to go elsewhere.  A clever practice they have turned into a “trusted” process in their advertisements.  It is real, they really will provide you with the lowest cost offer even if it is not their own.  But, sorry, they are not doing it for you!

Now back to being sure you get what you want.  You must read the policy and unfortunately most companies will not let you see their policies until you actually buy.  Some companies now post their policies on their websites and that is a good thing.  In the case of Geico, they did provide me with a policy but only after I had made an initial payment, which they said would be refunded, if after reading the policy I were not satisfied.  So here is my Geico story.  

Back in June 2006 while at the HOG rally in Billings, MT I visited the vendor show.  There was a Geico booth and some very nice folks giving stuff away.  They offered to give me a quote, and knowing that shopping for insurance is a good thing, I accepted their offer.  On the phone I outlined the number of bikes, riders, and specific coverage I wanted.  They came back with a quote that frankly blew my socks off!  It was way lower than my current policy, so much lower in fact that I felt a little more exploration was in order (if it sounds to good to be true then something is wrong).  I left without changing insurers and continued to explore.  The Geico quote was so low that I started wondering how they could do it.  In the mean time, I got rate quotes from several other companies.  Some higher, some lower than my current premiums, but all within about a +/-15% range, accept the extraordinary quote I received from Geico.  When it came time to renew my existing policy I decided to reinvestigate the Geico offer.  Sure enough, the rate I finally got quoted was not what I heard on the phone.  Unfortunately, sufficient time had passed since the original and fantastic quote and the Geico folks were unable to help me understand where the error may have occurred in the first quote.  However the quote I was currently considering from Geico was still 25% BELOW what I was currently paying.  So – I am thinking this is a no brainer, lets do it.  I was still very curious why the Geico quote could be so much lower than others.  I could rationalize about 50% of the difference, but not the 100%.  

Here is what I learned.  Most people understand that riding a motorcycle exposes the rider and passenger to less stability and more vulnerability than that of a car.  In other words, if you get hit or hit something, odds are you are going to get hurt.  For this reason, it is extremely important to me that I have very good uninsured AND underinsured coverage.  Basically what this coverage provides is protection for me, the rider, should the subject of my altercation with another moving object not have adequate insurance to pay their legal liability – TO ME.  Unfortunately in Idaho and many other states there are lots of folks driving that carry no insurance at all, much less the minimal to meet state requirements.  They are what is referred to and known as uninsured – if they end up being legally liable to you and they have no insurance you are screwed!!!  In a similar fashion, if they have insurance but carry low liability coverage (even meeting the states minimum requirements) you are also screwed.  This is especially true if the uninsured or underinsured party has no meaningful assets to their name.

Lets review:  You t-bone a vehicle that turns left in front of you while you are legally cruising at 55 MPH down a country road.  A week later when you wake up in the intensive care unit (a week of intensive care and you have pretty much consumed far more in hospital costs than that minimal $25k liability policy can cover.  In fact the totaled motorcycle probably ate up that $25K) a family member struggles to inform you that the idiot you hit has no insurance or at best minimal coverage.  Ouch - You’re screwed!!  

So a few years ago the industry and some government folks got together and figured out a way that you can purchase insurance not only to cover your liabilities to someone else, BUT also to yourself when some other SOB has failed to cover themselves AND therefore you.  It is called uninsured and underinsured insurance and it is for your benefit!

When I carefully read the Geico policy I noted that while I could purchase uninsured insurance, underinsured was not part of the deal.  So I called to inquire about it and I am casually assured by the representative that Geico covers both uninsured AND underinsured.  Well, we read the policy together and the representative seeks some higher-level assistance.  Keep in mind that no one is trying to pull the wool over anyone it is just a misunderstanding needing clarification.  So up the ladder we go.  Eventually we learn that in fact, the Geico policy does NOT cover underinsured.  Had I purchased this policy in reliance of what the representative warranted, and placed a claim against the company for underinsured liability, their attorneys would have read the exclusions and all the fine print and determined that I was not covered for underinsured liability.  I would be screwed.  They would also point out during my effort to claim, “but on the phone the representative told me I was in fact covered”, that there is a paragraph somewhere near the end of the policy (actually it is in all policies from all companies) that says no other representations can be made except those written in this policy.  Which is why you must read and understand your policy.

So I now understand the other 50% of the savings the Geico policy offered.  It did not provide a level of coverage I wanted, was currently getting, and for me was a deal breaker.  I am not suggesting that Geico was trying to pull a fast one, just that the coverage they provided did not meet my needs and I was willing to pay more for a policy that did.

Having had the opportunity to discuss my needs with the good folks at Geico I also pointed out several other typos and errors in their document, and I was connected with someone who actually took interest in understanding and meeting my needs.  They informed me that in January 2007 Geico would redraft their policies and at that time begin offering underinsured coverage to those who request it.  In addition, they will offer the underinsured coverage to Geico holders when their policy comes up for renewal.  However, if you wish to add underinsured coverage to your existing or renewed policy you will probably have to ask for it explicitly and you will be assessed an additional premium.

For my money, while riding on a motorcycle, there is no coverage more important to me than assuring that I am able to pay for my injuries, even if the other guy, while legally liable cannot.

Shop for insurance, but shop smart, the lowest premium is not always the wise purchase.  Read the policy, ask questions from knowledgeable sources, and be sure you are purchasing what you need at the best price available from a reputable company.