Cycle News - Archive Issues - 1970's

:: .. ... 8. o .... - '" " ,' ~ w Z w oJ tJ >tJ By Ron Schneiders Last week we discussed insurance from a general standpoint and the message was, Don't buy insurance unless you absolutely must. We tried to knock holes in a few of the arguments used in favor of buying insurance. This week we will assume that you have decided that you must buy insurance and that you ride a road·type motorcycle. You have the option of buying your insurance from either a broker or directly from an insurance company. A broker is simply a salesman: He sells you the insurance, and then sells you to an insurance company. Sometimes a broker will handle many companies and will attempt to match a company to a customer, but where motorcycles are concerned most brokers only have one or at best two companies with whom they can work. You might think that you can save a middle-man profit by dealing directly with the company, but in the case of insurance this is faulty reasoning. First of all, if the company doesn't work through brokers, it saves the broker's percentage, but must pay a salesman of its own or bike shop salesman. At any rate there is little difference in cost between these two. Pay-off is something else. If you have a claim and a reasonably honest or sympathetic agent, he might press matters for you. A salesman for an insurance company is not likely to be of any help. He will see that a claims adjuster is sent to you and the claims adjuster will "adjust" you right down to minimum legal liability (and below if he thinks you're in no position to fight and you aren't a particularly valued customer). Buying insurance is a little like buying a motorcycle. Frequently who you buy from is more important than what you buy. All policies have holes in them (called exclusions by insurance people) and the most disastrous holes are the ones that are most carefully camouflaged by the companies. The broker can point these out if he feels like it and if he knows enough about it himself. If you're lucky, you might find out what insurance you don't need from a good agent. But don't expect this: They get a commission on what they sell. There's no really reliable way to choose a good broker, any more than there is to choose a good priest or a good cop. You must rely mostly on intuition supported by a few scraps of evidence. With cops, priests and insurance agents, you don't know what you have until you're really in need, and by then second choices are out of the question. I interviewed a number of company representatives and brokers in preparing this article and here are some of the things that I observed. Everyone I talked to claimed some personal association with mo torcycles and most had some pictures of bikes on their desk or wa)!. Most of it was put-on. Some of the guys that I talked to probably couldn't tell the difference between a Norton Manx and Cushman Eagle. Two exceptions were Jim Manning and John Maynard. Manning has had a long association with bikes in several areas and Maynard's boys are top motocross riders. Even a real association with cycles, however, doesn't guarantee anything special, but if there is nothing else on which to base a judgment, you might just as well give your bread to a fellow cyclist. Besides, someone who will try to' put you on about being a bike rider is not likely to be very honest about anything else, either. If you're a reasonably competent conversationalist, you can find out quite a bit from insurance agetlts by planning a line of conversation beforehand. For instance, you can imply 'doubt about the solvency and respectability of the company and listen carefully to the reply. If the agent tells you how well they're doing, how few losses they've had, and how much reserve they have, you can then prepare a trap. Talk about something innocuous for a bit and then complain about the high rates. If you get a song of poverty coupled to wails of sorrow and losses, you might suspect some lack of' candor on the part of the agent. One agent that I interviewed first told me how risky it was to write insurance in this area, then told me he'd had only nine losses since he started business. He then complained about the high overhead. It was so bad, he said, that he had to raise the rates on a client who had never had a claim in several years of coverage. This agent had an absolutely sumptuous office, slightly larger than my living room, and a telephone with more buttons on it ~n my typewriter. He even bragged that his mini·skirted showgirls (who were unsuccessfully passing for secretaries) made more than any of Cycle News' employess. I have no doubt that was true, but I didn't believe anything else that he told me. Such overhead, I wish I had! It takes some special kind of talent to remain unembarrassed by such gross contradictions. With most types of companies you can assume better and more attractive facilities simply mean that the company has improved its product and is selling to a larger share of the market, thus making more profit. But there is no product in insurance; there is nothing to improve. Most agencies have about all the business that they can handle. When the agent starts dolling up the office, either literally or figuratively, there is only one possible place the money can come from: your pocket, either in rate increases or less service. If I were going to buy insurance, (which I'm not,) I would choose a broker who had been around for awhile and who didn't have a really lavish set-up. There is at least one company around that has filled all its public-contact positions (it doesn't use brokers) with motorcycle people. I met some of them. The l(Uys are o.k. and the chicks are groovy and they do know motorcycles. Unfortunately the don't know insurance. I suspect that these people would try to help you as much as possible, but that might not amount to much. And, from what I could see, the motorcycle people are only on the first level. The second level is probably an IBM comput;r and it gets colder from there on up. From most companies' viewpoints, motorcycles do not represent desirable trade. Thus if you have an older, richer friend or relative whom you trust (like a father?) it might be worth up to $200.00 to simply give him the bike (legally) and let him insure-it as part of his household transportation. He can then let you ride it and the two of you can pocket the difference. If you manage to get your bike insured as part of a larger package and do your dealing with an automobile insurance broker, you will be asked where you live, how far you drive to work, whether other people will be driving your scooter, and so on. Honesty is the best policy only when you know there's a reasonable chanc¢ of being caught. Otherwise honesty just merits a higher rate. Whenever you're tempted to feel sorry for the poor insurance company, force yourself to recall that in almost any downtown area in the country, the tallest and most luxurious buildings are owned by the poverty.stricken insurance companies. \ TYPES OF IN~URANCE Road motorcycle riders can buy two types of insurance: Insurance designed to protect the rider himself from heavy financial loss (medical and liability) and insurance to cover the motorcycle (comprehensive, fire, theft, collision). A third type which the cyclist is sometimes forced to buy is insurance to protect the dealer or fmance company which is financing the bike. The most important insurance is medical insurance covering your self and possibly your passengers. If you want decent medical attention following an accident, you must be able to produce proof that you are able to pay for it. It's a strange but true fact that even hospitals which have received much of their initial funding from the state (which is you) feel they have no obligation to the public, or at least to that section of the public which is unable to pay. the huge fees medical people feel they must charge. Consequently, if you are in a bad accident and medical care is imperative, you will die if you can't pay. It's that simple. We will discuss medical coverage in detail in the next article. LIABILITY INSURANCE protects you from the financial effects of an accident and from certain Legal effects which have been engineered by insurance company lobbyists. Do not make the mistake of thinking that liability insuracne will in any way protect a person that you injure; that person will get only the amount that he or his lawyers are smart enough to collect from your company's lawyers. If your victim is poor and not too bright, you might be able to turn him into a vegetable for peanuts. (The legal term for this operation is "obtaining a' settlement"). On the other hand, giving a wealthy matron (with sharp lawyers) a stiff neck might cost you your home and all your possessions, even if you have insurance. In most cases if you have a goodly amount of liability insurance, you will escape fmancial injury. Perhaps more important, you will not lose the right to drive, which is the legal blackjack used to encourage you to buy insurance, even if you don't have a home or any possessions to lose. Liability insurance is usually denoted by a string of numbers such as 15{30{5. This means the company will back you to the extent of $15,000 for the injury to one person, $30,000 for injury to more than one person and $5,000 property damage. This amount of insurance will keep you out of trouble with the state in the event of any accident, but is not really sufficient if you have money or material belongings that you would he destitute without. The cost of liability insurance for road cyclists is low in terms of dollars (about $44.00) but not in terms of risk. The amount of damage to others t~t cyclists do is rather slight. You might remember one other fact: If you do $10,000 worth of damage to anyone while on your motorcycle, you aren't likdy to be in any position to care what they do about it. The same sort of reasoning can be applied to COLLISION insurance. Collision insurance will pay for damage done to your bike either in a collision or a spill. This is fine in theory, but in practice it doesn't work very well because, first of all, pay-offs are based on the blue-book vlue of the machine and you can't replace yours for that amount. Secondly, the "deductible" is subtracted. The deductible may be as high as $250.00. As Jim Manning puts it in his Article, Insurance is the Best Policy, ..... and you receive what's left, which often only totals a down payment on amini-bike." Manning, himself an insurance agent, was talking about fire and theft coverage, but the pay-off is figured identically. Although collision coverage is never much of a deal, it is a particularly poor deal if you are handy with tools. In "that case, if you have a collision or spill, you can repair the bike yourself, usually for less tJian the cost of the premium. FIRE AND THEFT is probably the most desirable coverage for a cyclist simply because cycles are stolen with appalling regu1arity and are quite susceptible to fire. About one out of every one hundred bikes sold in Los Angeles County is stolen. Fire and theft on a 250cc motorcycle will cost you about $110.00 or somewhat over 10% of the cost of the motorcycle (new). If you do happen to have a claim, as before, you will not collect anywhere near enough to buy a new bike. Obviously this is a miserable deal and should not be entered into ·unless you absolutely cannot afford· to lose your bike under any circumstances. It is also probably the best deal a motorcyclist can get 'On insurance! ' You can inusre your own bike against theft by' buying a really good chain and a heavy-duty lock and using it, all the time. Whenever possibLe leave your bike someplace where you can watch it. Don't park it near a movie theatre where a thief knows he's going to have three uninterrupted hours in which to steal your bike and make his getaway. Learn to think like a thief when you're planning to leave your bike. Leave it in places where he hasn't got any place to run if he's discovered. Park it in places where he can't get his truck, and the.!' chain it. Screw up the ignition or the carburetion so that it won't run when you're going to be gone for a while. Even when your bike is at home, it's not safe. The stolen bike business is so lucrative that very well organized and well equipped teams are operating in the metropolitan areas. They steal bikes that are chained to a post in a locked garage. There is no way to stop a really determined thief, but you can make (Please turn to pg. 29)

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