Liability vs. Full Coverage is a never ending conversation in the motorcycle world. Let’s dive in…
Full Coverage insurance normally covers quite a bit:
- Collision coverage pays for damage to your bike if you hit something or someone (where you are at fault)
- Uninsured driver coverage pays for your damages, if you got hit by an uninsured driver
- Underinsured driver coverage pays for your damage, if you get hit by a driver with insufficient insurance coverage
- Theft of your bike
- Fire damage
- Water damage, etc.
While the full coverage is great, it is frequently too expensive for an average rider. Especially for those of us, who purchase a motorcycle to save money (By the way that’s a myth. Car ownership is usually cheaper.)
Here’s an example we see in the industry every day:
You decide to purchase a brand new sport motorcycle for around $16,000 and get it financed for 5 years, with a monthly payment of around $280 or more (depending on your credit). Now the financing company requires you to get full coverage insurance, which will cost you $2,000-$5,000 a year (depending on your age, location, driving record, the deductible amount, etc.). That is an additional $166-416 per month that must be paid just for insurance. If you take the full 5 years to pay off your $16,000 bike and you maintain a full coverage throughout – you could spend $27,000 to over $40,000 just for the bike financing and insurance alone. This is just to have a bike. It doesn’t take under account maintenance or operational costs.
Yes, insurance can be expensive, especially on newer model bikes. This is simply due to a high chance of you damaging the bike or yourself. It doesn’t take much to seriously damage or total a bike.
Additionally, if you do not have health insurance, or want to supplement it – you can get Personal Injury Protection (PIP) coverage. PIP is a form of No-Fault insurance, which helps you with paying for medical bills that are not covered by the health insurance plan. PIP pays out regardless of who is at fault.
As you can see, riding is not a cheap hobby.
Liability-Only
This is where it gets interesting:
Once you pay this motorcycle off and switch to the state’s Minimum Liability coverage, the annual cost can be dropped to $100-300. That’s $8-$25 per month, compared to $166-$416, but you give up a lot of protections.
Liability insurance covers only the cost of property damages and injuries of others when you are at fault.
Be careful and always ask the key question: “If I don’t have this insurance and something happens – then what?”
- If you don’t have medical coverage – who will pay for your hospital bills, if you get into an accident?
- If your bike does not have a full coverage – how will you replace or repair it?
This is the main reason why most thrifty bikers usually purchase bikes pre-owned, which can be affordable enough to pay for in cash. Then they build up a small savings fund to deal with with possible repairs, by setting aside the money they would otherwise spend on full coverage.
Here’s an example of an ideal Liability-Only motorcycle insurance client:
- You buy the bike with cash, usually from a previous owner. The average pre-owned motorcycle can be found for $4,000 to $10,000
- You have existing health insurance coverage (or you plan to purchase PIP)
- You have savings for repairs, in case if you lay the bike down
- You are willing to take a risk of losing your cash investment in your bike, if it gets totaled in an accident or stolen
The last one is the the BIG One. It is usually the biggest reason to get full coverage in the first place.
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So, make your decision wisely and consult with a trusted insurance agent before making any changes.
PRO-TIP for those who decide against getting the full coverage and get Liability only:
- Since motorcycles do not offer as much protection as the cars do, we strongly advise getting Personal Injury Protection (PIP) and/or a solid Health Insurance plan (if you don’t have it yet)
- And don’t forget to wear your Personal Protective Equipment (PPE) – helmet, jackets, gloves, boots, etc.
Keep the rubber side down!!!