Below is a video transcript between Scott O’Sullivan, founder of Rider Justice, and Tamara Thomas, a brand new motorcycle rider. Scott explains in detail, the various types of insurance available to riders and why “full coverage” is nothing like it sounds. Follow more of Tamara’s journey here.
Scott: How’s it going?
Tamara: Good. How are you doing?
Scott: How’s looking at bikes going?
Tamara: Good. It’s exciting.
Scott: As you go through this process, one of the things you gotta think about is insurance.
Scott: So, what do you know about it and what questions do you have?
Tamara: Yeah, I mean, not much honestly. All I know is you can kind of go through your current insurance provider, and hopefully they have a good policy, but that’s about as much as I know.
Scott: Right, right. I mean, one of the things we’ve talked about is with insurance, assume this – is that the majority of people out driving cars in Colorado right now are under-insured or have no insurance.
Tamara: Oh gosh.
Scott: It’s about two thirds. It’s terrible. So as you ride a motorcycle, which is, it’s great, but it is more exposed,
Scott: Right? So you have to think about protecting yourself in a different way than you would in a car.
Scott: In a car, you’ve got the airbags, you’ve got all this extra protection. They’re just getting safer every year. And in a motorcycle, one of the thrills is that you’re riding in open air and it’s just part of the deal.
Scott: So the way you can protect yourself, because you already got an awesome helmet, gloves, jacket, stuff like that, is you get good insurance.
Scott: And the different levels of insurance are crucial. So when they first sell you a policy or what they would sell you as the minimum full coverage. Do you know what that is?
Tamara: I don’t.
Scott: So full coverage is in Colorado minimum of $25,000 for Liability. It’s basic collision and comprehensive and that’s it. So, if you put some extra stuff on the side of the bike or you got some saddlebags and you’ve got some stuff off the back. That doesn’t cover any of that.
Scott: The other thing to think about is like your leathers, like your helmet, like your gloves; your insurance is there to protect you if something happens, whether it’s your fault or not.
Scott: So the first level is the liability insurance. And there are levels that go from the minimum $25k up to $250k. I recommend, for motorcycle riders, $250,000. Because someday you might have a friend on the back of your bike, and you hit a little gravel patch and you go down. That covers your friend.
Tamara: Yeah, that’s important.
Scott: Or God forbid, you know, you hit somebody. Which is rare. But if you did, it covers you.
Scott: If you own a home, things like that, that insurance just protects your assets. Right?
Tamara: Makes sense.
Scott: And then, I think the most important thing for motorcycle riders, and I’ll talk about this ‘till I’m blue in the face, is Underinsured Motorist coverage.
Scott: I also recommend a minimum of $250,000 for that. And most sales agents don’t understand what Underinsured Motorist really does. They’ll ask you, do you have health insurance? And if you’re like, “yeah,” they’re like, “Oh, you don’t need under-insured motorist coverage.”
Tamara: Oh, gosh.
Scott: And that’s a mistake because what it covers is lost wages, pain and suffering, future medical bills, future care and treatment up to your policy limits. And that’s why I think all riders should have a minimum of $250,000. And depending on who you have, you might be able to get more.
Scott: You want to have Comprehensive on it so that if like a tree comes down and hits it or it gets stolen or things like that, same with comprehensive and collision, you just want that on there. Even if you own the bike outright. So, even if you have no loan and you’ve paid it all off and you’re enjoying it, don’t get rid of it. Because when you do and something happens, nobody has that like spare three grand laying around.
Tamara: Right, right.
Scott: Right? They just don’t. And then the other part that’s important is Medical Payment coverage. Do you know what that is?
Tamara: Not particularly.
Scott: So, it’s something they also don’t necessarily want to sell.
Scott: But it was originally set up, and I helped pass this law years ago, it’s set up to help pay first responders.
Tamara: Oh, okay.
Scott: For ERs in particular ambulances. So medical payment coverage covers that first $5,000 of bills regardless of whose fault it is. And, so you have to actually turn it down. And if you don’t, when you sign up for insurance, you get it. So a lot of people turn it down. They’re like, Oh, I have health insurance, but most people’s health insurance is like five grand deductible.
Scott: So if you burn yourself on a pipe or something else like that, it just covers you – because it happened on your bike. And it goes from, depending on who your insurance carrier is, it can be from $5,000 up to a $100,000. And it’s really up to you. It comes down to, I think everybody should have at least the $5,000 because that covers your deductible at least. Or it covers the initial ER or urgent care facility.
Scott: $25,000 is a good number, but some don’t sell it. But all have to sell the minimum of $5k. I think it’s totally worth doing.
Tamara: Okay. So when looking at policies and stuff, do you have a rough idea of, with all of those coverages, what I should be expecting to pay?
Scott: So the short answer is, since I don’t sell it, I don’t really know. But in general, the cost of entry for the minimum, and then going up to what I recommend, is not that much higher. And that’s why they all sell the minimum. Because that’s how they, the independent insurance agents, make their money on the minimum sale. And they don’t really make much more as you go higher, and they don’t really want to sell higher because then people are like, “Oh, I don’t really want to spend that much.”
Scott: So I’m sorry, I just gave away a big secret of the industry, but that’s how it works. And so as a result, they’re not always trying to sell you the right kind of insurance. The bad ones are like, I got my 50 buck commission, I’m out. Question for you, Tamara, do you know anything about umbrella policies?
Tamara: I mean, I can kind of assume what it means just by the name, but…
Scott: Do you own a home?
Tamara: I do.
Scott: Awesome. So for all my riders that own homes, the last piece that I recommend for everybody is for your homeowners policy, get an umbrella policy on top of it.
Scott: And then specifically ask, and you gotta pay extra for it, an Underinsured motorist policy with the umbrella. So your underlying (motorcycle insurance) policy covers $250,000. And then your umbrella sits on top of your house and then it would also cover your car for Underinsured motorist coverage as well. And your motorcycle.
Scott: And what you do, is that can be a minimum of $1,000,000 and up to $5,000,000. So for example, you know, you want to get hit by me because I’ve got $5 million worth of coverage in an umbrella. Plus, I have a $5,000,000 umbrella for Underinsured motorist.
Scott: And the reason is, just like you, if I hit my head, I’m done. If I have a brain injury or, if you get some sort of leg or arm injuries for what you do, it’s the same thing. So at least it’s there as an extra layer. And for almost every motorcycle case I’ve done, with few exceptions, it could have used it, especially my catastrophic ones. It’s just there to take care of you and or someday, your loved ones.
Scott: Or it relieves your family from having to help take care of you because you have that policy. And so it’s just another way to look at the helmet, leathers, just like that. So that extra umbrella is so crucial. Oh my God, it could have been used in so many of my cases — I wish they had. And it’s not that much more on top of your homeowners.
Scott: And obviously everything we’re talking about is all your level of comfort of paying.
Scott: I just want everybody to get as much coverage as they can afford.
Tamara: Yeah, yeah. It’s a lot to think about.
Tamara: (Buying a bike) It’s coming together for sure and I’m excited.
Scott: Yeah, it’s coming together, and you gotta take your time too. Until you’re ready.
Tamara: Oh, yeah, I don’t want to rush it. Cool.
Scott: Alright. Thanks.
Tamara: Really appreciate it. Thanks Scott.