To insure, or not to insure, that’s the question many cyclists are asking. While insurance is often considered to be the best way protect expensive things, many cyclists aren’t sure whether or not bike insurance is worth it.
In this review, we’ll take a look at what bike insurance is and what it covers. We’ll also outline some key concepts about insurance and put them to good use by looking at some examples. Finally, we’ll share the names of a few businesses that specialize in bike insurance and give you several questions that will help you determine if bike insurance is right for you.
What Is Bike Insurance?
What is bike insurance? To answer this question, we need to establish what insurance is. Naturally, owning personal property that has financial value, like a bike, comes with risk. But what if your bike is stolen or destroyed in a fire? Without a plan to account for this type of risk you’ll have to absorb the lost value yourself. Insurance is basically a way to protect yourself against risk. Technically, it’s a way to transfer risk to somebody else.
But why would anybody take on your risk? In short, they wouldn’t do it without a fair incentive. Now you can see why an insurance company charges a deductible on top of a monthly premium. It’s because it’s the only way that it makes sense for them to take a risk that you’re not willing to take.
What Does Bike Insurance Cover?
Now that we have a handle on what insurance is, let’s compare bike insurance with homeowners insurance. The difference is in the details. In other words, the difference between bike insurance and homeowners insurance is found in the coverage and policy details. For example, a good bike insurance policy will reimburse you for race entry fees, taxi fare, and crash damages, whereas a traditional homeowners policy will not.
These are just some of the differences between bike insurance and homeowners insurance. Next, let’s cover three insurance concepts. Understanding these concepts will help you determine which type of insurance is right for you.
Disclaimer: Given the various situations and circumstances that may exist, we’ve had to make a few assumptions in this article for the purpose of communicating concepts. It's important to understand that the detailed terms and conditions for any type of insurance can, and often do, vary from state to state, company to company, and even policy to policy. Never assume anything. Always ask an insurance provider about policy specifics for your exact situation.
In general, there are three important concepts you need to know about insurance.
1. Proving Ownership and Value
It’s hard to overstate the importance of being able to prove that you are the rightful owner of your bike. In addition to proving ownership you should also be prepared to prove your bike’s value. A misstep here and you could find yourself in the undesirable position of not being fully, or even partially, reimbursed for a legitimate claim. The more information you can provide confirming the details of a claim the better. So think in terms of receipts, police reports, serial numbers, photos, etc.
Pro Tip: What should you do if you bought a used bike or received a bike as a gift and don’t have the original purchase receipt? All you have to do is schedule a maintenance appointment with your local bike shop. Be sure to ask them to provide an appraisal value of your bike for insurance purposes once they’re finished. The service report will provide the assessed value of your bike along with proof that you are the rightful owner.
2. The Fine Print
The inclusions and, more importantly, the exclusions of coverage are often found in the fine print. So, do yourself a favor and ask an insurance agent to explain the fine print unless your favorite hobbies include reading legalese.
3. Replacement Cost (RCV) vs Actual Cash Value (ACV)
All things being equal, a bike that’s five years old is usually worth a lot less than a brand new bike. This is known as depreciation. It’s important because insurance companies settle claims based on either replacement cost value (RCV) or actual cash value (ACV). Replacement cost value means you’ll get reimbursed with as much as it takes to go out and buy another bike of equal like, kind and quality. On the other hand, actual cash value means you’ll only get reimbursed for what your bike was worth in its most recent condition at the time of loss.
Applying the Concepts
The insurance concepts described in the previous section become much more useful when they’re applied in the real world. So, let’s ground the concepts we’ve touched on with two simple examples.
Cyclist-A plans to compete in 4 criterium races this year. She rides a new Specialized Roubaix that she bought for $3,150 plus another $2,800 in accessories and upgrades. Does it make sense for Cyclist-A to have a bike insurance policy? Let’s find out.
A reputable bike insurance company can provide a replacement cost value policy for $30/month with a $250 deductible. For an additional $4/month they can also include worldwide coverage and racing coverage to insure against crash damage. However, the policy doesn’t offer liability protection or bicycle shipping coverage.
Considering that Cyclist-A travels and competes in races with a bike worth $5,950, a bike insurance policy costing $408/year is probably worth it.
Now let’s consider Cyclist-B. He’s a cycling enthusiast who takes his road bike into the mountains on weekends. Twice a year, Cyclist-B looks forward to a bike tour with his riding group. He owns a used 2015 Trek Emonda SL6 that he bought in 2018 for $1,500. Since then he’s added about $800 worth of additional parts and accessories.
A known bike insurance company quotes Cyclist-B an actual cost value policy for $16/month with a $250 deductible. The policy coverage is limited to the U.S. and Canada and doesn’t offer liability or personal injury protection. However, for an additional $2/month he can add coverage for up to $750 worth of accessories. Unfortunately, bike shipping coverage isn’t included.
For Cyclist-B, a bike insurance policy probably isn’t worth it. Instead, he would be better served by the coverage he already has through his existing homeowners insurance. Given his travel habits, the greatest risk for loss or damage comes from shipping his bike. However, thanks to Overnight Bikes, Cyclist-B was able to drastically reduce his risk with FedEx Priority Overnight delivery. Simply put, less time in transit means less risk of loss or damage.
Where to Buy Bike Insurance?
If you think bike insurance may be a good fit for your needs, you’re in luck. In the U.S., we have several bike insurance providers to choose from. Keep in mind that there are subtle differences between policies, so be sure to speak with more than one provider to find the right policy for your needs.
Questions to Ask
We recommend asking an insurance provider the following six questions to help determine if bike insurance is right for you.
1. Does the policy offer coverage in the event my bike is damaged or lost in transit by a commercial courier service (e.g. FedEx or UPS)? 2. Does the policy feature an actual cash value (ACV) or replacement cost value (RCV) reimbursement as the basis of settlement in the event of a loss? 3. Is medical or personal injury protection included in the policy coverage? If so, how much? Does it apply only in the event of a bicycle crash? 4. Does the policy provide me with any liability coverage? 5. Are there geographical limitations on the policy coverage? 6. Does the policy coverage include any fixed accessories or upgrades made to my bicycle (e.g. power meters, GPS computers, upgraded handle bars, etc.)?
In this review, we covered all the basics of bike insurance including where to buy. Now, you’re equipped with the information you need to make an informed decision about whether or not bike insurance is worth it.
If you liked this article, please let us know in the comments and share it with your cycling group on Facebook or Strava. If you have any questions about Overnight Bikes, let’s chat.