An insider’s view on motorcycle insurance: how it really works

Motorcycle insurance – any insurance – is there for if things go wrong. As a road-user, you have to have it, so it’s no surprise that spending out on something you hope to never use can be galling. Especially if you don’t understand how the price is calculated, or why it might have gone up.

I’ve been buying bike insurance for a long time – having owned 21 motorbikes so far – and I’ve had the same frustrations as anyone else when trying to make changes to my policy or looking at renewals. But after five years with access to the insurance industry, I’ve had some unique insight into how it works that I want to share…

The no-bullshit guide to motorcycle insurance

I’ve been a bike journalist for more than 20 years, working on RiDE, Bike, MCN, Motorcycle Monthly and Motorcycle Sport & Leisure, before joining Bennetts BikeSocial as consumer editor.

Coming here has been eye-opening. I’ve seen what really happens in the background – why certain processes are carried out the way they are – and I’ve been closely involved in changing some of the things that annoy us all as riders; getting shipping containers and wooden sheds recognised as garaging came from the BikeSocial community, and there’s more going on right now.

What matters here though is that we all have questions about insurance. We all get annoyed by some things that are very real issues, and some that – frankly – aren’t much more than urban myths. I’ll keep this article updated with any questions that come up and anything that I miss, so let’s get started…

Index

What’s changing in insurance for 2022?
Why do policy prices go up?
What’s going to happen to my insurance policy price from 2022?
Why this doesn’t mean insurance policy prices will never change
Is the first step in any claim for the insurer to work out how not to pay?
Sharing no claims discount across policies: NCD mirroring
Why does insurance automatically renew?
Does this mean there’s no longer a need to shop around?
Who you deal with when you make a claim
How to get a discount on motorcycle insurance
Why some insurance providers charge fees
What’s the minimum insurance required?
Does it cost more to take a pillion?
Why you need to declare modifications (and when you don’t)
Do I need business insurance?
Are all insurance companies the same?

What’s changing in insurance for 2022?

You may have heard talk of the Financial Conduct Authority (FCA) introducing changes for 2022 that some say will stop your insurance getting more expensive each year, but what’s REALLY happening?

Put simply, the FCA’s new rules are intended to put a stop to ‘price walking’, which was where an insurer might increase the amount an existing customer pays at renewal compared to a new customer, and then at each renewal after that. Which meant wasting time getting quotes for bike insurance – as well as home insurance and car insurance too – every time the renewal letter drop through the door. Of course, renewal prices have gone down and well as up in the past, but from 1 January 2022, the pricing field is being levelled…

Why do policy prices go up?

This is one of the biggest causes of complaint when it comes to insurance, and there can be several reasons, but let’s look at ‘price walking’ first, as it’s the one that’s a hot topic right now.

I’m old enough to remember buying insurance from a high-street shop, but the success of price comparison websites (also known as aggregators) that compare insurance prices from a range of providers – changed everything.

Companies like these, and we’ve all seen their adverts, sometimes offer very cheap prices, but most savvy riders (we’ll focus on motorcycle insurance from now on, though this applies just the same to home and car insurance too) tend to look for the lowest they can find from a name they trust on a comparison site.

Now here’s where the problems started: to be on the first page of results, policy prices might be discounted below what they’d be at renewal or when buying direct, and for every policy sold through a comparison, the insurance provider has to pay a significant fee to the comparison site. It could be a loss-leader for insurers that then hoped the customers would stay long enough to turn that introductory price into a profit.

It’s not the only industry to use this model, but it relied on policy holders not bothering to shop around at renewal, and that’s where ‘price walking’ came in. Broadband and digital TV suppliers also offer discounts to get more people to buy and then hope you’ll stay with them when the price goes up to the actual amount needed for them to be profitable.

And it’s important that your insurer stays solvent. If they go bust, you might be left without cover.

What’s going to happen to my insurance policy price from 2022?

Generally, customers may well see their renewal prices roughly level out, but there are plenty of caveats to that.

Those who shop around more – especially younger, more price-sensitive riders – might see their insurance go up as new business processes in the insurance industry have been – and these are the FCA’s words – ‘often unsustainably low as they are designed to attract customers who will pay significantly more in the future, or are subsidised by loyal customers.’ Simply put, there’ll be no more introductory discounts or promotions. Policy prices will continue to fluctuate, but there are many other reasons, which we’ll cover next…

I’m trying to keep this as simple as possible, but you can read the FCA’s rules here.

Modified bikes can of course be insured, but some insurers are better than others…

Why this doesn’t mean insurance policy prices will never change

Many things influence an insurance price. Gaining experience and no claims discount (NCD) should, to varying degrees, reduce policy prices at least in the first few years of riding, but there can be other factors...

The obvious things are changing your bike, moving to a different location or making a claim, all of which could put up an insurance policy price. Remember, the FCA’s ruling means existing customers shouldn’t pay more than a new customer, but that’s with the same risk factors and at the same time of generating the quote. So you could have been with an insurer for two years riding a KTM 390 Duke, then move to a Ducati Panigale and your policy price will almost certainly increase, but if you took out a new policy, it would be the same.

Equally, where you live could suffer a spate of thefts, which might see your policy price (and that of a new customer) go up.

Anyway, it’s important to understand how most people buy insurance; companies like Bennetts are insurance brokers, which means they work with a ‘panel’ of underwriters (these are the actual ‘insurers’ in industry speak) to find the best policy for you. The problem is that these underwriters adjust their prices daily based on a huge number of factors, so the price one day could be different the next. That’s why you can typically only get a quote that’s valid for up to 30 days.

Where things really go to pot is when an underwriter pulls out of a particular market or changes their terms. As a perfect example, I used to have my Yamaha MT-10 and my heavily-modified Honda MSX125 on one multibike policy. But then, at renewal, I got a letter saying that I could no longer get insurance, so I needed to call an agent.

The underwriter that I was with no longer insured motorcycles, and nobody else at the time would cover extensive modifications on a multibike policy, so I ended up taking out two separate policies, with mirrored NCD (we’ll cover that in a moment).

It’s entirely possible that an underwriter that was previously happy with your circumstances might change their terms, which could raise the price at renewal. But this would be the same for a new customer, so it’s not price walking.

Ultimately the FCA changes are a good thing for customers AND the insurance providers because removing the opportunity to price walk also changes the business model for the comparison sites.

If you’re confident you’ll be treated properly should you need to make a claim, and you’re happy with the service you’re getting through the year, you have more incentive to stay with your current provider. Brokers will need to focus on things like customer service and claims performance because that’s how they’ll be judged from now-on. That’s why Bennetts offers its customers who buy direct – ie by speaking to an agent or using the Bennetts website, rather than a comparison site – full access to BikeSocial membership, so they can get more from motorcycling as part of the package.

Is the first step in any claim for the insurer to work out how not to pay?

How you’re treated when you have to make a claim will define an insurance company. The hope is you never have to use it, but you don’t want to be getting into a fight with the company over whether you’re paid out.

One of the things I’ve seen is people complaining about is terms and conditions in insurance, particularly the garaging clause. Some underwriters will insist that your bike is in the garage if you’ve stated that’s where it’s stored when at home. This is simply because that’s how the theft risk is assessed, so if you leave the bike out and it gets stolen, you haven’t kept your side of the contract.

BUT… you have to have some common sense with this – if you turn your back to open the garage door and a thief starts dragging the bike away, that’s a totally different scenario to leaving it out on the drive while you go to the other side of the house – out of sight of the bike – to make a cup of tea. An insurer should not decline to pay out in the former scenario, and if they did, that’s where your broker should be fighting your corner. And if that doesn’t work, it’s where the Financial Ombudsman Service steps in.

Think about it this way… if I promised to look after £10,000 of your savings in a briefcase, and I promised to keep it locked in my house, would you be happy if I left it on the doorstep while I went in the house for a poo?

Sharing no claims discount across policies: NCD mirroring

Another common complaint in motor insurance is that no claims discount (NCD) applies to the policy, not the rider or driver. That means that you might have nine years’ NCD on a car, but it doesn’t apply to the bike.

One way around this is a multibike policy, which groups your motorcycles under one policy, with one set of NCD applying. As we’ve seen though, this doesn’t always work, so another option is to ‘mirror’ your NCD, which means the insurance provider sets up two policies, with agreement from the underwriter that the NCD will apply to both.

This is one of the things a broker should do (that a comparison site might struggle to offer) to get you their best policy for your circumstances. It might be harder to get this online, but after speaking to a ‘referrals agent’ (a member of the broker’s team that can have a closer look at your policy than the automated systems allow), you should get the insurance you need at the price that’s right for the level of cover.

It’s an understandable frustration that if you can’t use your NCD across multiple polices, why should claims be counted across them? How accidents, claims and convictions that occur in a car affect quotes for motorcycle insurance, for instance, vary between underwriters (and it’s usually the underwriter that set these conditions, not the broker), but you must always be honest.

Again, the first step is not for an insurer to see how to wriggle out of paying a claim, and it makes no business sense to drive people out of motorcycling – but underwriters do insist that they can assess risks on their own terms.

Why does insurance automatically renew?

It’s a legal requirement to have cover, and the provider doesn’t want to in any way be liable for someone being on the road without insurance. So, by default, insurers encourage customers to auto-renew, but something the FCA has been looking at is the ease with which customers can stop their insurance from auto-renewing.

The FCA’s new rules state that ‘consumers should be able to cancel auto-renewal arrangements in a way that matches their usual method of communication with the firm’ and that if it’s done over the phone, call waiting times aren’t unreasonably longer than those for buying a new policy.

Fortunately, the prevention of price-walking should mean there’s far less need to cancel auto-renewal.

Does this mean there’s no longer a need to shop around?

As your circumstances change, and underwriters reassess risk, it’s inevitable that you’ll see fluctuations in your policy prices. The vast majority of riders each year see their prices either remain roughly the same or go up or down a little. These people don’t usually go onto social media to angrily declare how their premium has gone down so most of the chatter we see are from the relatively small number of riders whose price has gone up significantly – often because of a change of circumstances for them (which they know about) or their underwriter (which they probably don’t).

There are many reasons why prices change. One provider might be great for some models of bike, but not offer such good prices for another. A decent motorcycle insurance broker should have the ability to find an underwriter that suits you, but whoever you’re insured with, there may well be a time that it’s worth checking the prices you could get elsewhere.

What is important when you get quotes is that you check carefully what details you’re giving; ticking one box differently could result in quite a different price, so if you’re seeing a discrepancy, it’s worth calling your insurance provider to run through your details.

The bigger specialist brokers like Bennetts aim to use their buying power to fight for competitive prices from underwriters, so if things aren’t stacking up, it’s worth a call or a session on webchat.

Bennetts uses a highly experienced and specialised motorcycle repair company, but it’s your choice where your bike goes

Who you deal with when you make a claim

If you have to make a claim, you’re very unlikely to speak to the agent who set your insurance up for you. Bennetts works with a company called 4th Dimension, which is a specialist claims handler that can help make the process as smooth as possible. It’s not passing the buck; it’s partnering with a business that has the infrastructure and expertise to do things the best they can.

4th Dimension can collect your bike, assess it, repair it if possible and get it back to you. Having had work done by them and seen the huge facility in Egham, I’d trust them with any of my bikes, but it’s still up to you if you’d like to use someone else. There are advantages to you the customer as the equipment and on-site skills can mean the difference between a bike being economic to repair and not, but you’re not forced to use any insurer’s recommended repairer.

Ultimately, if you’re not sure about anything, the best motorcycle insurance brokers have staff to help you and will be able to give you the time you need.

How to get a discount on motorcycle insurance

Not making a claim is pretty much the best way to get a discount on insurance, but some underwriters might offer a saving for some advanced riding qualifications, for instance.

The hot topic is of course security. Some underwriters might insist on an immobiliser or tracker for certain bikes in high-crime areas, but the fact is that the majority of riders will rarely see much of a discount – if any – for locking their bikes up. But that doesn’t mean you shouldn’t bother!

This is a real bug-bear of mine as I review a lot of security for Bennetts BikeSocial – you can see all the lock, alarm and tracker tests here – and it’s frustrating to see people comment that a £200 lock is more than their excess so they won’t bother. It’s equally frustrating for our agents to have a customer ask why a lock I’ve recommended doesn’t give them a discount on their insurance. The fact is that motorcycle insurance is a tiny part of the industry when compared to home insurance, so the having a list of tested security products that’s woefully out of date raises few eyebrows outside of specialist motorcycle brokers like Bennetts. In fact, most lists date back to several years ago, when Thatcham used to test security, but the underwriters have no line of communication with Sold Secure, which does the official lock testing now.

There are still very good reasons to get decent security for your motorcycle. Buying the best lock you can afford – and using it – significantly reduces the chances of your bike being stolen, which avoids the heartache and hassle, as well as potentially losing your no claims discount.

Security protects your investment and your NCD. Being brutally honest, you might not save a few quid on your premium by using a lock, but you could end up paying more for your insurance after a theft.

While some providers might set up a commercial deal that sees a ‘discount’ for some security products, what really matters is the price you pay when you take out your policy.

Besides building up a healthy NCD, it never hurts to carry out a health check of your insurance – you could be paying for things you don’t need, so take a careful look at the miles you cover every year, whether you need European cover, if you need business use etc. I’ll say it again… this is where a specialist motorcycle insurance broker – like Bennetts – aims to help customers get the best price it can.

Locking your bike protects your investment and your NCD

Why some insurance providers charge fees

You might sometimes be faced with a fee for making a change to your policy outside of renewal. These changes are called ‘mid-term adjustments’, or MTAs, and the fee can be made up of an additional premium paid to the underwriter, as well as fees to cover admin costs and the time it takes to run the new quote through the system. It might sound petty to charge for an agent’s time, but it’s also the back-office work and the generation of new documents. For a small provider this can be less of an issue, but when a company is processing upwards of 1,000 MTAs a week, there are real staffing needs, and that costs money.

The alternative – and something some providers do – is to spread the cost across all policy holders, so while promises of no MTA charges might be attractive, be aware that those costs are still in the system somewhere. Consider how many changes you’re likely to make in a year compared to the initial policy price.

What’s the minimum insurance required?

Legally, motorcycles and cars must be insured ‘third party only’ (TPO) as a bare minimum, which basically means that if you cause an accident, the other party (pedestrian, rider, driver etc) can claim against you.

If you want paying out if your bike’s stolen and not recovered, you’ll need ‘third party fire and theft’ (TPFT), while if you want to be fully covered for more eventualities (including an accident that had nobody else to blame, such as falling off on an icy junction or misjudging a corner), you’ll need fully comprehensive cover.

Don’t always assume TPO is the cheapest option; the way underwriters assess risk is complicated, and it’s possible that a situation could arise whereby, for instance, an experienced rider might be considered a higher risk because they only want TPO cover; it could be an indication that they don’t care if they crash the bike!

Does it cost more to take a pillion?

You don’t pay more for taking passengers in a car, so why should you have to pay extra for a pillion?

Well, the risk to passengers in a car will be included in the quote as standard, as most people take passengers at some time (except maybe Peel P50 owners), and it’s that calculation of risk that can be part of the reason that teenage car drivers attract such high policy prices; they lack experience and they’re more likely to have a car full of friends who could all end up needing to claim against the driver should things go horribly wrong.

If you were taking a pillion on your bike and got struck by a car through no fault of your own, the other driver would almost certainly be liable for all damages to you and your passenger. But if you over-cooked a bend and dumped your pillion into a bush, they could claim against you.

Having said all that, asking whether you carry a passenger is just part of the risk assessment process, and I have seen it work both ways; it can be that your experience, type of bike, and the fact that you’re carrying a pillion can in some cases put you into a lower risk category, reducing policy prices. In my research, experienced riders often don’t pay any more for carrying a pillion.

Why you need to declare modifications (and when you don’t)

Insurance underwriters are basically gamblers with a huge degree of self-control; they’ll look at a rider, their experience, where they live and the bike, then decide how likely it is they’ll have to make a payout, as well as how large it could be (yep, they do keep track of how expensive a fairing or headlamp is for one bike compared to another).

But what if you change it? Some modifications can make a bike more powerful, or less stable. Some mods might make it more likely be to be stolen or more expensive to repair crash damage. But sometimes, they’re just not worth worrying about; road-legal exhausts are included on the list of modifications that Bennetts accepts as standard, so don’t need declaring. That means it doesn’t matter if you fit a new pipe, or a new screen; your policy price won’t be affected, and you won’t get charged a mid-term-adjustment.

The list keeps growing but do be aware that this is not a standard list across all insurance providers, so always check if you get a new quote elsewhere that everything’s still covered. It’s also worth noting that accessories aren’t counted as modifications; that can mean they’re not covered in the event of a theft, but if you’ve got a sat-nav or dash-cam, you don’t need to tell Bennetts, but again, do check with your own broker to be sure.

Do I need business insurance?

Business cover allows you to use a vehicle as part of your work, for instance travelling to another office or picking a colleague up from the railway station. Basically, if you ever claim for your fuel on expenses, you need business insurance. And make sure you check with your provider as to which level of cover you need.

Don’t confuse this with commercial insurance, which is suitable for ‘hire or reward’. You can’t use your vehicle as a taxi or for delivering food under standard business cover, so if you’re thinking of using your Goldwing for Deliveroo, you need a specific policy.

Are all insurance companies the same?

Like any business, some insurance providers are better than others, but let’s be realistic; motorcycling is a niche form of transport (but it’s one that’s incredibly enjoyable), so it makes no financial sense to put riders off doing it. As such, you’d hope the most successful providers have riders’ best interests in mind.

Specialist brokers, such as Bennetts, want to see as many people riding bikes as possible, and to arrange insurance through them. To do that, they need to provide cover at a fair price, they need to keep people happy while they’re insured (hence the discounts, offers and competitions offered by Bennetts through BikeSocial membership), and they need to be on the side of what’s right if a customer makes a claim.

The FCA’s changes for January 2022 mean that UK consumers should get fairer pricing when they renew their insurance, which hopefully means the companies that reward riders the most – and treat them best when they really need them – retain their custom and continue to thrive and provide that great service with far less messing about every time the renewal letter arrives.

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