This could be the difference between keeping your bike and watching it go away on the back of a salvage truck.
Dealing with insurance after a motorcycle accident is one of those situations where being forewarned is forearmed. Until recently, I’d never been involved in an incident that required me to work with insurance, so I was woefully unprepared to deal such matters when that unhappy time came. This post contains the stuff I wish I knew after I wrecked my motorcycle.
I am not an insurance agent or a lawyer. However, having been through the process, I figure it’s worth sharing my experiences so that if you find yourself in a similar situation you’ll have an idea of what to expect. Your mileage may vary.
Immediately After the Accident
Hopefully, any accidents you’ll be involved in will be minor ones where no one gets carted off in an ambulance. In a single vehicle accident (i.e. the bike is crashed and no other vehicles are involved), you won’t need to do this step, obviously. But in a multiple vehicle accident, you’ll need to gather some critical information from each of the parties involved.
This is not easy after a crash, believe me. Adrenaline isn’t intended to promote analytical thinking. If you need to, stop and take a short breather to gather your wits. Your first urge will be to get everything done as quickly as possible. Resist the urge. Take the time to get things right.
Find a piece of paper and a pen and ask each driver for their driver’s license and insurance card. Then write down the following info for each driver:
- full name
- driver’s license number and state issued
- phone number
- insurance company name
- insurance policy number
If there were passengers in any vehicle, it’s a good idea to get their names and contact phone numbers also.
Next, go to each vehicle and write down the license plate number. This would also be a good time to pull out your camera phone and take pictures of the vehicles and any damaged areas, just to keep everyone honest.
If the police arrive on scene, ask for the police officer’s business card. At the very least, get the police officer’s name and phone number. You may not need this info, but it’s good to have.
Rule #1: Avoid Filing a Claim At All Costs
The first rule of insurance is not filing a claim if you can avoid it. Of course, there’s a big exception to this rule: if you aren’t the one at fault, you’re probably going to file a claim against the other party’s insurance. If that’s the case, you can skip to the next section.
But what if you’re at fault, or if this is a single vehicle accident? Then you need to decide if you’re going to file a claim, or fix the bike on your own. If you can get an estimate before contacting your insurance company, you’ll have a leg up in deciding whether to file a claim or not.
The key thing to remember is if you’re still paying off the loan on your motorcycle, you have very little leverage with your insurance company if you file a claim. Why? Because you don’t own the bike. The bank does, and they will want their property restored to 100% pre-loss condition.
Even if you’re at fault and the other vehicle’s driver files a claim against your insurance, you’re not obligated to file a claim. Imagine that conversation going something like this:
- Your Insurance: “We’ve received a claim from someone’s insurance regarding an accident on such-and-such date, yadda-yadda-yadda. It appears your motorcycle was involved. Was there any damage to the bike?”
- You: “Yes, but I’m going to fix it myself.”
Don’t worry, what are they going to say? No? It’s in their best interest for you to pay for things yourself so they don’t have to! This could be the difference between keeping your bike and watching it go away on the back of a salvage truck.
Choosing to fix the bike yourself doesn’t mean you have to do it all at once. Fixing the bike yourself gives you freedom: freedom to choose who does the work, freedom to shop around for parts, and freedom to have things done your way.
A Few Words About Damage Estimates
Getting a damage estimate on a motorcycle is not the same as getting one on a car. Most insurance companies allow you to choose where you take the motorcycle for an estimate, as opposed to forcing you to go through one of “their shops” as with an estimate for a car. While I didn’t try it myself, it’s worth a shot to ask if they’ll let you do the estimate on your own, especially if you’re planning on fixing the bike yourself. You might be able to find replacement parts at prices far less cheaper than a dealer would quote on their estimate. If you want to keep the bike with a clean title, a cheaper estimate is a very good thing.
Most motorcycles are totaled by insurance for one of two reasons:
- the cost to repair is greater than 50% of the current value of the bike (the exact percentage depends on the insurance company)
- there is damage that puts the structural integrity of the motorcycle into question
That last reason is a killer because it’s incredibly subjective — and often hinges on the opinion of an insurance adjuster with very little motorcycle experience. I’ve heard anecdotal stories of bikes being totaled for a scratch on the frame. Frame damage, sub-frame damage, swingarm damage, bent forks, scratched engine casings, etc. can get a bike totaled quicker than you can say “Valentino.” It takes very little damage for a bike to be totaled these days.
Once the estimate is done, insist that the shop fax you a copy of it immediately, then bring the bike home from the shop as soon as possible. This gives you leverage during the settlement negotiations, forces the insurance adjuster to view the bike on your terms, and saves you money if the shop charges for storage.
Documentation, Documentation, Documentation
A paper trail is critical because knowledge is power when dealing with insurance. Don’t wait to dig out all this paperwork!
- paperwork from when you purchased the bike
- insurance policy and other related papers
- receipts for all aftermarket accessories
- copy of damage estimate
- NADA and KBB estimates of the bike’s current value
Document all your conversations with your insurance company representatives. You’ll hardly talk to your regular agent after the initial filing of the claim. Instead, you’ll speak to various claims agents and most likely an adjuster or damage appraiser.
Anybody Else Want to Negotiate?
The negotiation phase begins when the estimate is submitted. The primary subjects of discussion are the value of the bike and if it will be totaled. If you followed the flowchart above, you should already have a good idea of what the insurance company is going to tell you, at least at first.
What if insurance offers a ridiculously low value for the bike? Not surprising, especially if you’re filing a claim against an at-fault party’s insurance and not your own. So get ready to rumble! Now’s the time to bring out all that documentation you collected earlier: the NADA and KBB values, the receipts for all your accessories, recent pictures of the condition of the bike before the accident, etc. Even asking prices on craigslist and completed sales on your favorite motorcycling forums can be used as evidence to support a higher market value for the bike.
What if they want to total the bike but I don’t agree with that? Do you have the title to the bike in your possession? First, try negotiating a higher value for the bike. Ask the insurance company what their “percentage to total” is. If you own the bike outright, you can offer to accept some damage that you can live with (preferably cosmetic) in exchange for a lower damage estimate. This can save your bike from being totaled.
I Tried My Best, But It’s Totaled: Now What?
It’s time for you to make a hard decision. I think Stacey summed it up best when she told me, “Are you attached to the bike, or the kind of bike?” You basically have two choices: you can buy the bike back as salvage or you can negotiate a settlement of total loss.
Buying the Bike Back As Salvage
Once your bike is declared a total loss, the insurance company will offer a salvage value. They arrive at this figure by contacting salvage yards, dancing naked under a full moon, and reading a dusty tome of magical salvage values. Obviously, if you want to buy the bike back you’re going to want the lowest salvage price possible. It’s exactly the same as if you were going to buy a wrecked bike from a salvage yard. If you’re serious about getting your bike back, you’ll have to be prepared to dicker over the price.
The downside to buying the bike back as salvage is that it will be branded with a salvage title. You may also have to jump through some hoops with your state DMV in order to prove that the bike has been repaired to legally acceptable levels before they will issue you a title and/or register the bike. Lastly, a bike with a salvage title is instantly worth less than half of what it was worth before. Sucky, but that’s the way it is.
If you seriously want to buy the bike back, approach the negotiation in two distinct parts. First, negotiate for the highest value possible on the bike. Then, negotiate for the lowest salvage price. Don’t tip your hand too early and tell them you want to buy the bike back!
Here are some example numbers from my recent experience after I wrecked my 2007 SV650. I rounded the numbers slightly to make the math easier.
value stated by insurance: $4300 my deductible: $500 salvage value: $1600 $4300 - $500 - $1600 = $2200 payout
If you’re still paying off a loan on the bike, the payoff amount will be factored into the calculations:
value stated by insurance: $4300 my deductible: $500 loan payoff: $3300 salvage value: $1600 $4300 - $500 - $3300 - $1600 = -$1100 (yes, you'll be writing THEM a check)
Negotiating a Total Loss Settlement
If you choose to accept the bike as a total loss, the insurance company will offer a settlement. This assumes that you’ve already negotiated the value of the bike to be as high as possible. The settlement can be as simple as accepting the offered value, minus your deductible. Here’s an example, again from my wrecked 2007 SV650:
value stated by insurance: $4300 my deductible: $500 $4300 - $500 = $3800 payout
Again, if you’re still paying off a loan on the bike, the payoff amount will be factored into the calculations:
value stated by insurance: $4300 my deductible: $500 loan payoff: $3300 $4300 - $500 - $3300 = $500 payout
However, things can get more complicated if there are any salvageable accessories that you want to keep. Remember, you used the accessories in order to negotiate a higher value. If there are accessories you plan to remove (*cough*custom seats hand-crafted by a master*cough*) you need to re-negotiate their value. I suppose you could strip the bike and hope they don’t notice, but I (and this blog) do not condone anything illegal.
value stated by insurance: $4300 value of accessories you're keeping: $150 my deductible: $500 loan payoff: $3300 $4300 - $150 - $500 - $3300 = $350 payout
If you take anything away from this article, let it be this:
- Avoid filing a claim if at all possible.
- If you still owe money on your bike, be prepared to get the shaft. You have zero leverage to negotiate damage, and the loan payoff must be accounted for in your settlement.
- Save all your receipts for the accessories you add to your bike.
Lastly, even a 2000+ word post can’t cover all the nuances of an insurance negotiation or cover all the possible scenarios. When in doubt, consult a professional.
Praemonitus praemunitus, and good luck!