?

Log in

No account? Create an account

[icon] Insurance insanity - Patti
View:Recent Entries.
View:Archive.
View:Friends.
View:Profile.
View:Website (pattib.org).

Security:
Subject:Insurance insanity
Time:04:26 pm
I just called my insurance agent to set up coverage on the motorcycle I'm picking up tonight. It's about a $3K bike, but just for fun I had him quote me a price for collision and comprehensive as well as just liability.

The difference in price between the two is $283.56/year. That's basically 10% the price of the bike. It's easy to do the math here... is there a 1 in 10 chance that the bike will be totalled or stolen in one year of riding? Hell no.

As an aside, I once did this calculation and had it come out the other way. It was my first motorcycle, and a pretty cheap one. However, the difference in price between liability and full coverage was pretty small, and it came out to needing a little better than a 1 in 30 chance of destroying the bike in one year. Given that I was a new rider on a bike with a lot of (expensive to replace) plastic, lived and worked in San Francisco, and parked on the street, I thought that the odds were in my favor. I took full coverage. Two or three years later the bike got stolen, and the insurance company paid out more than I expected.
comments: Leave a comment Previous Entry Share Next Entry


andrewhime
Link:(Link)
Time:2010-04-29 07:07 am (UTC)
I dunno, 1 in 10... motorcycles do get stolen. And I'm not just saying that like I'm some pro-insurance shill.

Then again, you can afford to replace it with little issue. A lot of my customers...

Then again, a lot of my customers come in wanting to know how much full coverage is on a 95 Chevy Lumina they just bought for $500. Oh, those silly customers!
(Reply) (Thread)


whipartist
Link:(Link)
Time:2010-04-29 05:57 pm (UTC)
I have a pretty good grasp of the mathematics of insurance. I break it down into three different categories;

1. Mandated coverage (motor vehicle liability, homeowners insurance that's required by my mortgage holder, etc.)

2. Fee-for-variance-reduction (medical, other cases where a loss would be financially catastrophic)

3. Pure EV calculations.

For the bike, liability is obviously 1. I can afford to drop a $3K motorcycle off the cliff and not have it be a disaster, so 2. doesn't apply. That leaves collision/comprehensive on the bike squarely in category 3.

The bike sleeps in a locked garage, and will very rarely if ever be parked on the street overnight. It's not in the category of bikes that are frequently stolen to be parted out. I have a solid lock for it. All in all, theft doesn't feel like a huge risk to me. Maybe I'll wreck it, but I don't think the combination of theft-probability plus wreck-possibility comes out anywhere near one in ten.
(Reply) (Parent) (Thread)

[icon] Insurance insanity - Patti
View:Recent Entries.
View:Archive.
View:Friends.
View:Profile.
View:Website (pattib.org).