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How to File an Insurance Claim

The average number of visits to an auto body shop for an insurance-related claim is in the area of one every seven years.  This extended length of time between visits doesn’t lend itself to a familiarity with the process, and this article is intended to make it a bit easier. While specific details may vary from state to state and between insurance companies, the basics here will be a useful guideline for filing collision and comprehensive claims.  In nomanner or fashion is this being offered as legal advice; it is simply a guideline compiled from nearly forty years of service in the motorcycle industry repairing vehicles for claimants and insurance companies. 

Filing a claim actually starts much earlier than the actual occurrence that necessitates the claim.  It begins when you buy your policy.  Two areas arise as the biggest areas of conflict and disappointment. 

One is the amount of damage you may be covered for.  This is affected by a number of things among them:

(A.)         The vehicle age and value.

(B.)         Accessories covered on a separate addendum to the basic policy (also known as a “rider”).

(C.)         Your deductible. 

When it comes to a vehicle’s age, value decreases with age (unless a collector or specialty vehicle). If the vehicle is over ten years old, chances are the actual cash value of the bike (ACV) will be low enough the company will assign a replacement value so low that collision and comprehensive insurance may not make sense.  For example, if you have a $3000 ACV and a $1000 deductible, in the event of a total loss you will see only $2000 to you.  If you are paying $400 a year in collision premium, the bike is paid for in 5 years by the premium alone.  Not a great return on investment.  As you keep the bike longer, the value decreases but does the premium go down? Probably not. 

Keep the bike those five years and the investment gets even worse as the ACV of the bike goes down dramatically so you may see less than $1000 in the event of a total loss.  With the salvage auctions bringing such high money these days, the likelihood of your bike being a total loss is much higher.  We also know that tipping a sport bike over in a parking lot can ring up $2000 or more in damage and you can still ride the bike.  So think carefully about the value to premium ratio, unless you are required by a financial institution to carry comprehensive and collision for a loan, then re-evaluate after the loan is paid off.

Accessories are another area of conflict in coverage.  Unless it says it’s covered do not assume it is.  This is where a good agent is crucial.  There is so much legalese obscuring the actual facts of coverage that you will need help here.  While there isn’t much to be covered on a sportbike for accessories (pipe, custom paint, etc.) on a cruiser that has been customized by the adding on of such items as a windshield, lightbar, saddlebags, floorboards, etc, accessory coverage is much more important.  Some insurance companies also offer coverage on your gear as well.  ASK ASK ASK ASK!! 

Deductibles are an area that the agent will want as low as possible as it is the highest premium.  They are paid by a percentage of the premium.  You need to know how much of a financial blow you can absorb in the event of a claim.  There is no hard and fast rule here, but a week’s pay would be a place to start.  If you are prone to mishaps, maybe a lower deductible, if not, a higher figure will work.  Basically you are borrowing money from the insurance company to gamble with.  The trade off between needing to use the deductible and not is the gamble.  Get a quote with the various deductibles from $100 to $1000. 

Once you have your policy in place and understood now comes the next step.  Say you are in an accident and the motorcycle suffers some damage.  What to do next?  If the damage is significant, this will involve the possibility that a claim may need to be filed.  If another vehicle is involved, get the name, driver’s license information and registration number of the vehicle involved.  Having this allows you to file a state accident report if necessary and to verify that the operator is or is not the owner of the vehicle.  If the damage is over $400 it is usually a good idea to file an accident report.  The law enforcement officer will be able to tell you where to get the paperwork to do this or may even have forms there.  The filing of an accident report makes the record of the incident public and will be proof needed at a later date.  This is especially important if the other operator received a ticket and is required by law in most states. 

An accurate estimate of damage is the next step.  This should be done by a qualified repair service outlet.  Without this estimate you are at the mercy of the insurance company and it would be the same as doing your own medical diagnosis and hoping for a good result.  If the bike is not driveable, have it towed.  You have the right to choose the location you want the bike repaired.  As a bit of a plug for our store (and something to keep in mind wherever you have the estimate done), we are in the business of repairing motorcycles.  Our estimates are written with a repair in mind.  We paint parts, and repair damaged items in a professional and workmanlike manner.  Your service provider should do the same.  We can also supply accurate actual cash values (ACV) to avoid the problems mentioned above.  Our first responsibility is to you, our customer. 

Most places will charge for an estimate as it takes time and if for some reason the job isn’t going to be done, the technicians doing the estimating need to be compensated for their time.  Insurance companies have generally reimbursed our customers for estimates they pay for or in the event of a total loss we bill the insurance company when the bike is picked up to go to auction and there is no out of pocket expense to you.  If you have questions about the estimate, now is the time to ask them.  Any estimate that will stand the light of day can easily have questions addressed and answered.  In some cases there may be damage that isn’t visible.  This is called “hidden damage” (novel term, eh?)  This is damage that may be obscured by body panels or other parts.  If there is a possibility of damage of this type, it is so noted by the estimator.  This is where an experienced estimator is crucial.  The insurance companies don’t like to pay for disassembly unless there is a good chance the discovered damage, when added to the known damage, doesn’t put the vehicle into the total loss category.

If you don’t understand something about the estimate either in technical or procedural terms ASK.  We aren’t lawyers and can explain things in plain English.  While there are any number of technical terms used to describe the various affected systems, communicating the needed information can be done effectively.  It may take a try to two to establish your level of technical knowledge (and how much you actually want to know) but with a bit of effort it can be accomplished. 

Once an accurate estimate of damage is done the next decision is whether to file a claim or not.  If the damage is a couple of hundred dollars over your deductible, the question gets even more difficult.  With substantial damage, the question becomes a bit clearer, but still the possibility of an increase in premium or outright cancellation exists.  Discussing this with your agent may be in order, as cancellation on a policy required for a loan can get a bit dicey, forcing you to take out a policy elsewhere. 

Assuming the claim is going to be filed, the next step is to contact your agent or insurance company directly in the case of internet policies.  If the motorcycle is safely rideable the insurance company may request two estimates.  If it not safely rideable, let them know and then they can decide if they want to tow it to the second estimate site.  Let them know where the bike is and that the estimate is being done there.  If the amount of the claim is large enough, either an adjuster from the company or an independent adjuster will be dispatched to look at the bike, take photos and view the damage.  At this time we discuss any questions the adjuster may have concerning the damage and recommended repairs. 

In the case of an older bike, or one that may be getting close to the total loss level of damage an adjuster will often offer an “Appearance Allowance”.  This a cash allowance offered to you to accept the component in its damaged condition.  For instance if there is a scratch on a muffler, the adjuster may offer $100 rather than replace a $500 muffler.  This is the negotiation phase of the settlement of the claim.  If you accept the allowance that money can be applied towards other repairs or not spent on repairs and kept to be applied to your deductible.  This is also a place for the experienced estimator, as he can advise you as to whether the allowance is a good idea or not in the matter of function, safety, and significant diminished value down the road.  If you were not at fault there is less incentive to accept appearance allowances.  However, the insurance company will normally not want to pay much over market value in repairs (hence the sensitivity concerning older bikes) but each claim is different and needs to be viewed as such.  Just because you can’t afford a newer, more expensive bike that is no reason to be denied reasonable repairs to your unit. 

This is the most confusing aspect of the process and you need to be comfortable with the path taken in the repair process.  Don’t assume something is going to be taken care of unless it is in writing.  It is at this point that questions need to be asked by both you and the repair facility and answered to both the service provider’s and your satisfaction. 

If the repairs are approved either the adjuster contacts you and sends a check or he will issue a check for the repairs payable to you and the shop at that time.  If there are further questions the adjuster will contact you.  It is now time to contact the shop and make arrangements to have the repairs done.  Please bear in mind you will be responsible for your deductible and should have arrangements made for payment of that upon completion of repairs. 

When any negotiations are done and the repair prices exceed the threshold at which the insurance company decides to send the bike to auction they will often offer the bike back to you.  This is often at or above the expected salvage value they expect to receive at auction.  The notable exception is if the other guy’s insurance company is paying and they want to make you happy and you want to retain the bike, in which case you may be offered the bike at a nominal price.  If you elect to buy back the bike you also need to ask, before agreeing, if you have to surrender the title.  If you do, a brand will be attached to the title and you will have to go through the inspection process needed to restore the bike to being able to be operated on public highways.  If the bike is to become a track bike this is not an issue, but the inspection for title and license can be a bit of a nuisance.  See our tech article on branded titles for more information. 

Now remember, you can still have the bought-back bike repaired and returned to service, just contact the service provider of your choice and begin the process.

© Bill Whisenant 2009
written 4/22/09
updated 11/26/2012



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