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Monday, March 26, 2012

Why I'm cancelling liability coverage on my Royal Enfield

No riders: Solo seat is a constant reminder there's no insurance for a passenger.
My Royal Enfield Bullet has only the solo sprung seat. I've kept it that way to avoid the temptation to ever carry a passenger.

It was a visual reminder to me every time I got on the motorcycle that I didn't carry insurance coverage for a passenger. Now I've cancelled my motorcycle insurance completely.

It's legal to do so. My state of Florida and Washington state are the only two that don't require motorcycle liability coverage.

I never had carried more than liability insurance anyway. No insurance for me, none for damage to the motorcycle. Motorcycling was supposed to be an affordable hobby; regular insurance payments would have made it less so.

If the motorcycle was destroyed or stolen — well — I would be sad. I'd have to be careful.

As for injury to me — that just isn't in my plans at all.

Also not in my plans is getting sick. Yet my wife and I pay, as a couple, more for health insurance than we pay to live in our house.

Motorcycling can be a dangerous activity, granted, but it is no where near as dangerous as just plain getting old, and we pay an enormous amount to be "protected" from the effects of that. Enough!

Before cancelling the motorcycle liability insurance I watched a video out of Washington state on why I need it. "You could hit a pedestrian," was the argument, "or scratch a car while maneuvering in a parking lot."

The odds of that, however, are low. Here's how I know this: I save only $25 a year by cancelling my coverage (actually I save "only $24," the insurance agent pointed out, in an effort to keep me signed up). Very little.

That tiny figure represents the insurance company's evaluation of the danger that I would ever exceed my deductibles and even leaves room for it to make a profit. Clearly, the insurance company thinks I am very nearly at zero risk. I'll go with that.

Meanwhile, in the 10 years I've owned my Bullet, I've paid $240 to the insurance company. The expense, to the company, has probably been under a few dollars, to mail me fresh insurance cards twice a year — an expense it can take off its taxes.

It's a superb business plan for them. I'm dropping out of their profit stream, but I urge you to make your own decisions about coverage. Your comments are welcome.

12 comments:

  1. Good show Blasco , insurance types are parasites ,much like the tax inspectors - eh what.
    I had thought that mebbe the metal button on your purse had rusted through lack of use,but now I see it was a conscious decision not to pay - Bravo that man !
    That'll show the blighters !

    On another matter , I see you have removed the reverse image Bullet on your heading banner and substituted it with a picture of your smiling self .
    I preferred the former.

    A quick G&T before I exercise the hounds ?
    Good idea.
    Your servant .
    Maj Bunty Golightly MBH , Defender of the Kickstart , Companion of the Royal Floatchamber .

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  2. aaaaaaaaaaAAAAAAAAAAAA!!!!!!!!!!!!

    There is no possible response to this. You got me on both counts.

    I got nothing.

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  3. As one who works in insurance as well as a long time lover of all things that move fast - especially motorcycles, I can testify that we are, in fact, not parasites, but normal people who do care for other people - as all should. I've also never met anyone in the industry who is only there to cheat people of the hard earned money. Sometimes this fact can become obscured by bureaucracy and salesmanship, unfortunately, but its true nonetheless.

    Aside from that, my close experience observing claims come through our office has led me to understand the real value of carrying insurance. None of the claimants that we handle ever planned on their injury, but I have not heard of one of them that was disappointed that they carried insurance after they had the injury. I've also seen a number of companies that we cover (I work in worker's compensation) choose to drop their insurance coverage as you have done only to have a claim that shut their business down and bankrupted the owners.

    The cost of health care is exorbitant now and I've seen numerous simple "back strains" that end up costing over half a million dollars. The cost of an MRI can easily deplete anyone's reasonably sized rainy day fund (as can replacing someone's car, etc.). Should you be found liable in an accident, these financial responsibilities would fall on you (and your spouse) to pay for. $24 a year is a remarkably affordable premium to pay for freedom from this easily bankrupting danger. Also, as a note explaining why your premium was that low - its not only an evaluation of danger, but also a reflection of the size of the pool of other insurance holders. This is what allows your premium to be this low. The objective risk rate could be much higher.

    Not all will use their insurance, but most do. I encourage you to reevaluate your position, if not for yourself, then for others including your spouse.

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  4. My insurance company (State Farm) doesn't even OFFER motorcycle insurance...when I had my little crash (not my fault),I was liable for the whole $25,000 of medical bills,to reconstruct my badly broken left wrist..(>_<)..Oh well...such is life...my attorney is ON THE CASE...

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  5. Here Here Austin Smith I am glad that some one is thinking right, I am a victim of Florida,s Poor insurance policy's (dropping your insurance)to the tune of $750.000.00 no job still dealing with my injury's four years later due to being run over by a Floridian who fell asleep at the wheel, it was fortunate I don't think this way, Lucky I have decent coverage to pay my $120,000 hospital bill $20,000 medivac jet to fly me home for more hospital, wheel chair for three months Florida's got the worst drivers I have ever met (next to Quebec) its a good job I have racing experience its like going out for practice on there roads every day.

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  6. Reading these comments I thank God for the UK's National Health Service! All treatment and operations come free in return for the small contribution from salaries.
    But we must have basic insurance for all vehicles in this country.

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    Replies
    1. It might be more appropriate to thank Aneurin Bevan - don't yer think ?
      Otherwise one might think the Almighty is happy to see the rest of the world fend for themselves.
      One wonders if this is proof positive that God is British by jove ?

      Your servant
      Bunty etc .

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  7. Also, as a note, you mentioned your desire for motorcycle ownership to be an affordable hobby. A single claim could turn it into the most expensive hobby you've ever had. Also, you have effectively turned yourself into a time bomb to other riders on the road. Should you be found liable for another's injury, what would you do if the money you've saved for your own retirement, the value of your home, your other vehicles, and all the assets that your spouse has(presuming you're married)weren't enough to cover their claim? The expense would then have to be covered by the one you injured. My taking away your liability insurance, you've not only increased your risk, but also mine as well. As riders we ask for courtesy from other vehicles to watch out for us on the road. I feel $24 a year is a relatively inexpensive way to return the favor.

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  8. I also live in Florida and run with no insurance on my bikes. I have decent health insurance so my medical bills are not really that much of a concern. I like to be able to commute to work for very little. It is bad enough I have to pay for a tag every two years.

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  9. David. Great blog, been reading for ages.
    But I really think you've got this one wrong.
    Imagine a dog runs out in front of you and you swerve and kill someone. No witnesses to the dog. You will lose everything you own. For 25$??!
    My insurance costs me about €500 a year here in Europe.
    BR
    Matt

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  10. I have never done an item that has drawn such a remarkable stream of fine comments from all corners. Austin, thank you for a very thought provoking argument. American readers might not understand Maj. Bunty Golightly's reference to Aneurin "Nye" Bevan, a British Labour Party politician who was the Deputy Leader of the Labour Party from 1959 until his death in 1960. The son of a coal miner, Bevan was a lifelong champion of social justice and the rights of working people. His most famous accomplishment came when, as Minister of Health in the post-war Attlee government, he spearheaded the establishment of the National Health Service, which provides medical care free at point-of-need to all Britons. Austin, I would be delighted if you would share with us your informed opinion of the Affordable Health Care Act now under consideration in the U.S. We could use an honest assessment.

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  11. Thanks, David. I enjoy your blog immensely and hope you consider my thoughts on your insurance choice.

    As for the Affordable Health Care Act, I would hate to bring politics into a blog that serves as a haven from politics - where only things with two wheels, an engine, and the morning breath of exhaust matter - so I'll answer your question from only an insurance standpoint and leave the questions of legality to the courts.

    From a pure insurance standpoint, the Affordable Health Care Act makes sense. Insurance revolves around the assessment of liability. As a rider, I am a liability, as is everyone on the road. I can remove my liability by choosing not to ride. Unfortunately, in life we cannot remove ourselves as risks by choosing not to get sick, injured, or die. There are objective dangers to life that at some point will necessarily lead to our death. Doctors are required by law to treat the injured, whether the injured can afford it or not. For those of us with insurance, the cost of our care is paid for by the premiums from the pool of policy holders. For those without coverage, their assets are taken from them to cover the costs of coverage (the costs overtake the value of most people's assets very fast - within the first day of care for a catastrophic injury). Once their assets are exhausted, the cost is transferred to the taxpayer and policy holders. In effect, in many cases policy holders are paying for the care of the uninsured. The figure that the US Supreme Court is using in the Affordable Health Care Act case is that each family policy costs an additional $1,000 a year to pay for these uninsured injuries, sicknesses, and deaths.

    Younger people who do not get sick, injured or die generally don't see the need to pay a high premium for a service they will likely not use any time in the near future. They go uninsured and become liabilities to those that do hold insurance. This also shrinks the premium pool and causes the premiums to go up for policy holders. From an insurance standpoint the way to most effectively lower premiums and reduce risk is to increase the size of the premium pool. This means bringing young people and those that do not have insurance into the pool. In the case of the Affordable Health Care Act, this means requiring everyone to carry insurance or face a penalty (taxed premium), unless you have a hardship exemption (the pool of those with hardship exemptions is smaller than the number of currently uninsured).

    Unfortunately, health care is something that is unique in terms of liability. Not all will own a car and need car insurance, and not all will own a business and need workers compensation insurance. But to even have these choices you have to be living, and if you are living that means one day you will die: and that necessarily costs someone money. It is more than a risk, it is a guarantee. And there is no way to remove yourself from the liability pool. From an insurance point of view, it makes sense to have people pay for their own care, rather than transfer the cost to everyone else.

    Now whether this idea is constitutional or not, I suppose we will find out around June when the court rules. From a risk management point, however, it makes good sense.

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