First off, we need to declare an interest. BikeSocial is run by Bennetts – a specialist motorcycle (they only do motorbikes) insurance broker. And, although BikeSocial has editorial independence and no obligation to write anything about either insurance or Bennetts, we sit in the same office and are exposed to the frustration that many of the Bennetts staff have about not being able to explain how insurance works to a large audience of customers.
When I worked for motorcycle magazines, I tried to write features on how the motorcycle insurance business works, but none of the big players would co-operate. I know now that this wasn’t about secrecy but that the vastness of the data and complexity of calculating premiums make it difficult to generalise. Plus insurance is regulated by a draconian system designed (correctly) to protect consumers like me, who don’t understand it. This regulation requires legally-specific wording of just about everything to hopefully make things clear for the customer but mostly ends up doing the opposite. For insurers, not trying to explain how it works for fear of being misunderstood is legally a better option than accidentally saying the right thing in the wrong way and getting a huge fine from the authorities.
And that is why so many magazine insurance features you read are those superficial ‘How to get cheaper insurance’ type things. Great idea, but there are two key things here.
Why should it be all about price? If you were buying a new motorbike or TV or broadband you wouldn’t just look for the cheapest. You do some research, decide what your specific needs are and make a considered decision about which product fits the bill based on what each one offers.
When those features start saying things like ‘build a garage, get married or move to the countryside’ we lose interest because we’ve either done it already or it’s not an option right now.
Having now worked for an insurance broker for three years, I know the answers to much of this stuff. But I also know how much things have changed recently and why that matters if it’s been a while since you read about insurance. What follows are the answers to the questions that I kept asking as a rider who has paid his premium for 37 years and only ever made one claim. I’m guessing they are the same questions that you might have too. It might not help you get a genuinely cheaper quote (as opposed to just another introductory discount), but it should help you get the right cover for what you need at the best possible price.
If you have an accident and no one else is at fault, you’ll be needing fully comprehensive cover
Motorcycle insurance is simply a contract that puts your situation back to how it was beforehand should you cause an accident that requires compensation to be paid to third parties and repairs or replaces you bike if damaged or stolen. The extent of that assistance depends on the level of cover you choose and the circumstances of the incident, but, essentially, that’s it.
Third Party Only cover is the legal minimum requirement to use a vehicle on the road in the UK. Third Party cover means that if you cause an accident that damages someone else’s vehicle or injures them, the cost of having their vehicle repaired or compensation for healthcare and loss of earnings etc will be paid by your insurer. Repairs to your bike or your injuries are not covered by Third Party Only cover.
Adding Fire and Theft cover means that, should your bike be stolen and not recovered, or catch fire, it will be repaired to its pre-incident condition or you receive payment for the current market value to replace it. If you are the first owner of a bike that is less than six months old, you’ll usually get a brand-new replacement machine.
Fully comprehensive cover covers loss or damage to your bike as well as the third party(s), even if the accident was your fault or no-one was to blame (if you fall off on wet leaves or ice, for example).
The people you deal with to buy your insurance are usually a broker and, in most cases are not the company that actually insures you. That company is the underwriter. The underwriter assesses your risk, sets the price you’ll pay (the premium) and pockets the majority of your money. They are also the ones who pay out when you make a claim.
The specialist motorcycle broker
The people you buy insurance from are usually a broker. The broker’s job is to gather together all the relevant information about you, your bike and your experience in order to quiz the quote systems of many different underwriters to come up with the policy that best matches your requirements (multi-bike, agreed value, restricted mileage etc) at the best price.
In addition to this it is usually the broker that is your point of contact when you make a claim. At the horrible moment when you get knocked off your bike in the middle of a flooded Croatian motorway, can’t speak a word of the language, have nowhere to stay and no means of getting home, a good insurance broker becomes a cross between Thunderbirds and the world’s most accomplished butler. At the point where you need it most a good insurance broker takes care of everything, fixes the seemingly unfixable and puts a metaphorical arm around you. They are the people who fight your corner against the other party’s lawyers, sort out a recovery vehicle and hire bike and appoint a solicitor to battle for your compensation.
These are the moments when you understand that choosing the best insurance is definitely not the same as just choosing the cheapest.
The general insurance broker
As above, but these companies also sell house insurance, car insurance and maybe other financial products too. Enormous buying power for certain demographics mean these companies can be cheaper for specific, low-risk customers and they will bundle together different products because doing this makes it less likely that customers will move on if they increase the premium on one of them occasionally.
The other issue might be that, should you have an accident, their claims and repairs system might not be set up to deal with bikes as effectively as a specialist motorcycle broker.
The comparison site
Comparison sites are not brokers or underwriters. They are big businesses that make equally big profits by charging insurers (usually the broker) a fee to sell on their site. They have identified a need from customers to save time by comparing product prices against a standardised set of questions. This has driven some brokers to offer aggressive discounts for the tens of thousands of new customers they can bring in by being cheapest. In addition to the discount for the customer, a broker pays commission to the comparison site for every insurance policy they sell, which can be a significant percentage of the premium you pay.
Comparison sites offer quick-and-easy simplified quotation processes, massive discounts and apparently, no downsides. Be aware though that the simplified, standardised questions might end up with a stripped-back policy that doesn’t actually suit your needs and, when you transfer from the comparison site to the actual broker, additional questions are asked, which might increase the premium. Or it might turn out that the policy doesn’t include all the things your current one does at the discounted price, so you may not be comparing like with like.
Motorcycle travel insurance is a good example of this. Most comparison sites will display dozens of travel policies when you search ‘motorcycle travel insurance’, but almost none of them cover anything that might happen to you on a bike bigger than 125cc. Proper specialist motorcycle travel insurance is a little more expensive, but covers you for your actual requirements.
Insurance brokers’ business models rely on making a small amount of profit on a large number of policies (you’d be genuinely surprised how little the profit-per-customer for a broker is – this is a business based on volume, not profit margin), meaning each policy sold through a comparison site may represent a loss to the broker in year one, which they hope to make up in your following years as a customer when they are no longer paying commission to the comparison site. That loss from paying commission may be split over a few years so you, the customer don’t get a huge increase in renewal price in year two. This means that you might well be a loss-maker for a broker for longer than you’d think.
Because comparison sites dominate the market, many of the brokers feel compelled to take the hit and hope that they can retain enough customers in following years to make their costs back.
The comparison sites have no interest in year two of your cover and, actually benefit from the difference in the non-discounted renewal rate and the discounted premium they can offer you as a disgruntled year-two customer looking for a better deal.
We wouldn’t choose a house, car, dog or phone just because it was the cheapest, so why do we buy insurance like that?
Not necessarily. Deal with a broker direct and you should get a more tailored policy and the discount that would have been applied on the comparison site can still apply. Plus, once you take away the commission that the broker pays to comparison site (which pays for their costs, profits and free cuddly toys) you might get a policy that’s more suited to your needs (better excess or agreed mileage etc), has some extras available like breakdown, legal and helmet cover too, plus a rewards program and costs less than the equivalent policy on the comparison site.
So why does my motorcycle insurance premium keep going up?
This might surprise you, but a lot of riders see premiums decrease or increase only slightly every year. It’s just that those people don’t get vocal on social media like the ones whose prices go up a lot. Bennetts (who owns BikeSocial) manages the insurance cover for around a fifth of the UK’s riders. In 2019, the average increase in premium for existing customers entering their third year with us (you can’t count year two because, as explained above, the introductory discount applied at year one would skew the numbers massively) was just £19.45.
What shouldn’t surprise you is that insurance is a highly competitive business and any underwriter or broker wanting to be successful has to start from a position of offering the best possible product at the best possible price… just like any other business in a competitive price-driven market. Any insurer that genuinely got greedy would be out of business in months because the competition is so vicious.
When premiums rise there’s always a reason, even if the customer doesn’t understand why. You might be a year older, riding the same bike, living in the same house, with the same garage and not had an accident or claim for years. But what you don’t know is that the particular underwriter that used to specialise in riders like you has pulled out of the motorcycle market to concentrate on health insurance. And the other underwriters aren’t particularly interested in taking on your business because they don’t have data on the risk…unless the price is right.
Or it could be that a rise in theft claims in your county has pushed prices up for everyone in a 60-mile radius. Or that other middle-aged riders on adventure bikes have been having more accidents recently.
Theft is a really good example of this. Motorcycles are expensive, good security is relatively cheap and highly effective (try and remember that all those angle-grinder videos you see on Facebook represent a teeny-tiny proportion of actual thefts), but surveys reveal that a huge percentage of riders don’t use any security aside from their bike’s steering lock. Your bike might be secured, but if 20 other people in your town have their bike nicked because theirs weren’t, your premium will go up too.
The advent of big-data means that there are now so many parameters that make up your individual risk profile. Which is good because it makes finding the right insurance product from the right underwriter is easier than ever. But it also means there are more parameters to count against you when something goes wrong in motorcycling.
Once you’ve cancelled your policy, you’ll become a new customer again for most brokers on the comparison site and so you are likely to see the new-customer discount. If the price on the comparison site is much lower than even the one you were quoted when you called your broker to query the renewal, then check carefully that it is exactly the same cover and you entered the same information that was on your cancelled policy into the comparison site quote form (things like annual mileage, amount of excess and commuting/pillion cover can make a big difference). one simple difference in your answers can have a big impact on the price you are quoted.
A large broker such as Bennetts typically deals with around 55,000 changes to riders’ policies every year. Some of those are changing a bike, some are changing address, some are cancelling a policy. That’s more than 1000 changes per week that usually require a phone call. When you change address or buy a new bike, the broker must do a new quote because a part of the data that forms your premium (the bike or your postcode) has changed. Making the change involves the agent you are speaking to, plus the data team to record the changes. You’ll also need revised documentation and all of that takes time. The broker isn’t earning commission from the underwriter for the revisions but that time still costs money and 55,000 lots of that time each year is a lot of money, so there’s a charge to cover the costs of making the change.
If your bike decides to have a lie down, you’ll be more glad that you chose the right cover than simply paid the lowest price.
Decide what cover you need. If your bike is low value and you are such a safe rider you’ll never cause an accident or fall off on diesel or wet leaves, then, in theory, Third Party Only (TPO) with a large excess (because you’re such a safe rider) will be fine. Except many insurers have data suggesting that riders who have TPO have lots of accidents and are more likely to leave the scene of an accident making them a higher risk, requiring a higher premium. In many cases Comprehensive cover will be as cheap as TPO.
Think about what you really want. How many miles do you really do each year, do you take a passenger, or use your bike for commuting? Check the actual make and model of your locks and chains and keep the certificates from advanced training. How much excess are you happy to pay if you consider yourself to be such a low risk?
Go onto social media and ask who has good experience of an insurance company. Ask specifically who has had a good claims or customer service experience is equally important. So much more important than just the price because, while you might not want to pay hundreds of pounds for insurance, should you actually need it, you want it to be worth the money.
Comparison sites will be cheap because of the discounts but check the small print for what you are actually getting. Get an additional quote from a broker too because you’ll be surprised how competitive it can (should) be. And don’t forget to call your existing insurer too, even if their renewal figure was high. They might be able to get the cost down by adjusting your annual mileage or increasing your excess. It could also be that your renewal price was high because that particular underwriter was getting nervous about patterns of claims that turned out to be anomalous and have since reverted to their previous pricing. Insurance is a very fluid business – things change all the time.
Don’t forget the extras
Some brokers package legal protection, breakdown recovery, helmet and leathers cover together, which is good if you want it all, not so good if you only want one. Sometimes the premium will have them already included so you can save money by knocking them off. Conversely, the very low premium on a comparison site probably doesn’t include them, so be prepared for the hard sell when you try to buy. Don’t feel pressured – you can always find your own cover independently.
Loyalty and rewards programs can be very worthwhile. Some will be similar offers (discount hotel rates, two-for-one tickets to theme parks and discounts on a spa day) that you get with your phone, bank, or breakdown cover. But others are much better. BikeSocial’s parent company Bennetts works a lot harder on its loyalty program, Bennetts rewards, offering discounts on track days and training (on and off-road), savings on motorcycle products, motorcycle-related competitions, and opportunities for ‘money-can’t-buy’ moments at Bennetts British Superbike racing like grid walks, safety car and pillion laps, a chance to hand out the trophies on the podium and hospitality packages.
Understand how the deal works
Insurance pricing appears to be no different to your digital tv contract or broadband. Sky, Virgin and BT all offer massive discounts on year one for your telly and all the major broadband suppliers do the same. Cheap prices in year one and then the full price in years two, three and four. The difference with insurance is that because the market is so volatile, the increases in premiums can seem random and disproportionate. Your Sky TV price increases once by a large amount after year one and then in very small increments after that. Sky doesn’t have to deal with a sudden increase in stolen dishes or accidental damage or compensation when your dish falls off the wall onto the postman’s head. And you don’t have to deal with Sky deciding to pull out of an area altogether, leaving you needing a different provider.
And also, at the time you renew your contract you have 12 months’ experience of the wonderful programmes and services from your telly people, meaning it’s very easy to decide to renew.
Most of us never have anything to do with our motorcycle insurers other than the letter inviting us to renew cover at more than the price we paid on a comparison site 12 months ago. So we rarely build any loyalty based on actual performance.
Not every underwriter will cover heavily modified bikes although, in reality, they often do very few miles and can be a relatively low risk.
Most common motorcycles have an ABI (Association of British Insurers) code applied to them based on price, performance, capacity etc, which makes it easy for underwriters and brokers to quote on them. Sometimes though bikes appear that aren’t on the list. Grey imports were a good example of this in the 1990s. Independent importers started bringing in models that were never built for the UK market and so didn’t have an ABI code. Brand new models sometimes take a while to have a code assigned making it harder to get cover for your new machine. There are also classic bikes that never had a code, some machines whose model designation changed slightly five years into a ten-year run, limited edition race replicas, SP or Custom versions and many more. And then there are the café racers, choppers, home-built specials and Q-plates.
Most brokers will have a ‘referrals department’ staffed by experts who know lots about the outer corners of the motorcycle world and are able to assess and value an unusual machine accordingly. This is when you are glad you chose a specialist motorcycle insurer who understands that your Colin Edwards replica Aprilia RSV-R is just a standard RSV-R with fancy exhausts and a paint job and is very different from the RSV-SP, which had a different engine, frame, suspension and bodywork.