Two: Learn the Lingo
When reviewing bicycle insurance quotes, it’s important to understand the language used in policy documents. Here’s a brief overview of the terms you might encounter.
A premium is an amount you pay monthly, quarterly, or annually to maintain coverage for your bicycle. If you fail to pay your insurance premiums, you won’t be able to file a claim if something happens to your bike.
A deductible is a way for the policyholder to share some of the risk with the insurer. It’s the amount you’ll be responsible for before your insurance company will pay your claim. So if your deductible is $1,000 and your bike is worth less than that, it doesn’t make sense to file a claim.
The lower the deductible you choose, the higher the premium will be, and vice versa. While some renters, homeowners, and bike insurance companies offer $0 deductible policies, these typically come with a higher premium.
Your coverage limit is the total amount your insurance company will pay after your deductible should they accept a claim. There are different limits for different types of coverage. For example, you might have a $10,000 limit for additional living expenses and a $100,000 limit for liability coverage.
Your bicycle falls under personal property coverage. However, just because you have a $30,000 limit for personal property coverage doesn’t mean you can expect to be reimbursed for the value of your $2,000 bike. There’s typically a limit for different categories, and there may even be a limit for specific items.
Valuable Articles Coverage
Valuable articles coverage, also known as scheduled personal property coverage, is an add-on that covers specific valuable items against damage, theft, and loss. Think fine art, jewelry, musical instruments, and (you guessed it) bikes.
Adding this type of coverage raises your premium, but you won’t be subject to a deductible if something happens to your bicycle while you have valuable articles coverage. You’ll also be covered against more events, such as accidental loss.
Cash Value, Agreed Value, and Replacement Cost
Policies differ with regard to how they pay claims. There are three ways your insurance provider may assess your payout:
Cash value: If you have a cash value policy, your insurer will only pay the actual cash value of the item after depreciation. This is typically less than what it would cost you to replace the item.
Agreed value: If you have an agreed value policy, then you and your insurance provider have agreed ahead of time on the payout for each item you own. This guarantees you get the full amount in the event of a covered loss.
Replacement cost: If you have a replacement cost insurance policy, your insurance company will assess the cost to replace your stolen or damaged item. Sometimes, they might pay you the cash value first and then reimburse you after you’ve replaced the item.