Let’s say you’re a hardcore cyclist, more comfortable on two wheels than two feet.
You’ve dropped $2,000 on a Kestrel carbon fiber bike and you’re off on a training ride when you get mowed down by a Honda driven by a 20-something with no license or insurance. Will your medical bills be covered? What about your bicycle?
The answer on both counts is probably. If you happen to have a car and car insurance with uninsured and underinsured motorist coverage (UM/UIM), it should cover you even in accidents when you’re not in a car, said Ray Thomas, an Oregon lawyer who literally wrote the book on the legal rights of bicyclists in his state.
“Every car insurance policy covers you as a cyclist for collisions involving an automobile,” said Thomas, a partner with the firm Thomas, Coon, Newton & Frost in Portland.
As for your bicycle, your homeowners or renters insurance personal property coverage should compensate you for the damage, but you may run up against coverage limits. Plus, depending on your policy, your pay out might be based on actual cash value, meaning you’ll get some amount depreciated from what you originally paid.
In either event, to get the full amount, you may want to consider standalone bicycle insurance.
Wait ... what’s bicycle insurance?
In recent years, as cycling has become more popular, insurers have begun offering insurance specifically tailored toward bicycles. Velosurance, based in Ft. Lauderdale, Florida, has been issuing bicycle insurance since 2012 and has insured about 30,000 bikes since, said CEO and co-founder David Williams.
Williams used to sell home insurance, and he noted that clients were never happy when they made a claim on a damaged or stolen bicycle, especially for a high-end bike. That’s because many home insurers, particularly, reimburse based on the actual cash value of the bicycle, meaning you get a depreciated value back rather than what you paid for the bike.
Between depreciation and high deductibles, owners would often get a fraction of what they paid for their bicycles, Williams said.
“We wouldn’t be here if home insurance did a good job insuring high-value bicycles,” he said.
Genius tip: An actual cash value renters or homeowners policy covers what the item is worth now, not what it was worth at the time you purchased it. A replacement cost value policy, a common option among renters insurance, conversely pays out the amount it would cost to replace an insured item if you had to buy it again. Replacement cost value policies generally cost more than actual cash value policies.
Velosurance’s basic policy covers a bicycle for accidental damage and theft in the United States and Canada, with add-ons for stranded cyclist coverage, UM/UIM coverage, liability coverage, supplemental medical and worldwide coverage. The cost of the policy depends on the value of the bicycle being insured.
Velosurance’s underwriter is Markel, which offers its own bicycle insurance with similar features. Both companies emphasize they insure bicycles at their full value, not actual cash value.
“The rider tells us how much they think their bicycle is worth and that is what Markel will insure it for,” said Amanda Newmeister, product manager for Markel.
So who needs bicycle insurance?
According to Newmeister, anyone with a bicycle worth more than $1,000. She said many homeowners insurance policies have low coverage limits for sporting goods equipment. Combined with a high deductible, that could leave many owners of high-end bicycles paying much of the bill out of pocket, she said.
Genius tip: Homeowners and renters policies generally have two types of limits. One specifies how much coverage you get overall and the other type specifies how much coverage you get in a particularly pricey category of stuff, like jewelry, electronics or, in this case, sporting equipment. You can learn more here about what renters insurance specifically covers or doesn't cover here.
However, Thomas said the most important thing a cyclist needs is robust UM/UIM coverage to protect them in case of a catastrophic accident involving an automobile. Liability coverage isn’t as big a deal for bicyclists because there’s not as much damage they can do to others on their bike, Thomas said. Granted, there are exceptions, especially when pedestrians are involved, but for the most part, bicyclists are in more danger than motorists on the road. (It may also be a good idea to get disability insurance in case an accident forces you to miss work.)
That’s why he thinks UM/UIM insurance is so important. Neither Markel nor Velosurance offer UM/UIM coverage of more than $25,000, and Thomas said he hasn’t seen any other standalone bicycle insurers offer more either — though you could need some.
“If you’re in a serious bicycle collision a night or two in the hospital could easily exceed that amount,” said Chris Thomas, an associate in his father Ray’s practice and a fellow avid rider.
On the other hand, Williams said few of his Velosurance customers ask for UM/UIM coverage.
While many auto insurance policies offer UM/UIM coverage of $100,000, auto insurance is only available to car owners. Until standalone bicycle insurance begins offering more robust UM/UIM coverage, Thomas has been advising people to buy cheap cars and take out policies with at least $100,000 in UM/UIM coverage so they’re protected in case of a crash.
“We hope insurance companies decide this is a product they want to sell: UM/UIM for bicyclists who don’t have cars,” Thomas said. “We think that’s the most important product out there.”