There is one thing every insurance policy has in common. They will all list the limits of their financial responsibility on every policy. This is for two good reasons. First, it spells it out right up front for you to see. Second, if the claim comes to any amount above that figure, they will gladly show you where you only purchased that amount and they are sorry that they will not cover anything above that.

Most insurance companies work with the understanding that there will be a certain amount left each year under the profit column. Every company keeps a close monitor on what is known as their "loss ratio". This number can (and has) run anywhere from 20% (an enormously profitable company) to well in excess of 100% (obviously non-profitable). While it may seem impossible to run at over 100% loss, just think of any company who had the good fortune of insuring the homes in the Oakland fire, or the 1989 earthquake, or the automobiles and businesses involved in the recent Los Angeles riots. Catastrophic situations aside, most companies like to shoot for a 50% loss ratio. When it comes to vehicle insurance, one way to "curb" high losses is to set limits as low as possible. That is where the 15/30/5 comes into play.

Believe it or not, thefts on Harleys is not the major risk involved in insuring them. After all, that amount is "capped" by the value of your bike. On average, a $8,000 or even $12,000 claim is not going to make any company pull their hair out. What will send them for a loop is having to deal with high liability claims. Even a basic liability policy places the company at a maximum $35,000 risk. (That is paid out as a maximum 30K for the accident as well as the 5K property damage portion.) Given the choice, any insurance would probably rather like to know that your cycle was stolen as opposed to being involved in a multi- person and property claim.

Keeping the above in mind, we need to examine what may happen when a rather large liability claim happens. Take the following example. While cruising on your cycle, you swerve to miss a car that is illegally located in the street for some reason. This evasive action causes you to lose control of the cycle and you are involved in an accident. You have the misfortune of striking some new model, multi-thousand dollar European car. Your passenger sustains some injuries ( to make things easy, we'll say he has less than the $15,000 of coverage you have for him) and the car that created the whole thing is gone and no one has any idea where it went or the license number. You now have quite a claim on your hands. And this is where it gets a little strange.

The import car needs parts that come out of the Black Forest only when the elves are not on strike and the owner demands that nothing but factory original stuff be put on his car. To boot, he just about demands that the car be flown to Germany to have the paint matched. Damages total (I'll be kind for example reasons) $3,800 and he is also suing for the loss of resale value because now the car is not original. He feels that will cost another $3,500 and has enough documentation to write a book about resale of damaged cars.

Total suit, $7,300. You send the demand to your agent or insurance company. They send a check to him for $5,000, their limit. There is a little note going out to him, and you, explaining the 5K limit on your policy. Your letter might have a note about the need to seek professional help from an attorney. His letter will say something to the effect of how to contact you for the remainder.

While the car owner's claim for loss of resale value may be without merit, your insurance may just choose not to fight it. They might sit back and revue the whole picture. To send out an attorney to fight the claim may cost them a couple of grand. They may choose to "cut their losses" and just toss the guy the $5,000 and call it quits. It has happened! And probably will continue to happen.

Maximizing your liabilityt limits does not cost that much. In most cases, your basic 15/30/5 policy can be raised to 100/300/25 (sometimes 50) for as little as $28 a year. In other cases it could run upwards of $62 a year or $80. However, the question to ask yourself is this...would you pay $80 to make the above mentioned example go away? Most likely you would. If your insurance company was on the hook for 25K of property damage in the above, you bet they would be sending out every lawyer they had to fight that claim. You could just sit back and watch. Pretty cheap insurance if you ask me. If the example above was a Turbo Porsche or Mercedes 500SL, you would be amazed at what the demands would be.

Looking for inexpensive insurance is every consumer's right. But don't forget to ask for the "right type" of coverage as you are shopping. To have the above explained to you during the claim process can be a killer. Shop wise and let the insurance companies earn their keep! The smart buyer is the educated buyer!!.