Repair vs. total loss - Mike Felder Insurance

1647 Willow Pass Rd, Suite 347, Concord, CA 94520
Phone Toll free in California 800-7-CYCLES
California's Largest Motorcycle Insurance Agency

THUNDER PRESS
MIKE FELDER'S INSURANCE COLUMN
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MIKE FELDER'S INSURANCE COLUMN -------------------------------------------------------------------------------- Each month, I try to come up with some sort of story or article about insurance matters and how they relate to cyclists. At times, I have even "set up" certain situations to prove a point about a certain coverage or procedure. However, I don't think I could have orchestrated a better one than the one that happened last month. It is a perfect example of how not being informed about your policy can leave a very bitter taste. In one of the motorcycle publications, a letter appeared from a very dissatisfied cyclist. His cycle was crashed, brought in for an estimate, and "totalled" by his insurance company. No sooner did I read the letter that I received a phone call from the dealer. His main concern was to shed a light on those dark insurance matters that cause all of us anguish when claims happen. Every cycle that is involved in an accident, gets damaged somehow. That situation can get compounded rather quickly when you have a motorcycle with a full fairing and frame supports. The guts of the cycle (engine, frame, transmission, and drive chain) can be perfect, and yet the cycle can sustain enough damage to warrant SOME companies to total the machine. The repair estimate will list some $900 to $1500 of fairing parts, a couple hundred bucks of decals, a few more bucks for fairing supports, and a enough hours of labor at $50 to $65 to make a down payment on a house. Then we get to add an exhaust system and the usual handlebars, grips, mirrors, levers, and foot pegs. The end result, after sticker shock, is complete amazement at how quickly the cost of repairs can skyrocket. And, of course, the year of our cycle doesn't matter, we all want brand new parts! The idea that our cycle may be two or three years old doesn't matter. There are companies out there that insure cycles as a side line. (I have heard that statement before!) The rates are great if you qualify. However, their repair methods, and approach to them, have something to be desired!! For those of you who are insured through the "BIG BOYS", the next step is almost inevitable. The bike gets totalled as soon as the repair order exceeds, in some cases, 50% of the Blue Book value. This situation can be almost absurd in the case of Harleys where many of them sell for much more than Blue Book to start with. The insurance company makes a settlement with the cyclist and gets title to his expensively damaged cycle. The cyclist has his money, the insurance company has the bike. Since the insurance company doesn't collect damaged cycles, or melt them down for scrap, they put it up for sale by bid. In the case of this cycle, the service manager happened to put in high bid. A dollar or two either way could have seen the cycle going elsewhere. But, as good luck would have it, the service manager got the bid. And, as bad luck would have it, the old owner sees the now repaired cycle a couple of months later and feels he is the victim of an "insurance scam." I phoned the service manager to ask about the original extent of damage, insurance company, and his subsequent repairs of the cycles. Sure enough, the damage to cycle was your classic fairings all over the place touring bike damage that was insured by one of the "BIG BOYS." After hearing about the extent of the damage, it was easy to see how the insurance company elected to total the cycle. It has to be noted here that most insurance companies have not yet learn how to "repair rather than replace" when it comes to fixing cycles. As long as that philosophy is not learned, there will be totals happening for a long, long time! The cycle was not beyond repair, but was beyond the "cost efficient parts replacement" that the insurance company offered. The service manager, recognized that and knew that his decade of experience could bring this machine into a nice "commuter". There is a part to this equation that was left out in the original letter. The service manager was willing to work for two beers an hour on his hobby rather than the industry norm of $45 to $60 an hour that most any repair shop would charge! The service manager was willing to purchase used parts on some items. He was willing to straighten frame parts instead of demanding new ones. When he was finished, he chose to wrap all of it in a new fairing so it would look good. Bidding on "totalled" cycles is one of the little "bennys" that you get when you work in the cycle industry. As a past Honda dealer, I am very familiar with practice. If you have the time, the desire, and the willingness, you can wait patiently for a totalled cycle, bid on it, perhaps win the bid, take the machine home, spend a few hours every week for a couple of months placing used pieces back on it and you have a pretty nice "commuter". You'll never end up with a perfect machine unless you are willing to spend a lot more than it is worth. As far as an "insurance scam," I don't think so. With all that is going on with Prop 103 and the tight scrutiny being placed on the insurance industry, the bidding and sale of damaged cycles is watched pretty closely. The insurance company needs to reduce it's loss and the sale of the cycle is an important part of that! If there is any unhappiness with the chain of events, it seems to have stemmed from the original insurance company totalling the cycle in the first place. For those of you who may be insured through a company that operates this way on a total loss, ask for ways to make concessions on certain aspects of the repair. Check into "repairing rather than replacing" or having certain parts replaced with used pieces rather than new. They cannot total and sell the cycle until you sign off the pink slip! If you do sell your cycle to the insurance company, where it ends up in three months should really be of little concern. But, if you want to keep it, work with the company on how it can be a better situation for both parties. Trust me....the insurance company would rather see you back on the cycle! That means you will have to get insurance and keep paying premiums to them. THEY LIKE THAT!! Most of them will work with you. As usual, the smart shopper is the educated shopper!! As a final note it was great seeing so many of the Thunder Press readers at the Cycle Expo at the Cow Palace. I thank each of you who stopped by to say hello.

Information in this article is probably correct as of the date it was written. Please check with your insurance agent or call Mike at 800-729-2537 before you make any life changing decisions based on what you read here. Comments are always welcome.