12 month insurance?

[Jay_GSXR]

So my insurance company told me today that my bike has to be covered all year long ( liability included ).
I think that this is absolute b.s. since I wont even look at the bike during the winter and I'm allowed to cancel my coverage on my sports car.
Is this even legal for them to force me to pay for 12 months when I only want 6?
Does anyone know of any way around this? I'm new to the scene and would appreciate any help or tips.
Thanks,

Jay!

[sarafotoxin]

you can cancel your liability coverage over the winter

of course the insurance companies have that covered -- they charge you the bulk of your annual coverage over the summer months so even if you cancel you're not saving much (at least SF does)

yes it's total bs

[Trowa]

yes its total BS but we the consumer have no choice as the insurance companies own us.

[VifferFun]

It's not BS . . . you just don't understand the insurance product. The price you pay is essentially for six months of coverage, but the insurer will cover you for the entire year anyhow. The alternative is to charge you double the premium and let you cancel in the winter, but that would just be annoying for everyone.

I have discussed this in detail in the stickied thread, so you can read my more detailed explanation there:

http://www.gtamotorcycle.com/vbforum...ad.php?t=65033

[sherazad]

I don't know how the %'s work, but I know SF will insure you for the full year and then they spread this out over each month. I think your premium is 16% used for a few months in the summer and then 10% in the fall months then something like 2-3% in the winter months. You can cancel the ins. after the summer when the bike is sitting, but you'll end up having to owe SF because they're not charging you 16% of your premium in July, they're charging you 8.3% (1 / 12months). 80% of the premium is used up btw May - Oct.

The SF usage of the premium is:

Jan 2%
Feb 2%
Mar 4%
Apr 8%
May 12%
Jun 16%
Jul 16%
Aug 16%
Sep 12%
Oct 8%
Nov 2%
Dec 2%

I don't know if SF even let's you cancel, I'm not sure. If you can cancel and there are no penalties then you may (even after paying money after you cancel) come out on top rather than keeping your bike insured all yr round.

On a side note: I'll be paying $2600 for an 07 DRZ400SM (24, GM2) with SF, CRAZY!?!?!?!?!

[VifferFun]

If State Farm were smart, they would charge a NON-level premium each month, so that customers aren't confused when they try to cancel over winter. If you cancel over winter, you will owe State Farm money because you used insurance coverage that you have not yet paid for.

Suppose your policy is $1000. You are "using up" premium at the following rate, based on their earned premium schedule (simply multiply each monthly percentage by the policy premium of $1000):

Jan ----- $20
Feb ----- $20
Mar ----- $40
Apr ----- $80
May ---- $120
Jun ----- $160
Jul ------ $160
Aug ----- $160
Sep ----- $120
Oct ----- $80
Nov ----- $20
Dec ----- $20

You pay the most when you play the most. This should make sense to everybody?

Instead of charging premium this way, State Farm charges you a level premium each month, so for a $1000 policy, you would pay $83.33/mo. If you start your policy May 1st and cancel September 30th (i.e. five peak riding months), here's how to calculate what you OWE:

PREMIUM OWED TO STATE FARM
= [Used Premiums] - [Paid Premiums]
= [120 + 160 + 160 + 160 + 120] - [5 * 83.33]
= [720] - [416.67]
= $303.33

This isn't a penalty, but making you pay up for the insurance product that you already used but have not yet paid for.

Capiche?

[DaveP]

If State Farm were smart, they would charge a NON-level premium each month, so that customers aren't confused when they try to cancel over winter.

They have that option available, but most can't afford paying 16% in one month so they allow you the opportunity to spread the payments equally. If that's the route you or anyone wants to go, then just ask your SF broker and i'm sure they'd be more than willing to do so.

[VifferFun]

They have that option available, but most can't afford paying 16% in one month so they allow you the opportunity to spread the payments equally. If that's the route you or anyone wants to go, then just ask your SF broker and i'm sure they'd be more than willing to do so.

I think State Farm would save themselves a lot of grief if the either charged all policies with non-level monthly premiums, or required the whole premium up front. This is why most companies do not allow monthly payments for bikes.

[DaveP]

I think State Farm would save themselves a lot of grief if the either charged all policies with non-level monthly premiums, or required the whole premium up front. This is why most companies do not allow monthly payments for bikes.

Your correct on that but at they get a fair amount more customers because they allow monthly equal payments. Pro's and con's to everything, the best thing they could do is educate the average rider. Unfortunately most don't even want to know...

[GrahamT]

insurance rates and policies are ridiculous period.there is no percentage breakdown to convince me otherwise.i simply don't care what their EXCUSES are for hiking rates and holding us consumers hostage with their year long policies.i'm an honest guy and have never made a claim,however i laugh when i hear a story about an insurance company getting hosed for a false claim,.......now everybody can go ahead and tell me tha's one of the reasons insurance rates are so high

[VifferFun]

insurance rates and policies are ridiculous period.there is no percentage breakdown to convince me otherwise.i simply don't care what their EXCUSES are for hiking rates and holding us consumers hostage with their year long policies.i'm an honest guy and have never made a claim,however i laugh when i hear a story about an insurance company getting hosed for a false claim,.......now everybody can go ahead and tell me tha's one of the reasons insurance rates are so high

Before making uneducated comments regarding a topic you clearly don't understand, why not read my sticky and come up with a viable argument?

http://www.gtamotorcycle.com/vbforum...ad.php?t=65033

I'm an honest guy too, but I believe in the importance of an insurance policy.

[VifferFun]

Your correct on that but at they get a fair amount more customers because they allow monthly equal payments. Pro's and con's to everything, the best thing they could do is educate the average rider. Unfortunately most don't even want to know...

Yes, the monthly payments are definitely incentive for people; however, I still think it is much better to charge non-level premiums so that people can understand exactly what they are paying and what they are receiving. I've already tried explaining the "early cancellation" concept to people on the board, and for such a remedial topic, people seem to have a really tough time trying to grasp it. You have to be at least 16yo to get your M1, and most of us have already passed Gr. 8 by this point; that is all the math knowledge required to understand the percentages.

[DaveP]

LOL! Oh so very true...

Yes, the monthly payments are definitely incentive for people; however, I still think it is much better to charge non-level premiums so that people can understand exactly what they are paying and what they are receiving. I've already tried explaining the "early cancellation" concept to people on the board, and for such a remedial topic, people seem to have a really tough time trying to grasp it. You have to be at least 16yo to get your M1, and most of us have already passed Gr. 8 by this point; that is all the math knowledge required to understand the percentages.

[VifferFun]

Honestly, it's a lost conversation. No matter how many times I try to explain weighted premiums to clients, they just don't seem to fully understand.

I've attempted to explain the concept from many different angles, and I feel I did a pretty good job. I even used analogies, but still people don't understand

Judging from the responses, I would guess that some people just don't want to understand. My theory is that they simply ENJOY complaining about the "greedy good-for-nothing insurance thieves", or whatever variation of this juvenile description they can conjure. If they understood the insurance product, then they wouldn't be able to make their stupid comments without feeling like an idiot.

[VifferFun]

I think everybody should be able to afford non-level premiums (where 80% of the premium is paid over the six-month summer period). If they cannot afford this payment schedule, then they cannot afford to ride and should hang up their keys.

My guess is that companies do not charge non-level premiums due to systems issues. I know that my actuarial analysis would be more annoying, because I could no longer annualize a monthly premium in my data my simply multiplying by 12. It wouldn't be that big of a deal for me, however, so long as I have a field in my dataset indicating the weight of the monthly premium.

[rukus]

next up he's going to come on here bragging about how he got six months free on his policy. hel'l think that only paying for summer months mean you get the winter for free