Why Do You Need ATV Insurance?
ATV insurance is not exactly the exciting off-road content people come to ATV.com to read, but it is definitely worth educating yourself on the topic so you know how to protect yourself and your property. We put this article together as a good place to start on your road to ATV insurance knowledge and we’ll do our best to make this as painless as possible.
What Is Liability Insurance?
Just like your car insurance, liability insurance is one of the key components of ATV insurance coverage. But what does it mean? Here’s the simplest explanation we could come up with about what liability insurance is: Liability insurance covers everyone but YOU! Ok, almost everybody. If for some reason you have a passenger and that passenger happens to be married to you or are full-time residents of the insured (your) household, there may be provisions that exclude them. You MUST ask your ATV insurance agent, insurance broker or online underwriter what the passenger liability exclusions are. This is information you need to arm yourself with.
Know Your Minimum Liability
All insurance is a controlled affair. Each state has an Insurance Commissioner and they approve insurance laws, rate increases and decreases and they set the state minimum liability limits. Before you sign anything, you MUST your agent to confirm your state minimum.
For example, in one state the lowest limit might be $25,000/$50,000. Those are the bodily injury pay out maximums for a single injured person or multiple injured people. The majority of people automatically pick the minimum limits. Why? Because insurance agents don’t often explain why it’s important to buy the highest limits you can afford. It’s all about loss ratio. Ask your agent how loss ratio affects them.
As an insurance agent, your loss directly affects their income. Any agent that says otherwise is lying and you should find a new agency or broker to deal with. If you cause $80,000 worth of bodily injury and property damage in a claim and your agency only sends that company about $100k annual in written premiums, you have just caused your agent to lose money.
Typically, insurance companies expect to absorb losses just at or under 70% of what they collect. That means they pay the bills, employees and shareholders out of the other 30%. That’s acceptable to many companies as the cost of business. Anything over is losing them money and an independent agent can actually be suspended from writing business until they dip below the threshold. That’s why many agents don’t want you to max out your ATV (or automotive) liability insurance. One claim can end a year of hard work. It’s not easy being an independent agent or broker. It’s also why insurance companies direct market against the agents and brokers. If they aren’t paying an agent or broker 15% for your ATV insurance than it is just bonus. And NO – insurance companies are not supposed to offer you better rates from direct business versus going to an agent. That’s called rebating in most states and is illegal in almost every state.
Is the Minimum Enough?
Unless you’re under 25, single and NOT a homeowner, there’s a pretty good chance you are under-insured if you only have the minimum protection – and that goes for your ATV insurance, home insurance, or auto insurance.
Think of it this way: if you are on the trail or in your car and you hit anybody you will almost always exceed that minimum bodily injury limit if surgery for the victim is involved. If that happens, the $75-100 annually you would save by getting minimum coverage won’t seem like much of a bargain.
Unless you’re single with no assets other than your wheels, our insurance broker suggests to all his customers to buy a minimum of $100,000/$300,000 bodily injury limits. If you are married or own a home, buying less coverage just isn’t worth the risk to save a few bucks. The difference in the motorcycle world is usually less than $70 annually for anyone married and over 35 years old. The difference for ATV insurance is usually less than $15 annually. It’s about protecting yourself from being put in a financially undesirable position.
Property Damage Coverage
Property damage is the last number in the liability equation. It fixes the things you break. Cars, bikes, ATVs, guardrails, telephone poles, fences…the list goes on. Simply, if you break it you or your ATV insurance is going to have to pay to repair it to “like” condition. All insurance works like that. Insurance is supposed to put “whole” the victim in an accident.
If the minimum property damage coverage in your stage is $25,000 and that’s what you choose to go with, your insurance company will only cover you for that amount. It sounds like plenty on paper, but things are more expensive than you might think. If you drive your UTV into a telephone pole or somebody’s $80,000 truck, how quickly will that $25,000 disappear? But if you double the minimum coverage you now have $50k for property damage. Suddenly, you’re not getting a friendly letter explaining that they will accept payments in a timely manner.
Un/Under Insured Motorist Coverage
In most states you have the availability of un/under insured motorist coverage. This is what fixes your body in the event you are hurt by the uninsured or under insured on the road, dirt and water. HOWEVER, in most cases people will pass on uninsured motorist coverage. Some companies don’t even offer it for off-road riders. I’m not sure why people pass. Dirt riders are not usually insured and if you are hit by one then how do you get fixed or pay for the bills? I know that most places aren’t exactly packed with people when riding dunes or in the dirt, but injuries happen and it’d be a shame to have medical bills hanging over you if your personal healthcare provider gives you static and tries not to pay for your recovery.
Here is the vital part for the insured: Comprehensive coverage. Theft, fire, vandalism (unless caused by a family member) and acts of nature are covered. Family members or significant others destroying your toys in a fit of rage are not covered. Yes, it happens more than you might think. Don’t let family mess with your toys – period!
ATVs, UTVs (all the rage in theft rings), and dirt bikes are easy to make disappear. Most people never title them. They buy the toy, get the MSO (manufacturer statement of origin – kind of looks like a title, but it’s not) and toss it in a drawer. Toy goes away and that’s it. Nothing will be done. To think that the police will actively pursue an off-road vehicle if stolen gives you way more confidence in them than you should rightfully have. They simply have better things to do than mess with your RZR. It’s actually pretty cheap coverage. As a single component of the price structure of your ATV insurance you will usually pay less than $100 annually.
For off-road toys most people don’t opt for collision coverage. In most situations it’s actually cheaper to buy the part and re-install it than it is to try to utilize your coverage and pay a deductible. You should be more worried about theft repairing or replacing your plastic fenders.
ATV Insurance is Cheaper Than You Think
ATVs and other dirt toys in general cost very little annually to insure. ATV insurance for most machines can often be had for under $150 annually with many insurers. That’ll buy you $100k/$300k/$50k limits and comprehensive coverage. It’s the most common coverage our agent sells for off-road toys.
That’s it, really. Hope you learned something. Your ATV, UTV, Buggie, Dirt Bike and anything you can think of that gets dirty and is powered can, in most cases, be insured. Some of you can absorb a loss if it gets taken. Most cannot. Ask your insurance agent, broker or other insurance professional what they can do. Odds are it’s cheaper than you think.
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