Insurance and Cycling – a Comprehensive Overview
- by Christopher Jones
- Published: 5 June 2014
Are you covered if you have an accident on your bike or if your bike gets stolen? Are you sure? The Australian cycle insurance provider Velosure asks in their advertising “Are you really covered?”, and suggests that if you are relying on non-specific cover, such as a home and contents policy, it may not provide the cover you assume you have. According to Theo Grobler of Velosure, “Cyclists often assume that they have cover under normal general insurance and don’t realise that the cover they have is not adequate until it is time to claim”.
Choosing the right cycling insurance in Australia is a little difficult since products can’t always be directly compared; while there is overlap in the insurance coverage, each insurance product on the market has fundamental differences. Unlike car insurance, where you can choose the best value policy from comparable policies, finding the right bicycle insurance begins with identifying your specific needs.
The objective of this article is to make it easier to find the right cover and it provides an overview of what you need to consider when choosing the right cover.
All of the cycling insurance providers in Australia were invited to contribute towards this article and only Swann Insurance, who have a CycleSmart policy, chose not to be involved: “Whilst we do provide bicycle insurance, it isn’t a strong focus of ours at this point in time for a number of strategic reasons”. The insurers (including Swann Insurance) were each provided with a draft copy of the article to ensure accuracy. While we have taken every effort to ensure the accuracy of this information at the time of publication you should be aware that policies do change over time. The information provided here is not financial advice so should be checked with the insurance provider. It is worth carefully reading their current product disclosure statement (PDS).
What type of cover is there?
Bicycle damage / theft
When you think of bicycle insurance, bicycle theft probably comes to mind first. Bicycle insurance companies are quick to remind prospective customers that standard home and contents insurance usually provides very limited cover. $500 or $1000 maximum cover for sporting equipment in home and content insurance will be little solace if your expensive bike is stolen – and what happens if it is stolen away from home? This is where bicycle theft cover provides more peace of mind, as long as you follow the rules for securing your bike – more on that later.
Accidental damage cover goes hand-in-hand with theft cover and usually includes crashes and, depending on the insurer, includes the classic “garage door collision with bikes on the roof” scenario. Accidental damage cover however doesn’t cover warranty, and wear and tear type damage, and you need to check whether cover is provided while competing in races. For conventional home and contents insurance there may be no damage cover while riding or if the bike is damaged away from the insured property.
For incidents where the cyclist is not at fault, insurers aim to settle quickly with the policy holder to ‘get them back on the road’ and then attempt to settle with the at fault party (and their insurer).
Personal Injury or Death
A single insurer, Velosure, includes personal injury or death in their policy, and while the cover and payout isn’t comparable with a life insurance policy, it does provide international coverage.
Third Party Property and Third Party Personal Liability
For occasions in which a cyclist may be responsible for an accident and causes damage to other property, or causes injury or death, most insurers offer 3rd party liability insurance and the cover ranges from $1 million to $30 million.
A single insurer, RiderCover, specialises in income protection insurance, which is the sole type of cover that they provide. Because it is cyclist specific, it can be tailored to include competitive cycling and situations that could potentially be excluded by general income protection insurance.
Some income protection may be included if you are a member of a state based cycling organisation or Cycling Australia; the Cycling Australia income protection is capped at maximum of $500 per week.
Bicycle Insurance while travelling
In the context of bicycle insurance, insurance cover is typically restricted to Australia, though some insurers have the option to extend cover for a specific time frame or to purchase an option for travel.
Personal travel insurance cover is a separate insurance and should be investigated when traveling, taking note of any exclusions that may limit the cover for certain types of cycling.
Am I already covered?
There are a number of scenarios in which you may already have some cover which you can then take into account when choosing additional cover.
Home and Contents Insurance
Home and Contents Insurance has been mentioned and can provide theft and accident cover for bikes at home and may be sufficient for low value bikes. There can be security requirements in the home and contents insurance (locking conditions) and it is worth highlighting that riding (using) the bike is generally excluded from cover, as is accidental damage. Some general insurers may allow the cover for certain equipment, such as bicycles, to be increased, and in this case you need to factor in the increase in the premium for home and contents insurance and be aware of whether you are covered while riding or while the bike is away from home.
Some Home and Contents insurance cover includes liability insurance, for example NRMAInsurance specifically include the example of being covered while riding a bicycle under their Contents Insurance, outside of the insured property, but within Australia. Their cover is for “death or bodily injury to someone else, or loss or damage to someone else’s property”. If you have Home and Contents insurance, it is worthwhile checking whether liability insurance is included and provides this third party liability while riding a bicycle.
Organisation Member Insurance
If you are a member of the main state based cycling advocacy organisations (excl. NT) or Cycling Australia or MTBA, some insurance cover is included as part of your membership. This cover is different from policies that are purchased directly and the cover also varies between states even if the same insurer is used.
The rule of thumb is that insurance included with membership generally includes some 3rd party liability, personal injury/death, and income replacement (protection). As generic insurance cover, they may not suit personal requirements and, importantly, do not cover your bike for theft or damage. This membership type cover is different to the cover if you sign-up directly with an insurer.
• Bicycle Queensland, Bicycle NSW, and Bicycle South Australia membership have insurance cover provided by Cyclecover which includes 3rd party Liability and Personal Injury/Death and Income Protection.
• Bicycling Western Australia, Bicycle Tasmania, and Bicycle Network Victoria membership has insurance cover provided by Calliden Insurance which includes 3rd party Liability and Personal Injury/Death and Income Protection.
• V-Insurance is the provider for Cycling Australia, MTB Australia and Pedal Power members and likewise includes 3rd Party Liability and Personal Injury/Death and Income Protection with the cover extended to include sanctioned events.
• BMX Australia also has insurance provided by V-Insurance with 3rd party Liability and Personal Accident Insurance tailored to members riding in sanctioned events.
• Bicycle NT does not include a member insurance component.
It is crucial to be aware of the conditions for the insurance cover available with membership. The Cycling Australia membership covers sports related cycling, including participation or training, and technically excludes commuting or social bunch rides as they are not considered to be “organised training’. The PDS defines the type of riding in which cover is provided, “These activities include races, organised training, including individual training, meetings, fundraising activities and travel to and from these activities.”
Cyclecover insurance for the associated state organisation provides cover for members riding their bicycle at anytime in Australia and New Zealand.
What are the options? An insurance provider overview
A side-by-side comparison doesn’t provide a reasonable overview from which to make a choice for cycle insurance providers. A short overview of each of the insurers however, with their primary insurance options features and differences, is far more useful way to present them. All of the insurers have exclusions which are discussed below.
Behind most cycle insurance policies there is the actual insurer who issues the tailored policy. For example, BikeSure is a licensed insurance broker and issues a stand-alone policy issued by Calliden Insurance or a packaged Home Insurance policy for cyclists issued by one of five insurers.
Underwritten by the Hollard Group, Velosure provide dedicated bicycle theft and accident insurance and the premiums are based upon the bike value, which you provide when signing up and which can be valued up to $30,000. Coverage while racing and while the bike is in transit is also included and accessories can be optionally added.
Within their standard policy, Velosure are the only dedicated insurer to offer some cover for personal accident or death within their policy. A further differentiation is that third party liability for property or injury or death is not part of their standard cover and is available as a separate policy.
Velosure also believe they are providing cover in-tune with cyclists needs, “All the policies that Velosure offer are developed by cyclists for the specific risks that cyclists face and are unique to any other products available in the market place.”
Velosure also have a stand-alone personal travel insurance policy which covers cyclists who are competing overseas.
This insurance provider is also part of the Hollard Group and their dedicated bicycle policy titled Real Bike Insurance has the same cover and conditions as the Velosure policy.
While they are under different brands, the policies are from the same family and this article will focus on the Velosure policy for the remainder.
The Victorian based company have a number of specialist insurance policies including a package called CycleSmart with theft and accident insurance which includes liability cover for 3rd party property damage or injury or death. The Classic Cover policy has a maximum $1000 claim limit ($2000 total per annum) while the Elite Cover provides up to $20,000 cover and includes cover while racing and for carbon fibre bicycles.
As a general insurer, the bicycle cover from QBE is an optional addition to their Home Contents policy and “bridges the gap between householders policy and the cover they [cyclists] need while out on the road”. The cover for theft and accidental damage has no upper limit, rather it is based on the value of cover a customer chooses in the Home Contents policy. For bike accessories such as custom parts, custom wheels, and a travel case, each of these ‘item groups’ are covered for a maximum of $1000.
While third party liability cover up to $30 million is included, there is no cover for racing. QBE were forthcoming about the exclusion of racing cover with their policy, “Not all insurers offer racing cover, including QBE, however it is an important consideration for any cyclist who rides their bike competitively. Due to the increased risk associated with racing, insurance policies that include cover are, in general, a great deal more expensive, so it is worth considering whether you need the cover and if the cost is worth it for you personally.”
Rider Cover is operated by Bryan Moss, Principal of Money Box Financial Planning in Queensland. This specialist insurance is solely for income replacement and has three levels to suit different rider types: Commuter & leisure; Weekend Warrior and Club Rider; and Elite and Extreme Rider.
All levels of cover can be tailored to the level of income protection required and typically pays up to 75% of the gross income. The type of riding needs to be disclosed and the waiting periods as well as the time frame for payments of benefits can tailored. The cover is valid internationally and the second and third packages also provide ‘off bike’ income protection, while the Elite cover provides cover while cycling competitively.
Bryan Moss discusses the flexibility, “The income protection policies that Rider Cover can arrange cover you on and off the bike, and the cost is tax deductible. “
BikeSure insurance is managed by SRG Group. Two policies are available, the stand-alone package is called Bikesure Sport and the policy is provided by Calliden. The other policy is a Home Building & Contents Combined insurance package for cyclists called Bikesure Pro. These policies are available from five insurers: Vero, Allianz, Calliden, Chubb and AIG.
For the bicycle component, both provide worldwide cover (up to 90 days), cover while racing and liability insurance with 3rd party property and injury and death. Accessories that are specified in the policy are also covered.
“Buying insurance from an Insurance provider who are Cycling Enthusiasts, who know the risks and understand the needs of cyclists has to be a better solution” says MD Rod Fitzgerald.
Cyclecover Gold coverage is combined Home Contents insurance from Allianz and includes theft and accidental damage, 3rd party liability, plus accommodates an unlimited number of bicycles with no maximum value and cover for accessories. Racing cover is optional and the cover is valid internationally
As a point of differentiation, Cyclecover Gold highlight that they have no locking conditions for bicycle theft cover “If you have a lightweight road bike it may not be practicable to carry a 1-2kg U lock around with you”.
CEO of Cyclecover Insurance, Peter Levens outlines when Cyclecover may be a better suited insurance option for cyclists, “Some insurers provide bicycle only polices, however it can be more cost effective to have just one policy which will cover both your home contents & your bicycle. Cyclecover Gold is ideal if you have a number of bicycles at home. We do not need to list your bicycles (except for racing) and there is no limit to how many bicycles you can have!”
As a bundled policy, the Home and Contents PDS from Allianz (like other Home and Contents PDS) actually excludes cover for “Sporting equipment while it is being used”. Their one page fact sheet is less comprehensive that other insurers, though Cyclecover have provided assurance that this has not caused any problem honoring claims.
The NRMA insurance for bicycles is issued by Swann Insurance and includes two stand-alone bicycle insurance policies: Bike Essentials, which provides $1000 cover and excludes carbon fibre frames or racing cover; and Bike Plus which provides up to $20,000 cover and includes carbon fibre frames and racing cover. NRMA provides cover for accessories that are included in the policy and third party liability cover up to $1 million.
As an alternative, bicycles can be listed in the NRMA Home and Contents insurance policy as portable items and this cover extends to include cycling.
The fine print – so what is excluded?
What’s the good of insuring your $6000 carbon fibre road bike if it isn’t covered during weekend competition? What’s the good of insuring your $4000 downhill mountain bike when you can’t ride it downhill?
The decision for or against an insurer could lie within the fine print, so it’s worthwhile carefully reading the Product Disclosure Statement (PDS) rather than assuming you are covered, then read it again. BikeSure repeatedly highlighted “Look for exclusions, look for special conditions” and with this mantra seek to create differentiation in their cover with fewer, or less restrictive, exclusions.
Generally the PDS documents of each insurer were clearly presented and straight forward, with the exception of the policy cover information for membership insurance for state based cycling organisations. The space used in each PDS to list the exclusions usually made up the bulk of the PDS content.
Although it’s necessary to read the PDS yourself, the following broad overview of the exclusions will provide orientation when choosing suitable insurance cover. Your ‘duty of disclosure’ also requires you to inform the insurer of any changes that may affect your cover – otherwise you run the risk of having your claim rejected.
Exclusions on certain types of riding
High risk types of bike riding are typically excluded from cover such as stunt, trick, ramp, and BMX. QBE insurance curiously includes cover for track bicycles, but no cover for riding in a velodrome. Insurers also protect themselves by excluding “aggressive riding” and if you are a cyclocross or mountain biker the PDS may specifically exclude riding over jumps or obstacles. To be eligible for cover you also need to be riding legally; if you went through a red light and were hit you would generally forfeit your right to claim.
A more common requirement for cyclists is cover while racing. This is offered by default by BikeSure and Velosure, while it is a premium policy choice with Swann CycleSmart (Elite) and NRMA (Bike Plus), and optional with Cyclecover.
Exclusions on types of riders
For theft and damage, as well as third party cover, sponsored (competitive) cyclists are excluded as are professionals who use a bicycle for work, such as couriers or mobile services. People under 18 are often excluded from cover and, for theft, there may be no cover when the person who has taken the bike is known, for example a spouse or housemate. Of course, for third party liability cover, if you take out insurance you are not covering yourself, and the cover also does not extend to others who are using the bike with permission or, for example, a child in a bike trailer.
Unless you have income replacement with the policy, there are no benefits for lost work time.
Insurers have differing policies regarding how and where a bike has to be secured in order to be eligible for cover, some define the classification of bike lock required and the structure to which the bike needs to be locked to be eligible. Bikesure, for example, exclude theft cover for a bike that is in a shared or communal storage area where other members of the public have access.
Most insurers exclude the theft of accessories from a bicycle; cover for accessories (as per the policy) is provided if the whole bike is stolen with accessories mounted.
NRMA and Swann Insurance won’t provide cover for the theft of bicycles which are attached to a car bicycle rack. Cyclecover and QBE provide cover while an accompanied bike is in transit, and Velosure is similar though has requirements for packing the bike. All insurers however exclude coverage when the bike is unaccompanied or is being transported by a freight or removal company.
Damage Exclusions – Types of Damage
The cover provided for bicycle damage can be generalised: you are usually covered if the bike is damaged in a crash, but nothing else. This definition is, however, far from comprehensive and needs further clarification.
There are general exclusions for:
• workmanship and damage that is coverage by warranty
• defects while cleaning or maintaining the bicycle, such as over-tightening bolts
• equipment failure, such as structural or mechanical failure or defects
• wear and tear, such as corrosion and rust
• prior damage or damage arising from modifications. Some insurers need to be informed of modifications to document these on the policy.
As with insurance against theft, insurance cover for damage can exclude bikes in transit and also damage when the equipment hasn’t be secured properly, such as on a roof rack.
Damage Exclusions – The Equipment
While carbon fibre has become the normal material for mid to high range bikes, carbon fibre bikes may be specifically excluded from policies, or you may need to upgrade to a higher level package for cover. E-Bikes are excluded by many insurers as well as electrical failure, and it will come as no surprise that petrol powered bicycles (i.e. mopeds) are excluded.
As with theft, some insurers provide little or no cover while others have higher limits on the value of cover for accessories or will cover them if they are listed in the policy document, as in the case of Velosure. NRMA will pay 10% of the value of accessories and modifications which are not specifically included within the cover. If accessories need to be noted in the policy, is important to notify the insurer in writing of any changes.
There are significant differences between insurers on accessories included and excluded from cover, for example some specifically exclude punctures and rim damage. Cyclecover promote their insurance advantage with cover for all items damaged accidentally “including your helmet, clothing, shoes, accessories, plus your mobile phone.” QBE insurance takes into account the maximum insurance sum and provides up to $1000 for each ‘item group': cycling apparel, bicycle travel case, bicycle computers, and any custom parts fitted to the bicycle, including custom racing wheels.
When and where
While bike specific cover generally covers you away from home (when complying with all requirements), generic insurance cover may provide bike cover which is limited to theft/damage at home and not away from home or while in use.
For bicycle specific insurance policies, the theft and damage cover is generally Australia wide; Swann limit coverage to Australia, Cycle Cover allow up to 100 days world wide cover, and Bikesure’s policy extends internationally. Velosure can extend overseas cover up to 90 days, but they need to be informed and in some cases may charge an additional premium. For bicycle theft or accidental damage, the bicycle generally needs to be within your care as accompanied luggage, though some insurers remove cover during transit. QBE, Cyclecover, and Velosure have an exception and provide cover for bicycle loss and damage in transit if you are traveling with it.
Applying for bicycle insurance and the costs
Insurance premiums generally have a variable price and often take into account your previous claim history, location, and the value of insurance required. The Velosure premiums take into account the total value of your bicycle(s) while their separate 3rd party liability insurance has fixed pricing.
Each insurer has different requirements regarding information provided about you, the bike, and value of the bike. The Cycle Cover Gold policy, which is tied in with the home contents policy, needs the value of the contents (including bicycle) but no further bicycle details are needed unless racing cover is required. The costs for their policy will be affected by the suburb, (house) security, and claims history. Velosure and Bikesure require details about the bike (make, model, and year), the value of the bike, and accessories to be included. QBE insurance don’t require any bike details and calculate their policy on the amount of cover needed.
Bryan Moss of RiderCover recommends diligence when speaking to staff and signing up for an policy, “Record the time, date and person you spoke to as often times insurers will record calls, so if there’s ever a dispute you can refer back to the original phone call.”
It is important to be truthful when applying for insurance (referred to as your duty of disclosure) as the contract for insurance you have with an insurer is governed by the Insurance Contracts Act 1984. Insurers will offer a cooling-off period, usually between 14 and 30 days, with a complete refund of premiums (minus others costs) if you have second thoughts.
Claiming on your bicycle insurance
In the unfortunate situation that you need to turn to your insurance and make a claim, most insurers promote a friendly and fast process. Ensure you retain all of your receipts as the insurer will require proof of ownership and proof of value; it is a good idea to have a photo of the bike. Take all of the obvious steps, such as reporting accidents or a theft to police, keeping possession of equipment, and documenting everything that the insurer will need to verify the claim. Importantly, do not admit, deny, or negotiate a claim with anyone as this may affect your rights.
Your ‘duty of disclosure’ means you need to be truthful when making a claim. Bryan Moss of RiderCover explains “If you’re after bike insurance and you race on weekends, but when you apply for cover you say that you don’t race to try and get a cheaper premium, this could result in your claim being declined.”
When claiming, there is an obligatory excess to pay and this will range between $200 and $500, although some insurers, such as Swann insurance and NRMA, don’t publicise the actual value of the excess. For carbon fibre, or when racing, higher excess premiums are often levied; Bikesure raise the excess payable from $300 to $500 for carbon fibre and damage caused while racing.
Many insurers have an ‘new for old’ replacement policy. Bikesure specify a new replacement with the same make and model or series if your bike is a total loss, and QBE ”pay the actual cost to replace the bicycle, less any applicable excess”. Velosure follow this approach for new bikes, while for bikes older than two years they factor in depreciation to determine the amount payable.
You should take into consideration that you may have to pay the workshop costs for repair or rebuilding as your cover may only apply to the equipment, not the time required. You may even have to pay the difference if the replacement equipment costs more that anticipated. NRMA state that repairs or replacements can be with ‘non-brand’ or even recycled parts.
For repairs, the insurer may ask for quotes from two different bicycle shops. There are instances in which retailers will actually charge the customer just to provide a quote and if a ‘non-approved’ workshop is selected by the insurer it my cause any manufacturer warranties to become invalid.
If you make a claim, ensure that you are aware of total maximum amount which can be claimed as it will affect future claims. For the Swann Insurance CycleSmart Classic cover, the total amount of a single claim is $1000 (with $200 excess) and a maximum of $2000 can be claimed in the lifetime of this policy. Velosure automatically close a policy after a claim is made for a total-loss, so you need to remember to sign-up to a new policy.
If you decide to cancel the policy during its lifetime, there may be a small administration fee and generally you are entitled to a refund for the remainder for premiums paid annually.
The tough decision
If you have successfully read through this article then you will now have a better idea of what to look out for and, once again, it makes sense to read the PDS rather than making assumptions and being disappointed.
Bryan Moss of RiderCover summarises the value of insurance, “We never start a ride thinking we’re going to come off, but when we do it pays to make sure the bike and the rider are protected.”
Bicycles Network Australia does not recommend or endorse any of the companies, organisations, or insurance policies mentioned in this article. The information provided does not constitute financial or legal advice. The information in this article has been reviewed by the insurance companies who participated and is accurate at the time of publishing, however is subject to change. For complete disclosure, some of the insurers advertise on bicycles.net.au
Edited 19.06.2014 – addition of 3rd party liability cover that may be included in an an exisiting Home and Contents Insurance cover.