A survey of 1,000 motorcycle owners has determined that many don't understand important policy information, an insurer reported today.

That finding came from Mayfield Village, Ohio-based Progressive Group of Insurance Companies, which describes itself as the largest motorcycle insurer in the country.

The bikers' lack of knowledge can cost them thousands if they have a claim, Progressive noted.

In its survey the company focused on two key facets of a motorcycle insurance policy: physical damage coverages and loss settlement types.

Progressive said with many owners interested in individualizing their machines, it was surprising to find that more than half--56 percent--of all those surveyed don't know how much protection for their bike's custom parts and accessories comes with their physical damage coverage.

Of 44 percent surveyed with more than $3,000 worth of custom parts and accessories on their motorcycles, 51 percent didn't purchase additional coverage.

The physical damage portion of a motorcycle policy generally includes comprehensive and collision and custom parts and accessories coverages. Most motorcycle policies with comprehensive and collision include some custom parts and accessories coverage free with the option to purchase more, Progressive noted.

The insurer added that comprehensive, collision and custom parts and accessories are optional coverages and are subject to a deductible amount.

Progressive's survey also found that more than 45 percent of motorcyclists surveyed didn't know which loss settlement type--actual cash value, agreed value or stated amount--their policy provides, and 68 percent of those confuse the benefits of agreed value and stated Amount settlement types.

The company said many policyholders mistakenly believe that stated amount guarantees a preselected total loss settlement amount in writing in the event a bike is declared a total loss or is stolen and not recovered.

Insurance companies generally do not offer all three loss settlement types--instead, the loss settlement type available to policyholders is based on the type of motorcycle they own, Progressive said.

According to the insurer, if a policyholder owns a mass-produced motorcycle that has a resale value generated by a third party like the N.A.D.A. appraisal guides or Kelley Blue Book, they will generally be offered an actual cash value (ACV) settlement option. This means that, in the event of a total loss or if their bike is stolen and not recovered, they will generally be paid the ACV, less their deductible amount.

Progressive pointed out that if a customer owns a custom or classic motorcycle with certain characteristics, they might find that some companies won't insure their bike. But, it said, many insurers that specialize in motorcycles will insure these types of bikes and will generally offer one of two loss settlement types: agreed value or stated amount.

Special Reports /

Study: Motorcyclists Confused About Coverage

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