Published: May 2015
Your friend has been admiring your new motorcycle and he asks if he can take it for a ride. You consent, only to find that he wrecks it just down the road. Are you covered for this by your insurance?
If it was your car that you loaned out, you'd probably be covered by your auto insurance, says Robert Passmore, a senior director with the Property Casualty Insurers Association of America. Your car insurance would typically pay for the damage or the cost of any injuries (up to the limits in your policy) that resulted from the accident, and you'd have to pay the deductible on your policy.
And while it can vary from company to company, motorcycle insurance typically works this way as well. "The insurance usually follows the vehicle," Passmore says. But liability coverage may follow the insured rider in some cases.
Even when your policy does offer protection, you might discover that there are some added considerations. For instance, what if the accident resulted in damage that is more costly than your policy allows — what then?
If your friend had his own motorcycle insurance, it may kick in as a secondary policy to help close that $20,000 gap, says Passmore. But note, custom equipment installed on a borrowed (non-owned) motorcycle typically isn't covered — only the bike qualifies for coverage from the friend's insurance. Custom equipment can include custom paint, custom chrome, sound systems, roll bars, after-market windshields, etc.
But you have to compare the two policies to know for sure. Insurance policies typically have language that explains how they will provide coverage when there are multiple policies and policy holders involved in an accident, Passmore says. They may indicate whether it should serve as the primary insurance on a claim, or whether it should simply come in as an excess, or secondary, policy.
"That [language] will control who's first in line and who's second," Passmore explains. But remember, some insurers may not cover physical damage to borrowed (non-owned) motorcycles. Even if the friend has a motorcycle policy, it might not provide any coverage for your bike.
Of course, you may find that both policies are making the same assertion — they're both indicating that they should come in as the primary insurance on the claim, or, likewise, the second. In that case, the costs of the accident are typically divided, with both policies contributing in proportion toward their limits, Passmore says.
And what if there is no other policy available to make up the gap, because your friend is uninsured, or your friend has policy that does not cover non-owned vehicles? Well, says Passmore, you may find yourself in a situation where you're personally responsible for the rest of the costs.
"That's why you want to think long and hard before you ever let somebody use your motorcycle."