Today’s post is going to be relatively short and sweet (at least versus how much I normally write). Given the subject matter is cycle insurance, you might be quite pleased that I’m keeping it brief.
Why so short, Grimpeur-san? Well, I’m also busy working on a 4-step guide to riding your first century. I’m going to offer the guide for free (which is probably what it’s worth) to anyone that signs up to receive my email updates.
Don’t worry if you’ve already signed up, or you want to sign up right now (enter your details in the box at the top of the sidebar, or at the bottom of this post) – I’ll be sending the guide to existing subscribers as well.
Now, back to insurance…
The Grimpeur’s Global Policy On Insurance
I don’t buy it.
Actually, not quite true. What I definitely don’t buy are those policies that retailers try to sell to extend warranties on electrical items, or that pay up in the event of accidental damage. They dress them up with fancy names, but they’re straightforward insurance products.
Firstly, a product should fugging work for at least as long as three or five years. If it doesn’t, then it’s crap and people won’t be giving it good reviews on Amazon (I generally have a look for reviews online before I buy something – what did we do before the internet…?).
Secondly, I tend not to break things. I take care. I don’t drop my iPhone onto the floor or chuck it down the loo.
I do buy insurance in two instances:
1. Where I am required to by law (i.e. car insurance)
2. Where the (realistic*) potential loss is a significant proportion of my worldly wealth
* i.e. within the realms of possibility
Let’s Take Your Analysis Further, Grimpeur
This is another of my banal truisms, but we all have different amounts of wealth and we will all have different thresholds for what we consider a ‘significant proportion’ to lose.
The insurance industry, at least as it faces consumers, feeds primarily off fear. Think how terrible it will be if your house burns down, you lose your job, you drop your glasses, you do a plop on your iPad (which might be a policy exclusion actually).
The thing is, it is annoying to have something stolen and have to replace it. But if we can afford it, the likelihood is that the pain will be far less than we expect it to be.
Yes, I do know how insurance works (sort of)
You pool premia to protect yourself collectively with everyone else, so that by paying a little up front, you don’t have to pay a lot somewhere down the line.
But those premia mount up.
You have your car insurance, your buildings insurance and your home contents insurance (the ones required by law, your mortgage provider and your own common sense). Add in some sort of life insurance, critical illness cover, earnings protection. Slap on your travel insurance, your hire car excess policy, your dental plan, pet insurance, something that your mobile provider makes you pay each month that you don’t quite understand.
And each of these premia is inflated by those people that claim all the time, fraudulently or otherwise, and by the lawyers fees that go into protecting insurers from those that prey off them(e.g. the companies providing exorbitantly-priced hire cars whilst they fix your vehicle after an accident).
You might be protecting yourself from a potential painful event in the future, but you’re actually experiencing a very real punch in the wallet every month.
You Are Ranting. What Does This Mean For Me As A Cyclist?
(What does it all mean….?)
My contention is that insurance is only worth paying for when your real potential loss exceeds a threshold where it has a material impact on your day-to-day life.
If you hit someone in a car and are sued for £1 million pounds, that’s worth insuring against (moot point of course – you have to have 3rd party insurance by law).
If your house burns down and you need to rebuild it and replace the contents, paying for that is probably going to be a challenge – worth insuring against.
And so to your bike.
There is only so much you can lose if your bike gets stolen or damaged (ie. the cost of the bike), but if you hit someone or something (a gold-plated Bugatti Veyron for instance), your potential losses are open-ended.
If you cycle regularly, particularly as a commuter, it strikes me that taking out a membership of either British Cycling or CTC, both of which include £10 million of 3rd party liability insurance (amongst their many other benefits), is a bit of a no-brainer (neither of these are affiliate links by the way).
In terms of insuring a bike against theft or damage, for me, insuring my £500 Dawes (a generous valuation) was never something I thought about. With the new wheels, maybe it’s time to look again at whether the pain incurred by having to replace it exceeds the regular monthly pain of having to pay the premium. I certainly wouldn’t enjoy the conversation with my wife where I have to explain that next year’s holiday has been stolen by some bike thieves.
In an ideal world, I could save some of the premium cost in a separate account, ready to lessen the loss should my bike get stolen. I could even divert some of the funds to pay for a Fort Knox-style security system to lessen the risk of theft even further.
As this is not a perfect world, I’ll probably just keep procrastinating…
If You Do Have A More Expensive Bike…
…then it’s probably worth you taking out insurance (my sister was certainly happy she had it when her road bike was stolen).
If you’d like to know how much insurance for your two-wheeled pride and joy will cost, then Cycleplan provide this handy widget below. Just enter the value of your bike and it will kick out the premium you’ll pay:
(If you then go ahead and take out a policy, I’ll get paid a commission, you pay the same price.)