The Formula that Insurers Use to Evaluate Payout of a Stolen Motorcycle

In 2020, 53,111 thefts of motorcycles were reported in the US. That represents a sharp rise in motorcycle thefts over the last year. From 2011 to 2019, the number of thefts dropped to 40,830.

The reasons why thefts were on the increase are not clear. But it is clear that motorcycle owners who have theft insurance can file a claim if their motorcycle is stolen.

The formula for Payout of Stolen Motorcycle

Before you file a claim, the first step is to report your stolen motorcycle to the authorities. You cannot file a claim unless you report the theft to the local police department. The police will start an investigation based on the information you provide.

Such information should include the license number, identification number, registration, photos of the bike, and any video surveillance footage of the bike being stolen. The more information you provide to the police, the more likely you will recover the bike.

Once the police report has been created, you are ready to file a claim. First, you must have theft insurance on your motorcycle. An insurance company will not honor your claim unless you have theft insurance.

When filing your claim, provide the same evidence of photos, surveillance video, and other supporting items along with the police report. This should include any eyewitnesses to the theft. The insurer will probably ask a few questions, such as the following.

• How was the bike secured?
• Was the key in the ignition when the bike was stolen?
• Was the bike rolled away from the area?
• Was the bike placed in a vehicle?

Once all the information is gathered, the insurer will process the claim. Most claims will take around 30 days to process fully. Depending on several factors, such as your insurance company, the amount of evidence provided, and so forth, it may take less.

The police may recover your motorcycle. If they can recover your bike before the claim has been processed, the claim may be canceled depending on the bike’s condition. If your bike was damaged or stripped, the claim might be partially paid to cover such losses depending on the exact nature of your theft insurance.

Suppose your motorcycle is not recovered before the claim is processed. In that case, you will receive the cash value of the bike from the insurance company minus its depreciated value and deductible. For example, if you purchased the bike for $2500, its current value is $2000, and you have a $500 deductible, you will receive $1500.

At this point, the motorcycle is now owned by the insurance company. The claim essentially pays you for the bike covered by the theft insurance. If the police recover the bike after paying the claim, it belongs to the insurer.

The insurer may sell you back your bike. However, if the bike has been severely damaged or stripped of parts, the insurer may allow you to keep it. You will need to talk to your insurance agent or insurer to see what action will be taken.

Will Insurance Companies Evaluate Payouts Differently?

For the most part, all insurance companies use the same formula when determining the payout due for a stolen motorcycle. This means that major insurance companies such as Allstate, GEICO, and Progressive use the same basic formula for processing claims.

This means information is gathered, the claim is processed, and around 30 days later, it is paid. This assumes you have theft insurance. Theft insurance is often part of comprehensive insurance, required if you have a loan or lien against the motorcycle.

Other differences will depend on the policy itself. The greater the deductible, the less you will receive on your claim. In addition, the greater the value the motorcycle has dropped, the less you will receive on your claim.

This is one reason why theft insurance has become less important over time. When the motorcycle’s value falls below the deductible, you should probably drop the theft insurance on the bike.

Preventing Motorcycle Theft

Of course, you will not have to worry about getting an insurance payout if you prevent your motorcycle from being stolen. This may sound like a tall order, but there are several ways to minimize the risk. Here are a few tips to help secure your motorcycle and make it more challenging to steal.

1. Park Your Motorcycle in a Secure Location
2. Park Your Motorcycle in Full View of a Video Surveillance Camera
3. Secure Your Motorcycle with a Chain and Lock
4. Equip Your Motorcycle with Anti-Theft Devices
5. Lock the Motorcycle’s Ignition System when Turning It Off
6. Do Not Allow Strangers to Ride Your Motorcycle Alone

The last piece of advice may sound obvious, but you may be surprised that it occurs more often than you think. The bottom line is the more you secure your motorcycle, the less likely a thief will try to take it.

That’s because most motorcycle thefts occur to not properly secured bikes. A difficult-to-steal motorcycle will often be ignored, especially with anti-theft devices and possibly a tracker. Thieves tend to go for what is easy to steal, not hard.

Keep in mind that..

Some insurance companies will discount their theft insurance if you properly secure your bike. In addition, if you equip the motorcycle with a tracking device, that may lower the rates. Check with your insurance company to see what discounts they offer.

Filing a claim for the theft of your motorcycle starts with reporting it to the police. Then, you can take the police report and other information to file a claim. Be sure to follow all the steps and ask questions when necessary to ensure that your claim is filed correctly.