Originally Posted by hsblue
Aren't they going to notice they bought a wrecked bike with no rear end?? Just askin'
Henry--I'm a retired insurance guy (I won't go into my whole background, but I was kind of a muckety-muck) and have a clearer understanding of my insurance policy than the claims adjuster I'm working with! So I'll try to describe how the policy works without using a lot of insurance gobbledygook.
And BTW, if any of you guys need help or advice with an insurance claim, feel free to PM anytime.
DAMAGE TO THE MOTORCYCLE
The premium for collision coverage is based on several different factors and one of these is the value of the bike. All other things being equal, you're gonna pay more premium for a $20,000 bike than for a $10,000 bike. Stands to reason. And only fair. The flip side of that is if you have a $10,000 bike then add another $10,000 in farkles and mods, you can't expect the insurance company to cover all those farkles and mods for the same premium as another guy with a bone stock bike. Still with me?
So to be fair to everyone, and because the insurance company has no way of knowing if your bike is bone stock or has a gold-plated exhaust system, they don't cover the farkles and mods. Those are excluded. So when you crash your bike and total it, they are gonna pay you only for a bone stock bike--$10,000 in this example. But let's say your bike is 5 years old. Not worth $10,000 anymore, is it? So the collision premium goes down as the bike gets older, and so does the payout. Using insurance terminology, this is called Actual Cash Value coverage. On a total loss, this is where you're negotiating skills come into play because there is no agreed upon formula for figuring out the current value of your bike (with all the farkles and mods removed because, remember, farkles and mods are excluded.) The insurance company is supposed to come up with a total loss value based on recent equivalent sales in the used marketplace, but this is problematic because nearly all used bikes get sold with at least SOME farkles. So you are free to do your own research on eBay or Cycletrader and argue for a higher value.
Anyway, once you agree on a total loss value, the insurance company pays you and takes title to the bike. They are then free to dispose of it any way they want. There's nothing in the policy that says they must offer you the option to buy back the salvage rights. But usually they do, because it's easier than doing the extra paperwork involved in selling it to the breakers.
DAMAGE TO THE ACCESSORIES
So what about all those farkles and mods? Well, as I explained above, they are not included in the loss to the bike, but most policies have a separate OPTIONAL coverage (called "Accessories" coverage or something similar) that applies to all the farkles and mods. On my particular policy, my insurance company provides coverage for $3000 in Accessories for free. Cool! On top of that, I purchased an additional $18,000 in Accessories coverage. That may seem like a lot but you need to know two things--(1) anything on the bike that was not on a bone stock base model 2004 R1150GS Adventure is an Accessory. So that means Happy Trail panniers, Corbin seat, DMC car wheel, DMC steering mod, Ohlins shocks, not to mention oh by the way THE SIDECAR!! and (2) the Accessories coverage does not cover the market value (actual cash value) of the mod--it covers the full value! For example, if I bought a Corbin seat for $600 five years ago and it got destroyed in the crash, it might be worth only $300 now as a used saddle but for the purpose of the policy it's worth $800. Why not $600, you ask? Because $600 is not the present day replacement cost--$800 is. And (this is cool) even if I bought my Ohlins shocks from another inmate for $500, the Accessories coverage covers them for the cost of a brand new set of shocks from an Ohlins dealer--installed! Which is like $2000. Crazy!
If you go back to page 1 of this thread, I list all my farkles and mods as of April 2011. Even though I did not spend that much, you'll see that $21,000 is not out of line when you use the "cost new" approach.
An interesting side effect of this has to do with farkles that are NOT damaged. The insurance company doesn't owe you a dime for those! They only pay for accessories that are lost, damaged or destroyed. Like for instance my Ohlins shocks. Since they were not damaged, there's nothing in the policy that says the insurance company still has to pay me $2000 for them. They don't! So unless you want to give the salvage yard a lot of freebies, you want to remove any mods that are not damaged. The only exception would be for a farkle that can't be removed without destroying it like, for instance, all my reflective decals.
Henry, you asked if they wouldn't notice there was no rear wheel. Well, of course they would. The way to avoid any misunderstanding about the salvage value is to make sure the insurance company understands UP FRONT what farkles and mods you have. In my case, I spent about 3 hours with the adjuster on the first meeting showing him my farkles and mods, making sure he took pictures of everything, then I gave him either a copy of my receipt for the mod or a printed page off the web documenting the current value. That way we were on the same page from the git-go. We finally agreed on a total loss value for the bike just this past Monday, and once that was concluded, the adjuster arranged to have the bike towed to my house so I could remove the undamaged farkles. Once I'm done, I'll notify them so they can tow it to the salvage yard. Everything has been agreed to in advance, and everything is on the up and up. That's the way to do it!
I've tried to make this explanation as simple as I can, but note that each policy is different, and there are lots of different terms and conditions that I've not discussed. Don't want to bore you to death even though I find this stuff fascinating. I've authored dozens of insurance policies and thousands of policy amendments in my time and I always found it to be interesting and challenging work. But I realize that most of you didn't get past the 3rd paragraph of this post!
That's OK. I understand.