Bicycle insurance: How to get coverage for your other set of wheels
High gas prices, employer incentive programs and local initiatives are making bicycles an increasingly popular mode of transportation. According to the National Sporting Goods Association, 39.8 million Americans rode a bike more than once in 2010, a 4 increase over the previous year.
Whether cyclists are commuting to work, improving their personal fitness levels or earning a living as pedicab drivers, they face risks -- and insurance can help cover them if a bike is stolen, if they damage property, if they hurt someone else or if they hurt themselves.
The FBI reports roughly 183,000 bike thefts in 2009, which cost cyclists and insurance companies $58.2 million. The good news is that you may have insurance that covers your bike without even knowing it.
As a piece of personal property, bicycles commonly are covered under home or renter's insurance policies, according to the Insurance Information Institute. The bad news is that your personal property coverage likely has a deductible -- which you'll have to pay before coverage for the stolen bike would kick in. Considering the possibility of higher premiums as the result of filing a claim, it may be best to cover the cost of a lost, damaged or stolen bicycle out of pocket.
If your bike is particularly expensive, the Insurance Information Institute recommends adding an endorsement. Endorsements provide extra coverage for specific items and often are used when insuring valuables.
Be sure to look closely at your home or renter's insurance policy. Is your personal property insured for replacement value or cash value? Cash value takes depreciation into account -- in other words, you'd get a payout for the bike's market value, which may not be enough to replace it with a new one. Replacement value coverage (which is more expensive) would let you replace your bike with a new one of similar quality.
Liability coverage and health insurance
Liability insurance covers the harm you cause to others and their property. This, too, often is included in your home or renter's insurance policy, according to the Insurance Information Institute. If you injure someone while you're riding your bike, that person might sue you -- and your insurance would cover the cost up to your policy's limits. In addition, your policy may include no-fault medical coverage. This covers the injured person's hospital bills upfront (up to as much as $5,000) -- and may prevent a lawsuit.
But what if you, the cyclist, is the one who gets hurt? Less than 2 percent of vehicle crash deaths involve cyclists, according to the Insurance Institute for Highway Safety (IIHS) -- yet cyclists are at risk for severe injuries, like head trauma. So, your medical bills could be expensive. If a car hits you and the driver is at fault, his or her auto liability insurance would cover your hospital bills. If the driver doesn't have insurance (or it's a hit-and-run), you would need uninsured motorist coverage under your own auto insurance policy.
If you live in a no-fault insurance state, no-fault rules would apply. In no-fault states, injured parties collect from their own auto insurance personal injury protection coverage, regardless of fault. If you don't own a car and don't have insurance of your own, you may be able to collect from the insurance company of the driver who hit you.
If nobody else but you is involved in a crash (you hit a tree, for example), your injuries would be covered by your health insurance. Keep in mind that wearing a helmet can prevent some of the most serious and expensive injuries. According to IIHS, a helmet can reduce the risk of head injury by about 85 percent.
Bicycle insurance for businesses
If you bike for a living or own a business that relies on bike messengers, you'll need insurance to cover your risks. You can get this type of coverage from specialty companies.
Specialty insurer the Lester Kalmanson Agency provides insurance for pedicab businesses, for example. According to the company's application form, your coverage and premiums take into account whether your business uses independent contractors, the model of bikes involved and the number of drivers. Its coverage agreement also stipulates that all bicycles be equipped with reflectors, that all bikes are kept in good repair and that all insured drivers have a good safety record.