Underinsured - check your cycle insurance coverage

Being underinsured simply means that the sum insured is less than the cost of like for like replacement.

At the moment almost everything seems to be going up in price…This includes bikes and components, with many bikes having increased 10%, or more, when comparing previous years for the same brand and model.

When it comes to cycle insurance, many policies are built upon the ‘value’ of the bike entered by you when taking out the cover.

Whilst most cycle-specific insurance companies have a ‘new for old’ policy term (which typically has a ‘less than three years old’ rule), the company is unlikely to provide you with exactly the same bike brand/model if the sum insured does not cover the current replacement cost. So you might end up with a new bike that is of what they see as a similar value/specification, but which could be a lower model in the current year. Or you will have to help out with the cost to get an exact replacement.

If your bike cost £2450 in 2021, and you insured it as such, but now the same bike brand and model costs £2695 then there is a £245 replacement shortfall.

 

So what to do

  1. Check the policy wording and the FAQ section of the specific insurance company’s website, they do all differ. Take special note around how you should value the bike. The ‘new for old’ wording and the calculated value for older bikes.
  2. Ask the company if you can adjust (and keep adjusting) your premium to match the RRP replacement cost of the bike brand/model. If you pay monthly and the premium increase is huge, or requires admin fees, then consider getting a quote from other cycle insurers and jumping ship.
  3. Always consider the cost of aspects such as pedals (which rarely come included with bikes) when putting in a value. Or if you end up buying upgrades, do then contact the insurer.
  4. Ensure the value of your bike is accurate and current, remembering to not take into account any special retailer discounts or savings using a salary sacrifice Cycle to Work Scheme.
  5. Have at least a yearly insurance check. Check what you’re paying for your cycle insurance and also what it’s covering. It’s also useful to compare the cycle insurance market, as there are always new companies entering the market and changes happening.