Buying insurance is like ordering from a Chinese menu without translations. You can take a stab at it, but you often don't quite know what you're going to get.
With online quoting, however, it's possible to know just what you're getting into, and how much each of your decisions is going to cost. (And for that matter, how much each of those tickets or accidents will take out of your play money for the next year.)
What follows is a what-if based on taking a single owner and changing a few key parameters. We arrived at these numbers by using up quite a lot of Progressive's server time (www.progressive.com). It was an interesting experiment you can try, too.
Before we get into the numbers, let's begin with the caveats. First, this is just one insurance company. In any of these instances, Progressive may be high, low or right in the middle. Without an exhaustive survey of many insurance companies, it's hard to know exactly where Progressive fits in. This is a competitive market, and Progressive clearly wants business, but we're told it does not intend to undercharge in high-risk cases just to have the head count. Second, these online quotes were good only for the day they were made; insurance rates are always in flux. In fact, we went back to check another variable and found two totally unrelated outcomes had changed within the space of two days. Third, surely there are better deals and worse deals for similar coverage on the baseline bike. So be it; the purpose here is to illustrate the effect of some variables on the quoted rates.
Now, let's begin. Our prototypical rider is in fact quite average. Let's call him Baseline Bob. (OK, at 41 he's a little older than average, which is 38.) He is married, owns a house in Southern California and wants to insure the 2003 Yamaha YZF-R1 he intends to buy. He's the cautious type, so he buys a lot of liability insurance, with a basic liability of $500,000 combined single limit and an uninsured/underinsured motorist limit of $250,000/$500,000. He's financed the bike and chosen a $100 deductible for both comprehensive and collision. The total premium, so says the computer, is $3645 a year. It breaks down at $247 for the liability, $327 for the uninsured motorist, $1014 for the comprehensive and $2057 for the collision.
Just out of curiosity, Baseline Bob tries a higher deductible, punching in $250 for comprehensive and collision. That drops the rates to $940 and $1523, respectively, for a savings of $608 a year. Liking that direction, Bob tries a $500 deductible, resulting in a quote of $912 for comprehensive and $1477 for collision; this nets a $682 savings over the highest bill. In this case, he'd be better off spending the $74 over the year to save the extra $250 in the deductible. Next he tries a $1000 deductible, resulting in a quote of $770 for comprehensive and $1158 for collision, for a savings of $1143. Now we're getting somewhere. Assuming he has one accident in the year, he's $43 ahead on comp and collision alone. The question really should be: Can Bob afford to put $1000 out of pocket at any time to cover a crash?
Feeling the sting of a literbike's insurance, Bob thinks about getting an R6 instead. All else being equal, the R6 will in fact save him money. The basic liability is $208 (a savings of $39), uninsured motorist is $188 ($139 less), comprehensive at the $1000 deductible is $440 ($330 less) and collision falls to $605 ($553 less). Across the board, Bob is better off on the R6, particularly with regard to comprehensive and collision. Clearly the statistics favor the 600.
But most companies consider the R6 a pure sportbike. What if Bob found himself a nice YZF600R instead? You might be surprised to learn that his quote is exactly the same. But isn't the YZF a slowpoke compared to the R6? Yes, but as far as the statistical exposure goes, it ranks about the same, and so Progressive's rates are the same as for the R6.
Bob had heard naked bikes were cheaper to insure, so he checks the deal on an FZ1, just for fun. Turns out "they" were right: The total bill for the year is $918, with savings in every category, but particularly in collision. The FZ1 is a reasonable $424 for collision on a $1000 deductible.
But Bob has his heart set on the R1, so that's what he'll get. Nevertheless, he's worried that the superbike would get him into trouble with the law, and checks to see what impact three speeding tickets (in the last three years) would have. Predictably, the rates are up across the board. Liability is now $532 (almost double), uninsured motorist is $690, comprehensive is a whopping $2101 and collision is $2710. That's a total annual premium of $6033. Why would comprehensive and collision go up even if he hasn't had accidents? According to Progressive's data, someone with three tickets is more likely to have an accident than someone without any tickets, and the company charges more to offset the potential losses.
Let's say Bob turned back the clock and was half his 41 years of age. He wouldn't like the insurance bills. Keeping the $1000 deductible on comprehensive and collision but losing the tickets still earns him a breathtaking $12,070 insurance bill. The worst parts are the dramatically upped liability, now $2419 alone, and the collision, $5531, that would drive any 21-year-old to tears. Even running "bare" on comprehensive and collision, Young Bob would be in for a $3464 annual premium. And what if Young Bob just happened to have those three tickets in three years? How about a total premium of $22,981, with a collision amount itself of $10,349. Of course, Young Bob could drop down to the minimum liability level and skirt by on a $3099-a-year bill.
One more major variable to consider is location. Bob is old again and decides to move to central Maryland. (He hears the cows are nice.) There, with a clean record, he could even afford a $250 deductible for comprehensive and collision and pay only $1016 a year. Hearing that, he's out the door. Shame he'll learn about the summer humidity the hard way.
So, it's just as the insurance people told us. Age, experience and driving record are the prime movers of your insurance rate, though location also has a large impact. (In fact, different insurance laws by state make that issue extremely variable, not just for the rates but for the kinds of insurance offered, coverage limits and consumer rights.) Better shop around, Bob.