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BASIS OF RATING MOTORCYCLE INSURANCE
Rating factors
The basic rating factors for motorcycles are:
a) The power of the machine measured by its cubic capacity
b) The district of garage or use
c) The age and driving record of the policyholder or driver
d) The extent of cover requested
e) The actual make of the machine
Type of Motorcycle
The cubic capacity of the engine is used as a rating factor
and generally there are five or six rating divisions from
under 51cc to over 550cc.
Postcode District of garage or use
The postcode district is not usually a rating factor for
the smaller motorcycles (up to 100cc), again because the
premiums for these machines are usually calculated on the
basis of ‘flat’ charges which are indivisible
and from which no deviation is permitted, all this for reasons
of administrative economy. Above this size motorcycles are
normally subject to postcode district rating using automated
tables.
Some insurers ignore ‘postcode district’ as
a rating factor and apply one table of premiums to the whole
of the U.K. irrespective of the location where the machine
is garaged or used. The premium is based on the power of
the machine, the age and experience of the driver and the
extent of the policy cover provided.
Here again, it will
be appreciated that the reason for this approach is simply
one of administrative economy; motorcycle premiums are modest
when compared to those charged for other types of motor
business and insurers have to find a way to cut back on
their expenses if they are to make a profit from the account;
it is felt by some that one of the best ways of achieving
this objective is to ‘standardise’ rate tables
to allow as few deviations and alternatives as possible,
and to ‘streamline’ computer and handling procedures
so as to save time and expense.
Age and driving record of the policyholder or rider
Most insurers use ‘age’ as a rating factor for
motorcycle business and, as with other classes of motor
business, the driving record of the policyholder or driver
are factors that the underwriter takes into consideration
in determining his premium for the risk.
Policy Cover
In practical application a motorcycle premium is ascertained
by applying the cc of the machine, the district and age/experience
of the policyholder to the extent of the cover required.
The ‘cover’ for motorcycle business follows
the same general basis that has been referred to earlier
in the course, namely ‘Act only’, ‘third
party’, with or without fire and theft and ‘comprehensive’.
Purpose of Use
This is generally not a rating factor for this type of risk.
The normal policy provides use for social, domestic and
pleasure purposes and for the policyholder’s business
excluding hiring, racing, pace making or speed testing and
any purpose in connection with the motor trade. In the case
of a motorcycle of a capacity greater than 100cc, it is
usual to restrict the driving to the policyholder only,
although an extension to permit driving by other persons
is sometimes available upon payment of additional premium.
It is important to note, however, that for a machine under
100cc the cover is generally on an ‘any driver’
basis.
Where the policyholder is a company or firm use for social,
domestic and pleasure purposes is not given, since it could
prove extremely difficult to ascertain who, exactly, will
be using the machine for those purposes.
If use outside the standard limits mentioned in the preceding
paragraphs is required, an additional premium is usually
charged. Whilst some insurers may be willing to provide
use for hire and for motor trade purposes, very few insurers
are prepared to include the carriage of passengers for hire
or reward or include any form of racing, pace making or
speed testing.
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