ISO PERSONAL MOTORCYCLE POLICY ANALYSIS

(November 2024)

Part A - Liability Coverage

Part B - Medical Payments Coverage

Part C - Uninsured Motorists Coverage

Part D - Coverage For Damage To Your Motorcycle

Part E - Duties After An Accident Or Loss

Part F - General Provisions

This is a discussion of Insurance Services Office's (ISO) Personal Motorcycle Policy (PMP) Form MT 00 01.

AGREEMENT

The form’s opening section merely states that payment of applicable premium initiates the vehicle contract as stated in the sections that follow the Agreement.

DEFINITIONS

This section defines the terms that are critical to understanding how the policy responds to eligible losses. The following is a summary of the defined terms:

A. The terms “you” and “your” both have specific meanings.

1. The policy uses the terms "you" and "your" in reference to the "named insured" that appears in the policy declarations.

2. The terms also refer to the named insured's spouse, but only if that spouse lives in the same household.

Once a spouse is in a different address or location, he or she still qualifies under the definitions of “you” and “your” until the earliest of the following:

· He or she has been out of the household for 90 days

· The former spouse gets his or her own policy where he or she is the named insured

· The policy period ends.

Example: Jake and Nelly, Jake’s wife, are insured under a PMP with a policy term of 6/4/24 to 6/4/25. On 8/7/24, they legally separate and Jake leaves the insured household (Nelly was the named insured). On 11/27/24, Jake buys and insures his own cycle. Jake no longer qualifies under the definition of “you” or “your” when he’s been out of the household for more than 90 days; in this case, 11/5/24.

Note: A spouse who becomes a named insured on his or her own policy is no longer an insured under their former resident spouse’s coverage.

B. The terms "our," "us" and "we" mean the company that issues and maintains the motorcycle policy coverage.

C. The PMP considers a leased motorcycle (as defined under the policy) to be an owned vehicle if there is a written lease that covers a period of six months or longer.

D. "Bodily injury" refers to sickness, disease, or bodily harm. This definition even includes death if it is a direct result of sickness, disease, or bodily harm.

Example: Morgan, who is covered under a PMP, lost control of his cycle while turning too quickly at an intersection. He slides off the street, onto a curb and strikes a pedestrian. The pedestrian sues Morgan for her injuries. Later, she amends the damages sought when she has to be treated for infections related to her original injuries. The injuries and infection qualify as bodily injury.

E. "Business" means any trade, profession, or occupation. In other words, it is any regular activity that generates income.

F. A "family member" is any person who is a relative by blood or by marriage. Any persons who are adopted, wards or foster children qualify as "family members." However, no person is a family member unless they reside in the same household as the named insured.

Example: Jay jumps on Paul’s motorcycle and attempts to drive it around the block. He’s never operated a cycle before. He comes up to a stop sign, panics and accelerates. He jumps off the cycle before it plows into a store’s display window. Jay’s accident is eligible for coverage under Paul’s PMP because Paul is Jay’s foster parent.

G. The definition of “motorcycle” refers to vehicles that are motorized and meet all of the following requirements:

· Include a saddle or seat to accommodate a rider

· Operate with a maximum of three wheels that make contact with a travel surface

· Is intended, via its equipment and design, to travel over public roads

A sidecar may qualify under the motorcycle definition. Qualification exists only when a given sidecar is original equipment that has been installed by the applicable motorcycle’s manufacturer.

The PMP defines two types of trailers.

H. Motorcycle cargo trailer

A cargo trailer is any trailer that is intended, via its design, to be towed by a vehicle that meets the definition of a motorcycle.

I. Motorcycle transport trailer

A transport trailer is one that is intended, via its design, to be towed by vehicles other than motorcycles (including private passenger autos, pickup trucks, and vans) and which is used to move motorcycles.

Note: Due to their distinct purposes, motorcycle cargo trailers and motorcycle transport trailers are mutually exclusive under their respective definitions.

J. “Newly acquired motorcycle”

1. This term applies to a motorcycle (including motorcycle cargo or transport trailers) that the named insured obtains possession of during a given policy term. A newly acquired item could be either owned or acquired under a written lease.

Example: Cary’s motorcycle is insured under a PMP with an 8/10/24 to 2/10/25 policy period. On 10/3/24, a friend who is going to live in Europe for a year leaves his motorcycle in Cary’s care, giving him permission to use it as he likes. While the friend’s cycle is under Cary’s control, it does not qualify as a newly acquired motorcycle.

2. The coverage that is available for newly acquired motorcycles depends on the type of coverage provided by the PMP.

a. All coverages other than Part D, Coverage for Damage to Your Motorcycle.

The insured has to report a new motorcycle no later than 14 days from its acquisition. During those 14 days, the coverage is equal to the broadest coverage existing for a motorcycle that appears on the policy declarations.

This part of the policy states that once coverage is requested (within the 14-day timeframe), coverage only lasts a maximum of 14 days from the date of the vehicle being owned unless the insurer agrees, in writing, to provide the coverage.

This policy wording may be problematic, causing confusion. The point is to cap the coverage period for unreported, owned motorcycles to a maximum of 14 days. This is not typically an issue since, in most situations, acquiring a vehicle is a transaction in which securing insurance coverage is a priority (i.e., loan and leasing arrangements). However, it is easy to have a situation that would exceed this time period and, yet still need to be covered by an insurer.

Example: Emma has a motorcycle insured under a PMP. Just before she goes on vacation with a friend, she purchases another motorcycle. She bought it so her nephew could accompany her on a 10-day road adventure. After returning from her trip, it occurs to her that she didn’t add the cycle to her policy. She contacts her agent by email. The email was sent 13 days after the purchase. A couple of days later, (the 15^th after the purchase date), she has an accident with the new cycle. Her insurer has yet to send confirmation that the cycle has been added. Technically, coverage would not exist but, practically speaking, it would not make sense for the insurer to treat this as an uncovered situation.

b. Coverage for Damage to Your Motorcycle - Collision

Collision coverage is granted for a “newly acquired motorcycle” on the date it becomes an owned vehicle. HOWEVER, the insured MUST report the acquisition:

(1) Within 14 days of becoming the vehicle's owner when at least one motorcycle on the existing policy appears on the declarations with collision coverage. The coverage provided is equal to the broadest coverage existing for a motorcycle that appears on the policy declarations.

This part of the policy states that, once coverage is requested (within the 14-day timeframe), coverage only lasts a maximum of 14 days from the date of the vehicle being owned unless the insurer agrees, in writing, to provide the coverage.

(2) Within four days after becoming the vehicle owner if no motorcycle on the existing policy has Collision Coverage. If the named insured complies within the required timeframe and a loss occurs before the insured requests coverage (reports the motorcycle) a Collision deductible of $500 will apply.

This part of the policy states that, once coverage is requested (within the 4-day timeframe), coverage only lasts a maximum of 4 days from the date of the vehicle being owned unless the insurer agrees, in writing, to provide the coverage.

c. Coverage for Damage to Your Motorcycle - Other Than Collision Coverage

Other than Collision Coverage for a “newly acquired motorcycle” is available once the vehicle is owned by an insured, as long as that insured:

(1) Reports the vehicle within 14 days of acquisition, but only if at least one existing motorcycle on the policy is rated for Other Than Collision Coverage.

(2) Reports the motorcycle within four days of acquisition if no existing (listed) vehicle is rated for Other Than Collision Coverage. If a loss occurs to a vehicle within the reporting timeframe (for instance on day three after acquisition) an Other Than Collision deductible of $500 is in effect.

d. One policy provision applies uniformly to all coverages mentioned under policy parts J.2. a., b., and c.

If the named insured fails to report a vehicle’s acquisition during a policy period, then NO coverage will be provided ONCE the referenced reporting timeframes are passed. If such a vehicle is reported AFTER the required reporting timeframes pass, any coverage to which the insurance company agrees to takes effect on the date on which that vehicle was actually reported to that insurer. Further, the insurer must agree to provide that coverage in writing.

K. "Occupying" means in, upon, getting in, getting on, getting out or getting off.

Example: Lester parks his cycle outside of a convenience store. He returns to it with his purchases and finds a young man admiring the bike. The admirer shares that he wants a cycle just like it and wonders what it’s like to ride on it. Lester offers to take the admirer on a short ride. The admirer literally jumps onto the cycle, causing Lester to lose control, and the cycle falls over on them both. Lester is “occupying” the bike during this situation.

L. "Property damage" means the loss of use of damage to, or destruction of tangible property.

While this simple definition is inclusive, it still permits some elements of a loss to be denied.

Related Court Case: Does Repair Mean Restoration?

M. The definition of “your covered motorcycle” refers to:

· Vehicles that are described in the PMP declarations

· Vehicles that an insured acquires after the beginning of the policy period (called "newly acquired motorcycles")

· Trailers that are owned by any named insured. Such trailers must meet the definitions of either motorcycle cargo or transport trailers AND must appear on the PMP declarations.

· Motorcycles and trailers (as defined by the policy) that, while not owned by a named insured, are used as a substitute for a covered vehicle. However, the substitution has to be due to the other vehicle being serviced, repaired, lost, or destroyed.

Example: Neal’s motorcycle is in a local garage having its engine rebuilt and it will be a week until it’s ready. The garage lends Neal a motorcycle to use in the meantime. The loaner cycle is a covered motorcycle.

PART A - LIABILITY COVERAGE

Insuring Agreement

A. The PMP covers bodily injury and/or property damage for which a covered person is legally obligated to pay damages because of a motorcycle accident. The agreement also obligates an insurer to defend a claim or lawsuit. However, once the policy's limit of liability has been exhausted, the insurer's obligation to continue paying to legally defend an insured ends.

The PMP gives the insurer discretion on defending against and/or settling a given claim. As it is with standard vehicle liability policies, the PMP contains the potential of an unlimited defense obligation. This is due to it not specifying a monetary limit on the amount that may be paid to defend a covered person. However, the policy does allow a company to have some control over their financial duty to protect a covered person in a given claim. Per the insuring agreement, a company does not have to provide a defense under ALL situations. An insurer doesn’t have to defend any bodily injury or property damage loss is ineligible for protection.

Example: Hannah loves riding on her PMP-insured motorcycle, but she often gets upset at car and truck drivers. One morning, after a driver in a pickup nearly runs her off the road, she follows the driver. When the other driver parks and exits his pickup, Hannah roars through the parking lot, intended to scare him. When she applies her brakes, she loses control, slides and her motorcycle strikes the pickup owner. After investigating the incident, Hannah’s insurer denies the claim, stating that the injuries were due to her deliberate action.

B. Under Part A - Liability Coverage, an insured is:

1. The named insured or any family member. They are insured only regarding the operating, owning, or maintaining of vehicles that quality under the PMP’s definition of the named insured covered motorcycle.

Example: Lisa had an accident involving the child of one of her neighbors. Lisa noticed some roughness in her motorcycle’s engine during her latest ride. As soon as she gets off her cycle, she props it against a stand she uses when servicing it. The 8 year old girl who lives next door runs up to ask if she can help Lisa. Lisa asks her to get her ratchet set from her garage. Lisa then allows her to be her “assistant.” When she asks for a tool, the girl, instead of getting closer to Lisa, reaches out too far to hand it to her, she loses her balance and falls against the cycle’s still hot engine, severely burning herself. The girl’s parents later sue Lisa. Lisa is considered an insured from an incident related to maintaining her cycle.

2. A person who is using the defined named insured’s covered motorcycle.

Note: There is no requirement that the person is operating the motorcycle with permission. The PMP also considers other persons and organizations to be covered persons under very limited circumstances.

3. A person or organization that is considered legally responsible for an omission or act committed by a person covered under this policy.

Supplementary Payments

This section advises the insured of several, additional coverages that are available.

1. One supplemental coverage will pay for the cost of bail bonds, but this coverage is limited to a total of $250. However, the bond has to be connected with a vehicle accident with covered bodily injury or property damage. A bond that is due solely to a traffic violation isn't covered.

2. The policy pays for the costs of premiums on appeal bonds and attachment bonds, but only those involved in a suit that the insurance company is defending.

3. The PMP also pays for any interest on judgments that have been entered. However, any interest payment obligation ends once an offer to pay the policy's limit of insurance is made.

4. The PMP pays for loss of earnings caused by hearings or trial attendance and other reasonable expenses caused by an insurance company's request.

Concerning loss of pay, the PMP pays a maximum of $250 per day to reimburse a covered person for lost earnings. This supplemental coverage does not include loss of other sources of income. There is no other limitation regarding loss of earnings, so the limit could be paid for one or for a dozen occurrences of lost pay.

5. Finally, under Supplementary Payments, the policy will pay any reasonable expenses that are due to activity requested of an insured by the insurer.

Example: Shawna had to meet with her insurance company’s adjuster who had some questions about her claim. The meeting took nearly two hours. Shawna was late getting to the other side of town where she had arranged to meet with a person who wanted to buy tickets to a concert she couldn’t attend. Shawna requests that the insurer reimburse her for the loss of the chance to sell her tickets. The insurer rejects that part of her expense claim.

A very important point is that any supplemental payments do not reduce the PMP’s other, primary policy limits.

Exclusions

This coverage part's exclusions fall under category A, having to do with "insureds," and category B, which concerns vehicle ownership, maintenance, and use.

A. There are a number of situations that fail to qualify for liability coverage under the PMP:

1. The Personal Motorcycle Policy doesn't provide liability protection to insureds that deliberately injure other persons or property. Because this point sometimes causes confusion, it's important to examine what is meant by intent.

2. The PMP excludes coverage for property damage to property that any insured owns or transports.

Example: Joan collides with a car while returning from a friend’s house on her motorcycle. Joan’s sidecar hit another car while Joan was attempting to pass a narrow street. The sidecar is destroyed as was a friend’s game system that she was borrowing to play at home. Her insurer pays for the damage to her sidecar but does pay for the game system.

3. Any property that an insured has rented, uses or is caring for is also without protection if damaged or destroyed. The good news is that an exception is made for damage involving an insured’s home or garage.

4. This exclusion negates bodily injury coverage to any person who is hurt while working for an insured. However, an exception is made for domestic employees who aren’t covered by and are not required to be covered by workers compensation.

5. If an insured is using a covered motorcycle to make money by transporting either people or property, that insured has just made the vehicle ineligible, except if the situation involves either voluntary or charitable use.

Example: Timmy is a volunteer at his church’s annual festival. The festival is huge and located on several acres. He helps by taking different volunteers to their work assignments, using his motorcycle on paths designated around the festival location. Should he get into an accident, this use should be one that is eligible for coverage under his PMP.

6. This exclusion takes coverage away from any insured while involved in any “business” that is NOT ranching or farming.

Example: Paula lives in downtown Bigland, a community that is filled with businesses that cater to young artists, musicians, etc. Paula owns a music studio but has a part-time job where she makes meal deliveries. During one delivery, she is distracted while trying to find an address. She runs a traffic light and hits a pedestrian. This loss is NOT eligible for coverage because she’s using the motorcycle in business.

7. Don’t look for coverage under the PMP unless you’re operating a covered motorcycle in the belief that you have an insured’s permission.

Note: This standard can be subjective. This means that evaluation of a loss must include consideration of the operator’s point of view of regarding their thoughts on whether the motorcycle was operated with an insured’s permission. Persons who qualify under the policy as a family member are not subject to this exclusion. The rationale is that family members will hold a presumption of having permission and prohibiting coverage under such circumstances fails to meet the standard of reasonable expectations

Related Court Case: Was Unlicensed Driver A Permissive Operator?

Example: A newly licensed biker has been dying to operate her mom’s motorcycle. Her mother has promised to let her ride the cycle; however, she will be out of town on business for several days. The daughter thinks it couldn’t do any harm to just start the cycle in their backyard. She gets the keys, starts it, and hits the accelerator. The cycle takes off and she and the cycle plows into their neighbors’ backyard fence. This loss would be eligible for coverage.

8. No bodily injury or “property damage” is covered if separate coverage exists (or would exist except for exhausted limits) under a nuclear energy liability policy issued by three named sources (Nuclear Energy Liability Insurance Association., Mutual Atomic Energy Liability Underwriters and Nuclear Insurance Association of Canada) or their successors.

9. The PMP specifically excludes coverage for any legal responsibility any insured may have for operating or owning a vehicle when that vehicle is involved with, even minor delivery activity. Even food or newspaper delivery activity bars the insured against the policy’s liability protection.

Note: As is the case with exclusion A.6., an exception is made for charitable or voluntary activity.

Example: Sherri is in a collision while making deliveries to businesses and apartments in her area. However, the deliveries were of posters, advertising her area’s free community festival and she volunteered to make the deliveries. This activity would not be excluded by her PMP.

B. These are other situations that are ineligible for coverage.

1. If the vehicle’s main purpose (design) is for off-road use, it isn’t protected under the PMP. An exception exists for both motorcycle cargo and transport trailers.

Related Article: Glossary of Basic Automotive Terms

2. Exclusion B.2 explains that the PMP is not meant to cover racing exposures. This item bars coverage for vehicles that are either in the midst of or are preparing for any form of competition including nonsanctioned skills competitions.

This exclusion includes an important exception. If an event or training is connected to a Motorcycle Safety Foundation or any state agency course that is intended to improve cycle operating skills, coverage still applies if a loss should occur.

C. Situations involving limited liability protection

The next four exclusions are unusual because instead of totally excluding coverage they limit coverage to no more than the applicable state’s financial responsibility law. The applicable law is considered to be the state where the covered motorcycle is principally garaged.

1. Any loss that occurs when the motorcycle is operated by a person who is impaired by the use of either of the following:

a. Alcohol

b. Any controlled substance

The level of alcohol influence is based upon the protocol used by authorities in the applicable state where a loss occurs.

With regard to controlled substances, the use of any Controlled Substance(s) as defined by the Federal Food and Drug Law at 21 U.S.C.A. Sections 811 and 812 brings about this exclusion. Controlled Substances include, but are not limited to:

· Cocaine

· LSD

· Marijuana

· All narcotic drugs

This exclusion makes an exception for any loss involving the legitimate use of prescription drugs by a person following the orders of a licensed health care professional.

Note: Medical marijuana use has not been tested in court yet. It is a specifically listed controlled substance and continues to be illegal under the Federal Food and Drug Law. However, this exclusion’s application in practice will vary, especially in jurisdictions that permit the use of medicinal marijuana as well as the states that have legalized marijuana’s use.

2. Any loss in which an insured was committing a felonious activity and bodily injury or property damage resulted

3. Any loss that occurs when an insured is operating a motorcycle with the intent to escape capture or arrest by the authorities

4. Any loss that occurs when an insured operating the motorcycle does not have a valid driver’s license. A driver’s permit, with regard to this exclusion, is treated as a valid license.

D. Ineligible Damages

This policy only provides compensatory damages (those that reimburse for injury or damage) NOT to other forms of damage that are often awarded by courts or other agencies. Therefore, no coverage under the PMP is extended to either punitive or exemplary damages.

Related Court Case: Trucking Firm Not Entitled to Punitive Coverage – Although this is a commercial auto claim, the case does examine a situation regarding punitive v. compensatory damages.

Limit Of Liability

A. The monetary limit that appears on the policy declarations page is the maximum amount of coverage that applies to the damages from any single motorcycle loss. This maximum is not affected by the number of vehicles, insureds, or claims involved, or the number of vehicles or premiums appearing on the declarations page. This arrangement is true of both bodily injury and property damage claims.

The particulars of a given loss may well affect how payments may be distributed, but the maximum remains the maximum.

Example: Polly’s PMP has Bodily Injury limits of $100,000/$300,000 and Property Damage limits of $100,000. She is in an accident.

Scenario 1: The claim against Polly involves two persons seriously injured and one vehicle destroyed. In this instance, the maximum available BI coverage for the incident is $200,000 and the maximum PD coverage is $100,000.

Scenario 2: The claim against Polly involves five persons seriously injured and three vehicles seriously damaged. In this instance, the maximum available BI coverage for the incident is $300,000 and the maximum PD coverage is $100,000.

B. This section explains that, regardless of whether protection exists under more than one coverage part (specifically parts A, B and/or C), no duplicate payments will be made under the PMP. This limitation means that, even if portions of a single claim qualify for coverage under Part A - Liability as well as Part B - Medical Payments and/or Part C - Uninsured Motorists coverage, an insured will not be paid more than once for any portion of his or her loss. This provision assists in preserving the policy’s intent to limit compensation to indemnification.

Out-Of-State Coverage

This Personal Motorcycle Policy provision allows the PMP to respond to a loss according to a given state’s requirements. Paragraph A.1. of this provision states that the policy will provide a higher limit for bodily injury or property damage liability coverage to meet whatever is minimally required by the state in which a covered loss occurs. Paragraph A.2. explains that the PMP will comply with the minimum amounts and types of coverages that may be required by a state’s compulsory insurance law while the covered motorcycle is being operated in that state.

Paragraph B of this provision states that no one is eligible for duplicate payments.

This provision prevents technicalities to bar or limit coverage because of the different ways that states structure their coverage requirements. The provision allows travelers to cross state lines without having to worry about making specific coverage adjustments beforehand.

Financial Responsibility

The PMP, when considered as valid proof of financial responsibility, is to be interpreted as complying with the governing financial responsibility law. This is helpful and flexible because financial obligations required of drivers vary significantly by state.

Note: The limits displayed on the above article usually match the listed states financial responsibility requirements.

Other Insurance

In the event that other sources of liability insurance exist, Part A-Liability Coverage of the Personal Motorcycle Policy will pay on a basis that equals its share of the total amount of insurance available to cover an eligible loss involving a covered motorcycle. If the loss involves a non-owned substitute motorcycle or trailer, the PMP responds on an excess basis, paying only after the primary policy has paid its limit.

PART B - MEDICAL PAYMENTS COVERAGE

Insuring Agreement

Paragraph A of this coverage part explains that it will pay for necessary medical and funeral services incurred by an insured suffering from accidental bodily injury. However, only expenses for services provided within three years of the date of the accident are covered.

Example: Connie, insured under a PMP, is injured when her motorcycle hits a large pothole. Connie suffers multiple serious cuts as well as a broken arm and leg. She is treated for the accident after it occurred in June 2021. In August 2024 after suffering from years of back pain, a doctor discovers a spine injury he attributes to her accident. She has back surgery a couple weeks later. Although directly connected to her 2021 accident, none of Connie’s recent medical expenses are eligible for coverage.

The 2024 expenses are not covered by the PMP because they were incurred more than three years from the accident date.

Related Court Case: Insured Alleges Ambiguous Med Pay Provision

Item B defines insured as used in this coverage part as the named insured and spouse plus any “family member.” However, they are insureds only when occupying a covered motorcycle. They are also insureds if, while a pedestrian, they are struck by any type of vehicle that is BOTH motorized and designed to operate on public roadways. Finally, anyone else that qualifies as occupying a covered motorcycle is also an insured.

Exclusions

Even if a person is an insured, no coverage for bodily injury applies under the following circumstances:

1. When the injury takes place while the vehicle is being used to transport persons or property for income.

Note: The PMP does cover incidents in which the operator is involved in either charitable or voluntary activity.

2. When it occurs while the insured is on the job, and workers compensation coverage is either available or required for the bodily injury.

3. When the bodily injury happens while the insured is hit by a vehicle that is owned by the named insured (but not shown on the policy as required), or by a vehicle that is regularly available to him or her.

4. When the bodily injury happens while an insured is hit by a vehicle that is owned by or is a vehicle that is regularly available to a “family member.” However, this exclusion doesn’t apply to a named insured or a resident spouse, nor does it apply to a vehicle that meets the PMP definition of a covered motorcycle.

5. When injury occurs while the injured person is occupying a vehicle without the belief that she or he has the vehicle owner’s permission to do so. However, the exclusion does not affect such situations involving an insured’s family member who is operating a covered motorcycle that is owned by the named insured.

6. When injury is suffered while the insured is in a vehicle that’s being used in an insured’s “business.” An exception exists when the applicable business involves ranching or faming.

7. Any injury related to war of any type

8. Any injury caused directly or indirectly by a nuclear weapon, reaction radiation or contamination

9. This item bars coverage for vehicles that are either in the midst of or preparing for any form of prearranged competition.

10. The PMP specifically excludes coverage for any legal responsibility any insured may have for operating or owning a vehicle when that vehicle is involved with even minor delivery activity. Even food or newspaper delivery activity bars the insured against the policy’s liability protection.

Note: An exception is made for charitable or voluntary activity.

11. Any loss that occurs when the motorcycle is operated by a person who is impaired by the use of either of the following:

a. Alcohol

b. Any controlled substance

The level of alcohol influence is based upon the protocol used by authorities in the applicable state where a loss occurs.

· Cocaine

· LSD

· Marijuana

· All narcotic drugs

This exclusion makes an exception for any loss involving the legitimate use of prescription drugs by a person following the orders of a licensed health care professional.

12. Any loss in which an insured was committing a felonious activity.

13. Any loss that occurs when an insured is operating a motorcycle with the intent to escape capture or arrest by the authorities.

14. Any loss that occurs when an insured operating the motorcycle does not have a valid driver’s license. A driver’s permit, with regard to this exclusion, is treated as a valid license.

Limit Of Liability

Paragraph A explains that the monetary limit that appears on the policy declarations page is the maximum amount of coverage that will apply to injuries suffered by any individual that occur in a given accidental loss. The number of vehicles, insureds, or claims involved in a given loss does not affect this maximum amount. It is also unaffected by the number of vehicles or premiums appearing on the declarations page. The details of a given loss may well affect how payments may be distributed, but the maximum remains the maximum.

Paragraph B of the Limit of Liability section explains that, regardless of whether coverage exists under more than one coverage part (specifically parts A, B and/or C), no duplicate payments will be made under the PMP. This limitation means that, even if portions of a single claim qualify for coverage under Part B - Medical Payments as well as Part A - Liability and/or Part C - Uninsured Motorists coverage, an insured will not be paid more than once for any portion of his loss.

Other Insurance

In the event that other sources of medical payments insurance exist, Part B-Medical Payments Coverage of the Personal Motorcycle Policy will pay on a basis that equals its share of the total amount of insurance that is available to cover an eligible loss involving an owned motorcycle.

Example: Kerry is injured in an accident. She is eligible for medical payments coverage under two different policies. The PMP source one has limits of $5,000 and a source of health coverage provides $8,000. The PMP will pay its proportional share of the total loss amount. The proportion is based on its share of total available coverage. In this example, the PMP would pay approximately 40% of the loss (limit of $5,000 divided by total amount available of $13,000).

If the loss involves an additional source of coverage written for a motorcycle (providing medical payments and/or funeral costs protection), then the PMP responds on an excess basis, paying only after any other available coverage has paid its limit.

PART C - UNINSURED MOTORISTS COVERAGE

Different states vary on the issue of Uninsured (UM) and Underinsured (UIM) Motorist coverage. The common differences include whether the coverage is mandatory, what limits must be offered, the availability of underinsured coverage (including if UIM is considered part of UM coverage), and if UM coverage can be rejected.

Uninsured motorist coverage has long been a major problem for insurers, and it looks like it will remain a tremendous challenge for the automobile insurance industry. Drivers often consider operating a vehicle to be a right. Unfortunately, many such persons ignore the financial responsibility to take care of damages they may cause while exercising that ill-conceived right. Insurance companies have a very difficult time trying to price and control this loss exposure. One reason for the difficulty is that the exposure is hard to predict. Other than determining if a given territory has a higher number of uninsured drivers, how can a company gain insight on the likelihood of a loss involving a driver who is not insured?

Insuring Agreement

A. This part’s insuring agreement obligates the issuing company to protect an “insured” against “bodily injury” caused by an accident with an “uninsured motor vehicle.” In other words, an insured can rely on his own PMP to take care of injuries resulting from an accident where the driver who caused the injury doesn’t have the coverage to take care of his or her legal obligation. However, this coverage part is not bound by any judgment for damages that are determined by a lawsuit that’s filed without the insurance company’s written consent.

B. This portion of the insuring agreement defines who is considered an insured. An insured is the named insured and resident spouse, any “family member,” and any other person “occupying” “your covered motorcycle.” In addition, any person eligible for payment because of bodily injury damages suffered by an insured is also an insured. An example of such a person (such as the executor of an estate) is one who pays for the funeral expenses of an insured who dies from bodily injury in an accident with an uninsured motorist. Of course, no matter how well a policy tries to explain who is considered an insured, anything can be questioned in court.

C. This part of the insuring agreement includes the broadest definition of a vehicle. Any land motor vehicle or trailer qualifies as an “uninsured motor vehicle” as long as no bodily injury liability policy or bond applies to the vehicle. Such a vehicle could still qualify as an “uninsured motor vehicle” if a bond or policy does apply but the writer of the coverage denies coverage or becomes insolvent. Finally, a hit-and-run vehicle is also an “uninsured motor vehicle” when it hits the named insured (includes resident spouse) or a family member, or any covered motorcycle occupied by these classes of people, or it hits a covered motorcycle.

Ineligible Vehicles - Although the PMP’s definition of an uninsured vehicle is broad, it doesn’t include any vehicle or equipment that either belongs to or is regularly available to the named insured or any family member, or any vehicle owned by a governmental entity. Vehicles used as a residence, vehicles which operate upon crawlers or treads, or vehicles made primarily for off-road use also are disqualified as uninsured motor vehicles. Vehicles covered by legally permitted self-insurers (even after insolvency) are also ineligible under this provision of the PMP.

Exclusions

A. The following situations bar coverage for bodily injury:

1. No coverage exists for any insured if he or she is hit by or hit while occupying an owned vehicle (including a trailer) that isn’t protected by uninsured motorists coverage.

2. No family member is covered if they are hit by or occupying a vehicle that is owned by the named insured, but that is covered by any other policy.

3. No coverage is provided to the named insured or any family member when he or she occupies any vehicle. An exception applies when the vehicle being occupied qualifies as a covered motorcycle.

B. No insured qualifies for uninsured motorists coverage if a bodily injury claim is settled without the insurance company’s consent. However, this applies only if the settlement hinders the insurance company’s recovery rights. In the instance of an unapproved settlement of a bodily injury claim, it is only excluded if the action prejudiced (damaged or eliminated) the insurer's rights. This eliminates the application of an exclusion when, for all intents, an insurer's position has not been adversely affected by an insured’s action. Previously, certain losses could have been denied, purely on technical grounds. Nationwide, courts have been rejecting such results.

Also, there is no coverage for an insured in a vehicle that’s transporting people or property for pay or for loss to a vehicle while being used without permission. However, the question of permission does not apply to a “family member” who is operating a vehicle that qualifies as a “covered motorcycle.”

Related Court Case: Son Did Not Qualify As A Permissive Driver

The PMP specifically excludes coverage for any legal responsibility any insured may have for operating or owning a vehicle when that vehicle is involved with, even minor, business activity. Even food or newspaper delivery activity bars the insured against the policy’s liability protection.

Note: An exception is made for charitable or voluntary activity.

C. No coverage exists if coverage should be handled by either workers compensation or disability benefits law

This exclusion is not affected by the status of the party providing such coverage (either an insurance company or a self-insuring entity).

D. Payments are not made for punitive or exemplary damages.

Limit Of Liability

A. Paragraph A explains that the monetary limit that appears on the policy declarations page is the maximum amount of coverage that will apply to the damages from any single loss. This maximum is not affected by the number of vehicles, insureds, or claims involved, or the number of vehicles or premiums appearing on the declarations page. The particulars of a given loss may well affect how payments may be distributed, but the maximum remains the maximum.

B. Regardless of whether coverage exists under more than one coverage part (specifically parts A or B), no duplicate payments will be made under the PMP. This limitation means that, even if portions of a single claim qualify for coverage under Part C - Uninsured Motorists Coverage as well as Part B - Medical Payments and/or Part A - Liability Coverage, an insured will not be paid more than once for any portion of his loss. This limitation also applies to any coverage available under any underinsured motorists coverage provided by the policy.

Example: Harold was injured when hit by an uninsured driver. He is paid $4,900 by his PMP insurer. Later, his insurer requires him to pay back $380, the amount he was already paid under the Medical Payments portion of his policy.

C. The PMP won’t pay for a single element of loss that already has been paid by any party responsible for that loss.

D. No coverage exists under this portion of the policy if coverage should be handled by either a workers compensation or a disability benefits law.

Other Insurance

If other sources of insurance or other policy provisions apply to an uninsured motorist loss, this provision intends to make sure that such sources are contemplated when compensating an insured for a loss.

1. This portion of the PMP operates with a special constraint. It considers that the total amount of coverage available to pay for losses involving uninsured motorists is no higher than the greatest amount (whether on an excess or primary basis) provided for a single vehicle.

2. Further, the total amount that may be paid on the loss may not exceed the total amount of primary and excess coverage available for any single vehicle. If the loss involves a non-owned vehicle, the uninsured motorist coverage part responds on an excess basis, paying only after the other available coverage has paid its limit (this is true even with regard to vehicles that are temporary substitutes for listed vehicles).

Related Court Case: Insurers Must Share Coverage of Wrongful Death Suit – illustrates problems in interpreting how “other source” provisions apply.

3. a. When primary coverage is provided by the PMP, this policy will respond to an eligible loss in the proportion it holds according to the total of all primary-level coverage available to the covered vehicle.

3. b. When excess coverage is provided by the PMP, this policy will respond to an eligible loss in the proportion it holds according to the total of all excess-level coverage available to the covered vehicle.

Arbitration

A. If the insurance company and an insured do not agree:

If the company and their insured aren’t on the same wavelength regarding whether a loss payment is due and/or how much is due in an uninsured motorist loss, the argument may go to arbitration. However, both the company and the insured must want the disagreement to be handled by this process, using representatives of their own choosing. A judge may be called upon to select a third arbitrator if that person isn’t selected by the first two arbitrators within 30 days.

Related Court Case: “Insurer Must Accept Decision of Its Approved Umpire” – though not an auto case, it illustrates the power of an arbitration clause.

B. Distribution of costs

Each party will handle their own out-of-pocket expenses, as well as share in the cost of the third arbitrator. The arbitrators must follow the local rules of law in their discussions.

C. Unless both parties agree otherwise

The insurance company and the insured must accept the decisions agreed on by any two arbitrators as legally binding in the areas of determining a valid claim and the amount to be paid. An exception is made if the arbitrated amount is greater than the minimum bodily injury liability established by the applicable state’s financial responsibility law. If this disparity occurs, either the insurer or the insured can insist on going to trial. However, if no party contests the amount within 60 days, the decision, regardless of the amount, is binding.

PART D - COVERAGE FOR DAMAGE TO YOUR MOTORCYCLE

This section is a serious departure from the earlier sections, because instead of liability to other injured parties, it deals with actual damage to the named insured’s covered vehicle and expenses incurred because of loss of use of the same.

Insuring Agreement

A. Under paragraph A of the insuring agreement, the Personal Motorcycle Policy agrees to protect “your covered motorcycle” against accidental loss. Any payment includes compensation for loss to motorcycle equipment but does not include the applicable deductible. If you’re unlucky enough to have more than one covered vehicle involved in the same collision loss, only a single, highest deductible will count against any loss payment.

Example: The Clampdons were on vacation using their twin, Honda motorcycles. They pull off and park their bikes together next to an RV camping area. Minutes later, they hear a horrible crunching sound. To their horror, a gigantic branch of an old oak had fallen and crushed both of their bikes. The only good news is that they only had to pay a single $500 deductible for the loss of both cycles.

This section clearly applies only to collision and other than collision losses, but only if the policy’s declarations page shows a deductible choice to indicate that these coverages apply.

B. “Collision” refers to your covered motorcycle being either hit or been hit by another vehicle or by some other item. It’s implied that the event has to result in damage to your vehicle. It also covers the damage to the covered cycle when it flips or is otherwise upset.

“Other than collision” simply refers to those events that aren’t collision. The PMP lists 10 events that qualify as other than collision losses. If your covered motorcycle is damaged by items falling from the sky, fire, theft, explosion or earthquake, windstorm, hail or flood, vandalism, rioting, contact with birds and animals, or if glass has broken, you’ve experienced an other than collision loss. The PMP contains an option for losses involving glass. If any vehicle glass is broken during a collision, an insured may choose to have it covered under the collision portion of the policy.

C. Paragraph C of PMP's Coverage D responds to losses involving custom equipment. Under the policy, the term refers to a variety of property that is commonly used with motorcycles such as saddlebags, enhancers (to a covered motorcycle's body, engine and/or exhaust), fairings, windshields, luggage racks, bars (both light & sissy [extended] bars), safety guards, roll bars, custom plating (including plated exhausts), seats, wheels, tires, custom chrome, murals, paintwork, graphics (as well as decals) and side cars.

Additional Coverage

Rider Safety Apparel

The PMP's Coverage D extends its protection to items used by motorcycle operators to reduce the chances of injury during motorcycle accidents. The following, as well as similar property, qualify for protection:

A. Motorcycle helmets (including wireless headsets that facilitate operator/passenger communication)

B. Protective riding clothing

C. Riding boots

D. Riding gloves

E. Protective eye and ear wear

The protection applies to such apparel worn by the named insured as well as such property that is worn by a passenger. The latter is protected only at the post-loss request of the named insured.

However, coverage only applies to damage resulting from collision losses that take place while a covered motorcycle is occupied. The PMP declarations page also must indicate that collision coverage has been purchased. The maximum protection provided by the additional coverage provision is $1,000 for a single, eligible loss. This maximum applies regardless of the scope of loss that occurs to eligible property.

Payment under the additional coverage provision neither requires a deductible, nor does it affect the amount of protection provided by any of PMP coverage part.

Exclusions

Part D - Coverage for Damage to Your Motorcycle will not pay for:

1. Loss to a covered motorcycle that occurs while it is used for hire to transport persons or goods. An exception exists for charitable or voluntary activities.

2. Damage resulting from the covered motorcycle’s aging, extremely cold weather, mechanical or electrical breakdown, or road damage.

Example: While riding his cycle, a tire blowout causes John to crash. The $2,900 that his motorcycle insurer pays for damage to his vehicle does not include replacement of his tires, which blew because of deterioration from use.

An exception is made for such damage that is related to the total theft of a covered cycle.

3. There’s no coverage for any loss caused by radioactive contamination, nuclear weapons, war, insurrection, rebellion, or revolution.

4. Part D of the PMP does not cover loss to electronic equipment designed for reproducing, receiving, or transmitting signals (both audio and visual). The PMP specifically references that the exclusion applies to equipment such as radios, tape decks, stereos, or compact disc players. Other items that are becoming common components are also barred from coverage such as navigation devices, phones, computers, TVs, scanners, and similar equipment. However, there are exceptions. There IS coverage for equipment IF the equipment is permanently installed in your covered motorcycle. Also, loss to a helmet is covered subject to the Rider Safety Apparel Additional Coverage limit.

5. This exclusion is for any media that is used with such equipment as well as any accessories used with equipment that reproduces sound, receives, or transmits (audio and/or visual) signals that are described in item 4 above.

**A handlebar mounted GPS is an accessory that does not qualify for coverage under the PMP.

6. No coverage is available for covered motorcycles listed on the policy when they are destroyed or taken by military or civil authorities.

Of course, an exception is made for the financial interests of loss payees. It isn’t in the public interest to deny protection to lenders because of the illegal acts of their borrowers.

7. Any equipment used to detect or locate radar or lasers isn’t protected if it is lost or damaged.

8. All custom equipment is excluded from coverage that exceeds $1,500. Examples of such items are special handlebar grips, chromed items, custom wheels, fairings, etc. These items should be separately endorsed since their value is rarely included in the vehicle value used to rate the basic physical damage coverage. ISO provides a special endorsement where these items can be listed and rated.

Related Article: Personal Motorcycle Policy Endorsements

9. No protection is provided when a covered cycle loss has any connection to an insured’s business with a special exemption for ranching or farming use.

Example: Ramya turns in a loss. Her motorcycle was damaged when she and the bike fell and tumbled on a road. Rhianna owns a ranch. The bike is used, primarily, for patrolling her miles of fencing for breaks or gaps. The loss would be eligible for protection.

10. The PMP is not meant to cover racing exposures. This item bars coverage for vehicles that are in the midst of preparing for any form of competition, including nonsanctioned skills competitions.

11. The PMP specifically excludes coverage for any loss to a covered motorcycle involved with food or newspaper delivery activity.

Note: An exception is made for charitable or voluntary activity.

12. Any loss that occurs when the motorcycle is operated by a person who is impaired by the use of:

a. Alcohol

b. Any controlled substance

The level of alcohol influence is based upon the protocol used by authorities in the applicable state where a loss occurs.

· Cocaine

· LSD

· Marijuana

· All narcotic drugs

This exclusion makes an exception for any loss involving the legitimate use of prescription drugs by a person following the orders of a licensed health care professional.

13. Coverage is barred for any loss involving renting or leasing a covered motorcycle to any entity (person or organization) other than the named insured or a family member.

Example: Joey escapes injury when he jumps off a motorcycle before it goes over a steep hill, substantially damaging the cycle. The claim for damages is denied. The motorcycle is owned by Loretta who received $150 from Joey to let him rent it for a long weekend. The loss is ineligible for coverage.

Limit Of Liability

A. The PMP does have restrictions on the total amount of coverage available for a loss to a covered motorcycle. It will pay no more than the lesser of the following two values:

1. The actual cash value of the covered property that has been stolen or damaged.

2. The total cost of repairing or replacing the stolen or damaged covered property. This provision includes the option of settling a loss by using property of like kind and quality.

This section also explains that the maximum available for the loss of custom equipment that, at the time of a loss, is located either in or on a motorcycle that qualifies for coverage under the PMP is $1,500.

Example: Paula underestimated her speed and did not brake in time to avoid slamming into the back of a furniture moving company's truck. The truck was undamaged, but the front end of Paula' motorcycle is seriously smashed up, including the handle-bar mounted GPS. The GPS portion of the loss ($210) is not eligible for coverage under Paula's PMP. However, the $950 loss to the custom handlebars is covered.

B. Any settlement is subject to an adjustment for a vehicle’s decreasing market value (depreciation) and physical condition when determining its actual cash value after a total loss.

C. If the repair or replacement of a covered vehicle results in an insured being better off than before the loss, the PMP won’t pay the value of the improvement.

While not defined, the words “of like kind and quality” can have a significant impact on settlements. As the cost of vehicles and vehicle parts continues to increase, insurers face more pressures to find options that indemnify their insureds while not “breaking the bank.” As it is with homeowners insurance, the need to repair damaged property often puts auto insurers in the position of having to actually improve an insured’s position after a loss. Use of the terms “like kind and quality,” allows carriers options other than the problematic use of new parts to make repairs and then attempt to make adjustments to the value of the settlement. Requesting insureds to participate in loss settlements above their coverage deductibles is a hard sell, so the option of introducing the “like kind and quality” concept made increasing sense, at least from the insurer’s side of the equation.

Payment Of Loss

This provision discusses a company’s options in making a settlement on a loss to a covered vehicle. The settlement may be in the form of a cash payment, repaired property, or replacement property. The insurer has the option to return any stolen property to the named insured or to the latest address shown on the declarations page. If such stolen property is returned, the insurer must pay the cost of returning it and the cost of repairing any damage to it. Further, should the company exercise the right to keep the property; it has to be at a price that’s acceptable to both parties. Finally, if the settlement is made in cash, the total has to include any sales tax.

No Benefit To Bailee

A carrier for hire or a bailee for hire is not permitted to benefit from the PMP.

This provision prevents the PMP from being used by entities that are outside the intended, contractual parties. Without this clause parties who haven’t been rated or underwritten for coverage would secure protection against more exposures than contemplated. Such persons or organizations can’t piggyback their obligations to the PMP when their having custody or control of a covered motorcycle is due to a commercial transaction.

Other Sources Of Recovery

This provision is to make sure that any payment under Part D of the Personal Motorcycle Policy takes other sources of loss payment into account. If other insurance policies, provisions or sources of recovery apply to a physical damage loss, the policy will only pay its proportion of the total available coverage.

The proportional payment response is only for owned vehicles. If other sources of payment exist for a loss involving a non-owned vehicle, Part D of the PMP responds on an excess basis. It is excess over every other available source of payment, including the policy of the party that owns an applicable vehicle that was acting as a temporary substitute for the named insured's vehicle.

The provision to pay its proportionate share on owned motorcycle losses effectively assures that the policy won’t pay more than the limits of liability listed on the declarations page. Of course, it has no other way to control the amount paid by other sources.

Related Court Case: Parties Dispute Applying “Other Insurance”

Appraisal

A. This system works quite similarly to an arbitration clause, except that the only point of dispute is the amount of payment, rather than the amount of payment and/or whether payment is due. This provision may be invoked when the company and the insured don’t agree on the amount of the loss. Each party must select its own qualified (competent and impartial) appraiser. The two appraisers then select an umpire. The appraisers then submit their opinion of the actual cash value and the amount of the loss. If they don’t reach agreement, they submit this information to the umpire. An agreement by any two persons is binding on both parties.

The company and the insured have to pay for the expenses of their own appraiser, as well as equally share the expenses of the umpire.

B. No other insurer rights are affected by their agreeing to an appraisal. For instance, if another party has some responsibility for the loss, the insurer, after paying the appraised amount of loss, may still subrogate the claim.

PART E - DUTIES AFTER AN ACCIDENT OR LOSS

This section explains what an insured must do in order to fulfill his or her obligations once a loss occurs. It is important that these conditions be met, since failing to comply may relieve an insurer from having to pay for a loss. However, coverage may be lost only if the failure to comply with obligations harms or violates (prejudices) the insurer's position. In other words, loss of protection is not triggered by a mere technicality.

A. Notification. The insured must tell the company the accident details as soon as possible. The notification may be to an agent, and, ideally, should include the identity and addresses of any people hurt in the accident, as well as accident witnesses.

Paragraph A is critical, since it initiates the entire claims process, and it gives the insurer its first and best opportunity to control the expense of the claim.

B. If an insured wants coverage, he or she must:

1. Assist the insurer in the claim’s investigation and settlement, as well as help with defending against any claim or suit.

2. Immediately send the company copies of ANY material received that’s related to the accident.

3. Agree to attend as many:

a. Physical exams, involving doctors selected by the insurer and/or

b. Interviews under oath

as are reasonably requested by the insurer. These requirements are at the insurer’s expense.

4. Permit the insurer complete access to medical and other records that relate to the accident.

5. Give the insurer any requested proof of loss.

The items in paragraph B. allow an insurer to evaluate whether a loss payment is due and how much has to be paid. This area has a lot of potential for straining relations between the insurer and the insured, since the two parties may differ over what is “reasonable.” The insured may quickly become concerned with their privacy, as well as their community standing. It is important that this provision spells out an insured’s contractual obligations in order to document their cooperation and possibly mitigate any hard feelings over repeated requests for help or information.

Related Court Case: Insured Fails To Cooperate

C. If the loss involves uninsured motorists coverage, the insured is further obligated to notify the police quickly if the accident was caused by a hit-and-run driver, and to send the insurer copies of any legal papers should a suit be filed. Hit-and-run losses are always difficult to investigate and are always favorites for exaggerated, inaccurate, or fraudulent claims. The requirement that such losses be immediately reported to the police is a way to guard against claim problems.

D. If the loss involves collision or other than collision coverage, the insured is further obligated to:

1. Protect the property from further loss. The company is obligated to reimburse the insured if any additional expense is involved.

2. Quickly notify the police if the covered vehicle is stolen.

Example: Carla is in a collision while riding her motorcycle to work. She is uninjured, but the motorcycle is too damaged to use. She trades accident information with the other person involved in the accident. She also gets approval from her insurer to have the cycle towed from the scene. She can't miss work, so she leaves the scene after providing details to a local towing service. The towing company calls a couple hours later to tell her that the cycle was not at the location and must have been stolen. Carla hangs up and immediately calls the police to report the theft.

3. Allow the company to inspect and evaluate the damaged property BEFORE it is repaired or removed. Preserving the damaged property after a loss is extremely important.

In the last instance, having any damage repaired or getting rid of the damaged property is an extremely serious breach of contract on the part of the insured, and could easily result in an insurer’s refusal to make payment. If the insured vehicle is repaired or disposed of, the insurer has no chance to evaluate whether coverage was due, nor determine how much was due.

PART F - GENERAL PROVISIONS

Bankruptcy

The PMP states that an insured’s bankruptcy or insolvency doesn’t release the company from any obligations under this policy.

Changes

A. This states that the policy is a complete agreement that can’t be changed, except by the company issuing an endorsement.

This is important. If the insured were allowed to change the policy, it would make it difficult for insurers to handle claims and to earn a profit. Fortunately, insurers are eager to help their customers make valid changes to their policy to fit their current circumstances.

B. The second paragraph of this provision explains that the policy premium was based on a certain set of facts. If any of this information changes, it could affect the rating of the motorcycle policy, and the insured’s premium may be changed. Items that could cause the policy’s cost to change include the number, type, or use of vehicles; the operators using the cars; where the vehicles are kept; and coverage, deductible, or limit changes.

Finally, paragraph B. of this provision makes a reference that falls outside of the policy. It states that if a rating change is necessary, the change will be performed in compliance with the applicable company’s filed rating plan and rules.

C. This part is a liberalization clause for the benefit of consumers. If a company does something to expand the coverage under the PMP without charging additional premium, then the change immediately applies to all similar parties in a given state. This provision does not apply in instances where changes both expand and restrict coverage (whether such change is done via a new coverage edition or an amendatory endorsement).

Fraud

This provision is particularly brief and straightforward. The insurer advises that, if an insured speaks or acts with the intent to mislead others regarding any loss or claim, the insurer can deny coverage. Of course, this provision of the insurance contract is implied throughout the policy.

While it is questionable that such wording ever deters fraud, at least it continues to act as a basis for denying coverage when discovered.

Example: Ben reports that his motorcycle was stolen from in front of a restaurant while he and a date were enjoying dinner. After investigating the loss, his claim is denied. The insurer discovers that Ben had fallen way behind in payments for the cycle and he arranged for it to be stolen by a friend.

Related Court Case: Insurer Denies Car Theft Claim

Legal Action Against Us

A. The provision forces the parties to use all of the tools within the PMP before a suit is attempted. In other words, an insured, disputing the existence of liability or the amount that should be paid, cannot skip arbitration or appraisal or cooperation with the company or providing proof of loss, etc., and go straight to filing a suit. Further, even after compliance with all of the policy provisions has occurred, no action can be filed unless there’s been a written agreement that the insured is responsible for a loss payment OR the amount of the payment has been settled via judicial proceedings.

Related Court Case: Filing Appraisal Not Lawsuit Prerequisite

B. Paragraph B of this provision denies any person or organization’s right to bring action against the insurer to determine if the insured is liable for an accident. This paragraph is needed to limit the persons who may rightfully expect performance under the contract. Without this clause, the PMP would provide an umbrella of protection to parties who, rightfully, should secure their own protection.

Our Right To Recover Payment

This provision states that, while an insurer will fulfill any valid obligation to make payment under the policy, when payment is made, it acquires the insured’s right to recover payment from another responsible party. Just as important as acquiring this right is the duty it imposes on the insured. The insured must cooperate fully with the insurer to pursue recovery AND must be certain that he or she does nothing to undermine (prejudice) this right. However, this provision doesn’t apply under Coverage Part D - Damage to Your Motorcycle when the responsible party is a person who operates the covered motorcycle with permission (including parties who, under the circumstances, felt they were permitted to use a covered vehicle.

Paragraph B of this provision explains that if the company compensates the insured for a loss and then collects payment from the responsible party for the same damages, the insured HAS to hold onto the money on behalf of the insurance company and then reimburse the company up to the amount of the settlement.

This duty of both parties regarding subrogation has been long established.

Policy Period And Territory

In order for the PMP to apply to a loss, the loss must happen within the policy period shown on the declarations page and within the territory shown. The territory described in the Personal Motorcycle Policy includes the United States, its territories and possessions, Puerto Rico, and Canada. The territory also includes accidents involving a covered vehicle while it’s being shipped between the ports of these locations.

Termination

A. Cancellation

1. The insured has it simple. All she or he has to do is either return the policy to the company or send prior written notice of the date the policy is to be canceled. The insured can request cancellation at any time during the policy period.

2. It’s a little more complicated for the insurer to cancel coverage. The company has to mail written notice to the named insured at the address shown on the policy declarations page. The insurer must give 20 days’ advance notice of cancellation unless the cancellation is for not paying the premium or if it is done within the first 60 days of coverage (new business). In the latter instances, the insurer may give 10 days’ advance notice.

Related Court Case: Cancellation Notice Must Allow Required Time

3. After new business has been in effect for 60 days or after a renewal of a continued policy, cancellation may take place only for nonpayment of premium or after the license of the named insured or a regular driver of the covered vehicles is suspended or revoked. Any suspension or revocation must have occurred either during the last policy period or, if the policy period is other than annual, since the last anniversary date. Another reason for cancellation is any significant misrepresentation set forth to get coverage.

Note: A misrepresentation has to be important enough to affect a company’s decision to accept coverage. Minor items may call for premium adjustments, but not cancellation.

B. Non-renewal

This option to end coverage is just a company option. However, if an insured sent in advance a written notice to end coverage at the policy’s expiration date, it technically would be an insured’s request to non-renew.

In any case, if a company doesn’t want to continue coverage, it has to give an insured at least 20 days’ advance notice of non-renewal. If the policy period is less than six months, coverage may be non-renewed at any six-month period after the anniversary of the original effective date. If the policy period is annual or longer, the policy may be non-renewed at any anniversary. It is critical that an insured understand the rules of the company and state provisions since the differences center around the amount of notice (nearly always longer) and have specific reasons for non-renewing. Further, for both cancellations and non-renewals, many states require that the legal notice includes the reason for the action and any available recourse.

C. Automatic Termination

This section of the termination provision allows for coverage to end without any written request or notice being required. If a company sends a renewal policy, and if the insured or insured’s representative doesn’t accept it, coverage ends at the latest expiration date. Nonpayment of the renewal premium is considered non-acceptance. If an insured obtains another insurance policy, coverage automatically terminates at the effective date of the replacing coverage.

D. Other Termination Provisions

1. Paragraph D of the Termination provision informs the insured that a cancellation notice may be delivered or mailed and that proof of mailing acts as sufficient proof of notice.

IMPORTANT: Many states mandate how the notice has to be delivered (for instance, registered or certified mail), so you need to be aware of state law and any form that amends or replaces this provision.

2. The insured is also told that the company may be refunding the premium if a policy is canceled, but that the refund transaction has no effect on the cancellation.

Example: Vern received notice that his policy terminated on 7/3/24. He is in an accident on 7/9/24 and he receives a premium refund on 7/12/24. Vern submits a claim, arguing that his coverage should have lasted until the date he gets his refund. The insurer confirms that the refund's processing had no impact and that the termination date was still 7/3/24.

3. Whatever date that appears as the cancellation date in a given notice is treated as the policy period's ending date. This may seem like a technicality, but it aligns the insurance company's intent with any policy reference to "policy period."

Transfer of Your Interest in This Policy

A policyholder can assign his rights and duties under the PMP to another person, BUT ONLY with the written permission of the insurer.

There is one exception to the rule of having to get the insurer’s permission to assign a policy: if the policyholder dies. In this event, this policy provision automatically transfers coverage either to a surviving spouse (if he or she lives at the same address) or the deceased’s legal representative. Either party achieves the status of named insured. However, the legal representative is protected only to the extent of his or her duties to maintain or operate the covered vehicles.

The insurer will only recognize such a transfer until the policy’s expiration date. The working assumption is that appropriate coverage reflecting the change in circumstances will be obtained or that coverage will either be terminated or allowed to expire.

Two or More Policies

What happens if the insurer issues more than one policy to an insured and all of the policies are available to respond to the same accident? This provision designates the company’s total liability to its insured. The total amount that the company is obligated to pay equals the highest limit of insurance written under any single, applicable policy.