PERSONAL MOTORCYCLE
PROGRAM UNDERWRITING CONSIDERATIONS
(November 2024)
Underwriting a submission for coverage under
the Insurance Services Office (ISO) Personal Motorcycle Policy (PMP) involves
assessing the acceptability of both cycles and their operators.
The definitions section of the PMP explains
which vehicles are eligible for coverage. The PMP Declarations page includes a
vehicle description, coverages, and limits and, if applicable, a deductible for
all vehicles covered in the policy.
Underwriting a PMP includes considering several factors such as the following:
·
The
vehicle’s performance type (such as cruiser, chopper, touring bike, etc.).
·
Make,
model and serial number of each vehicle.
·
Vehicle
age.
·
Vehicle
cost new or stated value.
·
The
type of protection and safety devices installed on the vehicle.
Other important considerations are the
existence of custom features, special equipment or expensive accessories.
Underwriting a vehicle is a matter of
determining whether it matches the market that is desired by the insurer and
being careful to write vehicles that have characteristics that fit its rates.
Too many custom features may force a vehicle to a specialty market. Of course,
different characteristics should be considered as a whole in order to determine
overall eligibility.
It
is critical to have a complete list of all drivers, including family members
and relatives who are members of the insured’s household, who may be using the
vehicles. Remember that family members include wards, adopted and foster
children. Besides listing all of the operators in a household, it is also
important to have the following information:
·
Where
permitted, each driver’s gender and marital status
·
Each
driver’s name, date of birth, and driver's license number
·
The
amount and type of rider safety apparel used by operators
·
The
vehicle operated by each driver (on a primary and secondary basis)
·
Each
operator’s motor vehicle record:
— are there any accidents or violations
— frequency of infractions
— severity of infractions
·
Each
driver’s level of experience
·
The
existence of any driving restrictions and reasons for same
The above factors are typically the minimal information
required to fully evaluate a personal motorcycle exposure. An underwriter must
be certain to gather additional information, such as evidence of skills
training.
A driving household’s loss and violation
history is critical for underwriting a personal motorcycle account. Loss
history should include the date, time of day, driver, vehicle identification,
description of the accident or loss, and the final amount of the settlement.
Claims frequency and severity are not always clear-cut indicators of
eligibility. Developing adequate information is important!
The above situations show that there can be
numerous areas of uncertainty. With violations and driving history, appearances
can be deceiving, so more information usually means better underwriting
decisions.
Another important topic to consider in any
underwriting evaluation is the need for deductibles. The Personal Motorcycle
Policy uses deductibles for Damage to Your Motorcycle Coverage, which includes
Collision and Other Than Collision coverage. Typically, deductibles are
identical for all vehicles written on the same policy that carry physical
damage coverage. Deductibles can be used to help control losses.
Deductibles may be used to reduce the cost of
insurance. Most insurance companies provide a premium credit based on the size
of the deductible. The insured is responsible for the losses that are under the
deductible and the insurer responds only to the portion of loss that exceeds
the deductible.
Underwriting considerations must include whether all the basic
policy coverages are necessary for a specific insured. At other times, the PMP
may not be broad enough and the policy may be endorsed to add wording or
eliminate exclusions in order to broaden coverage.
Related Article: Personal Motorcycle Policy Endorsements