Bicycle insurance: Do you have the right cover?

By John Grant As Katie Melua sings in her hit song, "There are nine million bicycles in Beijing" - well she could also be singing, there are nearly one million bicycles in New Zealand, and that's a fact! According to research from SPARC, around one quarter of New Zealander's are active cyclists. Cycle importers say about 100,000 bikes are sold in New Zealand each year and the retail cost of a new bike ranges from $200 to $5,000 - and in some specialist cases considerably more. Its a significant activity with lots of 'value' at risk, and one that generates many insurance claims. Of the 12 companies we reviewed (click here to see the comparisons), only seven insurers provide replacement cover on bikes. This means that in most cases claims will be limited to market value.  If a bike has an economic life of 5 years then the value payable could reduce by 20% per year. Many of the insurers we compared have special policy  limits applicable for bikes. With values ranging from $200 to over $5,000 specific policy limits will become important. Patrick Morgan of Cycle Advocacy estimates the average value of a bike is around $1,000. Three of the twelve companies we surveyed had no policy limits, one had a limit of $5,000, two used a $2,500 limit, four used $2,000, one used $1,500, and one had a limit of $1,000 per bicycle claim. Insurance cover on bicycles is provided under a Contents policy and it is clearly important to check with your company or broker/advisor what cover and limits apply under your policy. It is very important to check how your policy treats "sporting-equipment-while-in-use".  If that is excluded, it could well mean no cover while you are actually using them. And that could have serious repercussions, particularly if you are at fault in an accident and cause damage to other property that would normally be covered under the liability section of the policy. The issue is even more important for mountain bikers. Make sure that your policy actually does provide cover for your bike while it is being used. Do more than check verbally - make sure you have this documented. Also make sure the policy limit is sufficient. If you can, select an insurer that offers replacement value cover so that any claim you have will not be depreciated based on age or condition. However you need to be aware that "replacement" will mean exactly this - you won't get the money, you will get a similar bike. If you want to be paid in cash then expect the policy to revert back to market value cover.