Motorcycle Insurance Articles
Rebuilt Bikes And The Problem They Pose For Insurance Companies
2011-06-28
Rebuilt bikes can often be purchased at unbelievably low prices. Although they usually need a few new parts, salvaged bikes are very popular with motorcycle collectors and enthusiasts. Motorcycle insurance companies, on the other hand, do not look too kindly at rebuilt bikes for several reasons, including the fact that they were "totaled" in an accident. Motorcycle insurance rates are always climbing, and in the case of rebuilt bikes, they will be even higher.
The key element which decides whether or not any insurance company will insure a person or product is the risk factor. This risk factor is decided by professionals hired by the company who look at everything from a driver's traffic record, age, sex, credit history and location (to infer the possibility of theft). Motorcycle insurance companies aren't too bothered with inspecting new motorcycles, but rebuilt bikes pose a whole new set of problems for them. One reason is that these bikes are typically refurbished by hobbyists who may have a good idea of what they are doing but are not expert mechanics. Insurance companies do not look too kindly at amateurs working on a bike which has already been given a salvage title.
Many motorcycles which have been given the "salvage" title have been in serious accidents, which means that there may be hidden damage that can result in another accident even after repair. But perhaps the biggest problem that a rebuilt bike poses for an insurance company is the fact that it can be difficult to appraise the proper value of a rebuilt salvage bike. Many major appraisers such as Kelley Blue Book assign little or no value to these motorcycles. The value of a bike is very important in determining the motorcycle insurance rates, and the fact that these bikes have no standard value is quite a problem with most insurance companies.
State laws can also be a problem for insurance companies and motorists, as several states will not allow salvaged repaired motorcycles on main roads and may limit the insurance policies that can be taken out on a rebuilt bike. In order to get a rebuilt bike insured, a motorist will have to take the bike to either the DMV or the state police to get it inspected. Should the vehicle be deemed road-safe, a certificate, required for vehicle insurance, will then be issued. Some individuals engage in the legal practice of "title washing", which means moving the registration of a motorbike from one state to another in order to obtain a clean title. In all, rebuilt bikes are a headache for insurance companies due to the risk and uncertainty involved.