Why Do Insurance Companies Total Motorcycles With Little Damage?

Getting into an accident is never a pleasant experience. It becomes even more frustrating if your motorcycle sustains only minor damage, yet your insurance company decides to total it out anyway. This situation leaves many bikers wondering – why would an insurer total a bike that doesn’t seem very damaged?

While it may appear perplexing on the surface, there are several logical reasons that insurers make this decision. Understanding the method behind an insurer’s total loss evaluation can help you better navigate the claims process and get the maximum settlement.

What Factors Determine If A Motorcycle Is Totaled?

Insurance companies don’t make total loss decisions arbitrarily. They rely on specific criteria and calculations to determine if it makes financial sense to repair or replace your damaged bike. The main factors include:

• Repair Costs: If repairs exceed a certain percentage of the bike’s value, the insurer will total it.

• Pre-Accident Value: This is determined by the bike’s year, make, model, mileage, and condition.

• Salvage Value: What the insurer can sell the damaged bike for. This reduces their payout.

• State Laws: Some states mandate a total loss when repair costs reach 50% or more of the pre-accident value.

• Insurer’s Threshold: Many insurers voluntarily total a vehicle when repairs hit 70-80% of the value.

So a bike with minor scrapes could still be totaled if the underlying frame or engine components are bent or damaged internally, forcing repair costs over the insurer’s threshold.

Why Would Repairs Exceed The Visible Damage?

Unlike cars, motorcycles leave their mechanical components exposed. Even if body plastics escape unscathed, the frame, suspension, and engine can suffer internal stress and damage that is not visible. Here are some examples of “invisible” damage that leads to high repair bills:

• Frame Damage: The frame could become bent or twisted without external signs. Straightening and realigning the frame is extremely labor intensive.

• Mechanical Damage: Engine or transmission components like crankshafts, valves, or gears can warp under stress. These require disassembly to assess and repair.

• Electrical Damage: Crash impact can destroy wiring harnesses and control modules that are hidden from view. Diagnosing and replacing electrical parts gets very expensive.

• Partial Replacements: Some damaged parts like fairings or handles may need to be fully replaced even if only partially cracked or stressed.

• Labor Hours: The required technicians’ diagnosis and labor time is often the biggest portion of any auto repair bill.

• Aftermarket Parts: Having customized or high-end components on your bike means much higher replacement costs.

What Determines The Motorcycle’s Pre-Accident Value?

Insurers determine a totaled bike’s base value using industry valuation guides like NADA and Kelley Blue Book. These provide a starting point based on the motorcycle’s:

• Year
• Make and model
• Mileage
• Overall condition
• Factory equipment

The insurer will then examine documented upgrades, modifications and overall maintenance records to adjust the base value up or down accordingly.

Some common factors that add value include:

• New tires or major components
• Custom paint or bodywork
• Engine performance upgrades
• Premium audio and electronics
• Recent major service and repairs

And factors that typically lower value:

• High mileage
• Visible wear and tear
• Old or mismatched tires
• Unrepaired damage and mechanical issues

If you’ve made significant investments in aftermarket parts or upgrades, be sure to provide invoices and documentation to get full credit for them in your settlement.

Will I Get Compensated For Aftermarket Parts?

Unfortunately, most standard insurance policies will only pay for the motorcycle’s core value, not the extra money you spent tricking it out. Here are some steps to get higher compensation:

• Purchase add-on coverage for accessories and modifications. This will pay to replace them.

• Provide invoices showing investment into upgrades like the exhaust, suspension, engine parts, etc. The insurer may increase the settlement.

• Negotiate a higher payout by finding comparable bikes for sale with similar upgrades.

• For very expensive custom work, purchase specialty coverage like “stated value” insurance to cover the full customized value.

How Does The Salvage Value Come Into Play?

After totaling your motorcycle, the insurance company takes possession of it and sells it to a salvage yard. The amount they get for the damaged bike is then deducted from your total settlement.

So if your bike is valued at $5,000 but the insurer sells the salvage for $500, you would only receive $4,500 (minus your deductible).

This deducted salvage value is one reason settlements often disappoint – you assume you’ll receive the full pre-accident value. In reality, you only get that value minus salvage and deductible.

When Do I Get To Keep The Totaled Motorcycle?

In some cases, the insurer may let you retain possession of the totaled bike. This usually requires that you:

• Pay the salvage value they estimated
• Sign a “transfer of ownership” document

By keeping the totaled motorcycle, you forfeit your payout. But you’d have the option to repair or salvage usable parts. This rarely makes financial sense given repair costs but can be desirable if it was a rare or sentimental bike.

How Much Should I Expect For My Total Loss Settlement?

While amounts vary case-by-case, you can expect a settlement between 50-80% of your motorcycle’s pre-accident value. This percentage depends mainly on:

• The deductible amount you choose
• The salvage value based on damage
• Any negotiated value adjustments

For example, on a $10,000 bike:

• With a $500 deductible, you may get 60% or $6,000
• With a $2,000 deductible, you may get 50% or $5,000

Adjustments for aftermarket parts, mileage, etc can nudge the settlement amount slightly up or down.

Tips To Get The Maximum Settlement On A Totaled Motorcycle

1. Gather all maintenance and upgrade invoices, photos, receipts that show the bike’s condition.

2. Negotiate respectfully with the claims adjuster using comps for similar upgraded bikes.

3. Ask about keeping salvage parts you may want to reuse.

4. Learn your state’s total loss thresholds and settlement regulations.

5. Consult an attorney experienced with total loss settlements. Most offer free consultations.

6. Move quickly – the insurer takes possession once they cut a settlement check.

7. Thoroughly review the settlement breakdown and calculations before signing.

8. Consider an appraisal if their value seems unfairly low compared to the market.

What If I Owe More Than The Settlement On My Financed Bike?

This upside-down situation happens frequently with financed vehicles. To avoid owing money on a totaled bike, experts recommend “gap insurance.” This add-on policy covers the difference between the settlement and your remaining loan balance.

Without gap coverage, you would need to tap into savings or credit to pay the loan balance yourself. Alternatively, your lender may let you roll the deficit into your next bike loan. But this leaves you starting underwater on the new purchase.

Purchasing gap protection upfront provides the most financial security if your motorcycle gets totaled shortly after financing the purchase.

Am I Entitled To Compensation For Injuries Or Riding Gear?

The property damage settlement covers only the monetary value of your totaled motorcycle. However, if you suffered physical injuries or damage to riding gear in the accident, you can pursue additional compensation through injury and personal property claims.

Common examples include reimbursement for:

• Broken helmets or riding leathers
• Hospital bills
• Ambulance fees
• Physical therapy
• Lost wages from missed work
• Pain and suffering

This requires filing an injury claim against the at-fault driver’s liability coverage or through your own medical and income protection policies. An experienced motorcycle accident attorney can help fully document damages and pursue the maximum available compensation.

While having your bike totaled out with little visible damage can be frustrating, understanding what goes into an insurer’s decision brings clarity. Pay close attention to settlement terms, stand firm on just compensation for aftermarket parts, and consult experienced legal counsel for the best results after any motorcycle total loss.