(November 2018)
Underwriting a submission for coverage under the Insurance Services Office (ISO) Personal Motorcycle Policy (PMP) involves assessing the acceptability of vehicles and their operators.
The definitions section of the Personal Motorcycle Policy 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 the consideration of 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, 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