Should You Insure Your Bicycle? Find Out About Velosurance.

Video Transcription of the Live Interview with The Florida Bike Guy and Dave Williams, CEO of Velosurance

Jim: The short answer is so you don't have to pay for it twice. But we're gonna get a better answer from Dave, who is the co-founder and CEO of Velosurance. So Dave is joining us on the screen today, we're gonna talk all things bike insurance. And I think you're gonna find out, a lot of things are gonna pique your interest. So why don't you introduce yourself, Dave?

Dave: Good morning, everyone. Dave Williams. Insurance agency licensed in 48 states. And all we do is insure bicycles. We got into this because of the poor job that home owners' and renters' insurance do when they're covering high value bikes. When you're speaking to someone at a home owner's insurance company, they think a high valued bike is something that costs about $300. And as we all know, we're all pedaling bikes today that cost more than our first car.

Jim: Yeah, that's true. So give us an idea, I mean, I know you said you were in 47 states. How many policy orders do you have in Florida?

Dave: In the 3,500 to 4,000 dollar, I'm sorry, in the 3,500 to 4,000 range.

Jim: Okay. And what is the, so I know Velosurance, you're backed by another company called Markel. Who is Markel and how strong are they in the insurance world?

Dave: Markel, it's Markel American Insurance Company founded in 1933. They are an A rated US insurance company, AM Best rated, and they're in the 35 to 40 billion, that's billion with a B, range of capital reserves.

Jim: All right. So I wanted us to talk about what everybody wants to hear about. So you've got a bike that costs 1,000 or 3,000 or 5,000 dollars, whatever it might be. I think a lot of people are under the impression that their home owners' insurance is going to cover them if they have some type of a claim on their bike. Tell us the difference between what a home owners' insurance will cover and what Velosurance would cover for the same incident.

Dave: Okay, let's talk about a $4,000 bike that is five years old. Velosurance insures that bike for its MSRP replacement cost, $5,000 if that's what it costs to replace the bike, subject to whatever deductible the client chooses, that's how much money they would receive from us, no argument.

Jim: So your bike gets, you run over the bike in the garage, it falls of the rack, you run into a parked car, you got no one to sue, but you know, it was your own mistake. You had a $4,000 bike, you got a $200 deductible. So you're gonna give them a check for $3,800, is that correct?

Dave: Yes, if you're looking at a damaged bike and that damage was caused by an accident, it's covered.

Jim: Okay.

Dave: No argument at all. We don't depreciate the bike value, the bike always remains at replacement cost for us.

Jim: Okay.

Dave: Whereas if you're dealing with a home owners' insurance company, the bike is subject to depreciation. Probably something like 10% the first year and 5% every year after that. So at that point, you have a 30% depreciation factor on a $4,000 bike. So you're losing about $1,250 bucks off of the $4,000 bike. So now you're down to 2,750 and you've got $1,000 deductible on your home owners' insurance, if it's as low as that. So now you're down to $1,750 reimbursement from your home owners' insurance company to go out and replace a $4,000 bike.

Jim: Okay. Go ahead.

Dave: Oh, I'm sorry. Our concept is that we want our clients to take as little money out of their pocket to replace the bike if the worst were to happen.

Jim: So what is the difference in terms of the types of claims? 'Cause home owners', they cover only certain types of claims, and Velo is much broader, from what I understand.

Dave: Just as I said a little bit ago, if you're looking at a damaged bike and that damage was caused by an accident, it's covered. And you could write a book about how you could damage a bike. And depending on who your home owners' insurance company is, the bike might be covered for fire and theft at home. So unless your bike is gonna spontaneously combust, you're down to theft from your house.

Jim: Okay. Yeah, I just had a comment, hey, Tracy, I had a comment from Tracy online saying that she is, she's insured with Velosurance and she had an issue with, her seat post screw broke going up a mountain headed towards Arizona. And she used your roadside assistance for that claim.

Dave: Yeah, it's, the roadside assistance stranded cyclist coverage is $10 bucks a year, which is cheaper than a pair of socks, and you can use it five times a year. So it really comes down to, if you did use it five times a year, it really comes down to two bucks a time. Everyone who uses it is happy, very happy with it.

Jim: So let's talk about for a minute, I don't know that I've gotten the complete answer from what I was looking at. So home owners' insurances, they only cover certain claimed losses: fire, theft, loss from an accident, I believe. And I think Velo is much broader than that, can you just touch on that for a minute?

Dave: I'm not aware of a home owners' policy that will cover a bicycle for accidental damage while it's away from home.

Jim: Okay. So they cover certain designated perils: fire, theft, that kind of thing.

Dave: And we, our policy is all risk policy subject to exclusions. And the exclusions are very understandable. You know, you can't use your bike commercially. We don't cover things like mechanical failure. So if something internal happens to the bike, that's not an accident, that's a mechanical failure. But other than that, if it's an accident, it's covered.

Jim: You touched on the roadside assistance. What is that to someone, what kind of assistance would be included in that?

Dave: We partnered with a nationwide auto club who claimed to have a service vehicle within 35 minutes to 45 minutes of everyone in the US. It's a service vehicle, it shows up, picks up you and the bike, and they will drive you up to 35 miles for free. And after 35 miles, you need to make arrangements with them if you need to go further.

Jim: Okay, all right. And what are the other types of things that, what other coverages do you get with the Velo policy?

Dave: The base policy, you get the accidental damage and theft coverage, theft at home and away from home. You can purchase optional coverages such as medical payments to fill the gap between what you have to pay and when your health insurance company picks up 100%. Liability coverage, if you damage property such as a vehicle or injure a person, all it takes is someone staring into a cell phone stepping off the sidewalk in front of you, and all of a sudden, it's your fault that they weren't paying attention. And any time a bicycle interacts with a pedestrian, the ticket is always going to go to the cyclist. And if that happens and you have liability coverage with us, you had that letter to us and we take care of it for you.

Jim: So we have a question, Lee, thank you for your question. Lee wants to know, what happens if a mechanical issue causes a crash? In other words, you caused an accident, you've injured someone, I presume, but it was caused by a mechanical issue with the bike.

Dave: I'd have to know what the mechanical issue was but--

Jim: Let's assume a brake failure or a part breaks.

Dave: And once again, every claim is taken individually and looked at individually, but probably the biggest mechanical issue that we see is the chain shifting into the inside ring and the chain drops off the inside ring. That's a mechanical issue that brings the bike to a, it can bring the bike to a pretty quick stop.

Jim: Right.

Dave: We have not seen any cyclist-related liability suits, what I mean is a liability suit from one cyclist with another cyclist who, you know, let's say something did happen to the bike and it stopped and three people ran into the back of it. We haven't seen that. Maybe we will. I don't want one of our clients to be the test case, but if it happens, it happens and we handle it from there.

Jim: Well, one of the things I think I understand and I may have touched on here, we get a lot of calls from people who run into, you know, poles and parked cars and other objects. There's no negligence on the part of some other person, so you don't have a claim against the other person. Your bike has been injured or crashed. Is that a covered peril under the Velo policy?

Dave: Yes. If it's accidental, it's covered. And our two biggest claims with cars, car drivers, I should say, because it's not the car's fault, it's the driver's fault, is getting doored, and we tried to campaign a couple of years ago to teach people to reach over to open the door with their right hand, so it kinda forces them to look over their shoulder at that point. But getting doored and the J hook, which for those of you who are not familiar with a J hook, cars don't understand how fast a bicycle can go. So you're pedaling down the road at 20 mile an hour. You're moving along at a good clip, but the car doesn't understand this, so they pass you at 30 mile an hour then slow down and turn right in front of you, not giving you enough time to stop.

Jim: We see a lot of that.

Dave: That's the most common cyclist versus driver accident that we see.

Jim: Okay. Why don't you give us some idea of what a policy cost, what's the price range going to be for someone to insure their bike? I know what I pay for my bike and I could use that as an example, but how do you--

Dave: Yeah. We separated the country into three tiers: north, central and south. North's where you can pedal your bike six months of the year and you have six months of ice fishing. So we understand that bikes up in Minnesota, the UP of Michigan, there are days when they're not going out the front door, let alone thinking about riding a bike. The central states, there may be some days when you don't wanna step outside the front door with your bike, but a lot of people in central states ride 12 months of the year. And when I speak to my clients there, they tell me there's no such thing as bad weather, just bad equipment. And then the southern states where you can ride 12 months of the year, so a $5,000 bike in Florida might cost $400 bucks a year to insure, whereas that same bike in Minnesota or Wisconsin would cost $250 to $270 a year.

Jim: Okay. Do you give a multi-bike discount, if someone has a, I was talking to a group the other night and the guy asked a question about, I was talking about the same subject and he asked the question about his bike collection, you know, does he insure the collection? I said, as far as I know, you insure each bike individually. You wanted to comment on that?

Dave: We do insure each bike individually and we have clients who have collections of bikes. We have an Olympic, an ex-Olympic track racer who has I think at last count 24 track bikes that he raced on in the Olympics. And we insure 24 track bikes that are never gonna be ridden again. But they sit in his warehouse office and his biggest fear is someone doesn't understand what they are would break in and steal them.

Jim: What's the most expensive bike you currently insure?

Dave: For a, I hope she's not listening, a 50 plus--

Jim: Don't use any names.

Dave: A 50 plus Ironman competitor who has, she has, much to the consternation of her husband who isn't a cyclist, she has over $100,000 in bikes insured with us, and the most expensive one is just over $35,000.

Jim: Wow, okay.

Dave: And she is an attorney who is a busy woman, and so I get to deal with her husband when it comes time to change bikes or pay premiums.

Jim: Okay.

Dave: But she's a podium triathlete, and equipment means a lot. Good equipment can help you get to the podium.

Jim: I wanna go back again to the cost for a minute. I think my policy is probably a fairly common policy, I have maybe a $2,800 carbon bike that I insure. I think my premium is in the range of $150 a year. Does that sound like, obviously, I'm in Florida.

Dave: We do check our clients' driving records because your past insurance experience is a predictor of future insurance experience. So if, you know, if you've got 11 speeding tickets, your premium is not gonna be $150 bucks a year. If you have a safe driver on your license and you haven't had a policeman knocking on the window of your car recently, your premium will be lower.

Jim: So what do you really insure when someone insures their bike?

Dave: We don't look at it as insuring the bike, we look at it as insuring their lifestyle. If whatever your bike costs, if it goes away and you have to replace it, you're taking money from somewhere else and it may mean that you're not going on a ski vacation this winter because you just had to replace a $5,000 bike that got stolen off of the back of your car. So we look at it more protecting clients' lifestyles rather than just the bike.

Jim: And I can tell you, the calls we get in our office. We have people frequently calling here with expensive frames, $8,000-10,000 bike frames that they hit a fixed object, weird things happened, there's no one to bring a claim against and they're out, they're out an $8,000 bike. I think the premium on the Velo policy seems small in comparison to those types of situations, which are a lot more common than I think people actually realize.

Dave: Well, you've got your bike insured for around $3,000, and I don't know about your household, but it's a lot easier for our household to find $150 bucks or $170 bucks than it is to find another 3,000. So it's... Hi, Jim, this is Dave. No, we insure all types of bikes, from beach cruisers to e-bikes to mountain bikes, downhill mountain bikes and all road bikes.

Jim: So that was a question, hey, Mike. Mike had a question, is this for road bikes only, which Dave just answered, thank you.

Dave: Yeah, if Mike looks in the background, he'll see two mountain bikes, both insured.

Jim: So I know a lot of people travel, and there's issues about taking your bike on the TSA, and you told me the other day something that people don't realize when they ship their bike on vacation or somewhere, the time limit within which they have to notify the airline of damage to the bike. Why don't you tell us about that?

Dave: Yeah, I'm not a big fan of TSA. They seem to be staffed by three year olds who have no understanding of our bikes that we love packed inside of a bag or a box. And we pack it in the box lovingly, they pull it out because I'm not too sure what they think a cyclist is smuggling. But they pull it out and put it back in the way a three year old would and then jump on the box to close it. I had a situation where I opened up my box and TSA had opened it, pulled everything out, put it all back in, and when they put the wheels back in, they put the cassette facing down on top of the other wheel and then jumped on top of the box to close it, when I opened up the box, there were 18 spokes that were broken. There went my first day of riding.

Jim: Yeah, and so what's your time limit, so when that happens, you arrive at your destination, some people don't realize how quickly you have to notify the airline that you have a claim on, for package damage.

Dave: You have a four hour window to complain to the airline that someone, and the airline typically points at TSA and you know how trying to get TSA to fess up to something goes. So we have hints for our clients. I have gone away from the box to the travel bag now because the wheels go on either side of the bag and it's kind of TSA-proof. But if you're traveling with a plastic box like a Trico Iron Case, we recommend that you zip tie the wheels together so they come out as one piece, and just put a little note on the cassette that says this side out. And that way, hopefully with some instruction like that, TSA can manage to put the box back together kind of the way you lovingly put it together.

Jim: So let's switch gears here a minute. Let's talk about bike locks. You told me the other day something I didn't understand, so if my bike is in my garage, I still need to secure it to prevent, in order to have a claim if someone just walks in and steals it while the garage door is open. Talk about that and talk about cable locks for a minute.

Dave: More bikes are stolen out of open garage doors than anywhere else. And we all do it, you open up the garage, take the lawnmower out, go into the back yard and the garage door is open and there's $30,000, the bike's sitting in there.

Jim: Right.

Dave: All it takes is, it doesn't matter who it is. Someone sees it, runs in and grabs the bike and they're gone, it's gone in 30, it's gone in 3 seconds.

Jim: Right.

Dave: So as much as I dislike cables because cables are very easy to cut, as much as I dislike cables, I cable my bikes in the garage so it's just not a snatch and grab. I also put in an interrupter switch, so before I go to bed at night, I flip off the interrupter switch and that means that there's no electricity going through the garage door.

Jim: That's a good idea.

Dave: So it can't be opened up by anyone. There are programs that can grab the code for your garage door out of the air when you push the garage door opener.

Jim: Tell me about, I know you mentioned, go ahead.

Dave: I was gonna say, the other thing I did in my garage, you know that little piece of chain that hangs down and you pull on it if the motor's not working or the electricity's out and you can open the door manually?

Jim: Right, on the motor.

Dave: Yup. You can push, from the outside of the door, you can push down on the seal at the top of the door, reach in there with a a piece of wire and pull that lever. And now a thief can open the door manually. So I have zip tied that lever up because I use that lever about once every three years when the electricity's gone out.

Jim: Right.

Dave: And I see no sense in leaving it there permanently, so I zip tie it up so you can't reach in and grab it.

Jim: Okay.

Dave: My garage at night is pretty impregnable.

Jim: Sounds like it. So you've mentioned your dislike for cable locks. Talk about, I think there's a false sense of security with people, that they buy cable locks and you see ads that they're bullet proof. What's your experience with cable locks?

Dave: There isn't a cable lock out there that can't be easily cut in mere seconds. End of story.

Jim: So where do you look for a good bike lock? I know you have a resource for that.

Dave: There's an independent website that reviews bike locks, it's called thebestbikelock.com.

Jim: Okay.

Dave: It's not owned by a lock company. It's actually owned by an expat that lives in Spain. And he decided to research bike locks, he probably had a bicycle stolen at some point. And just put up a wonderful website. And he keeps it fresh. So when new lock styles come out, he updates. It's well worth looking at, there's a lot of good educational material in there.

Jim: Give me an idea of kind of the demographics of people who are insuring, well, first off, I wanted to make sure everyone understands. All you deal with is bicycles, Velosurance only insures bicycles, is that correct?

Dave: That's it.

Jim: So when you call and make a claim, you're dealing with somebody who understands what cycling is and what a bicycle is and the value and the loss and what it means to lose a bike, all those things, correct?

Dave: Yes, yes. We talk to our clients, first question is, are you okay? That's always the first question that we ask when someone calls and says I had an accident. We wanna know that the client's okay and then we get on to the bike. But we've also educated the claims team who came into this, claims team are a part of Markel American Insurance Company, and they came into this knowing what a bike was but, you know, they really didn't have the depth of knowledge that, you know, six years later now, they do. And they understand exactly what we do, why we do it and why we don't wanna be off our bike. I had a client call me the other day and her claim was settled in two days. I mean, not only settled but the claims team member called her and said, we've just mailed your check to you today. So she put the claim in on Monday after a Sunday wreck. On Wednesday, the claims team mailed her a check. Depending on how, it really depends on how complex the claim is, of course, and how long the bike shop takes to get your repair estimate, but easy claims, they're settled within hours and days.

Jim: A couple things. Are you covered from international travel?

Dave: You can add worldwide coverage to the policy. We have no restrictions on what countries you can go to and it runs about 10% of the annual premium to add worldwide coverage to your policy. If you have optional coverages on your policy, they do not leave the US.

Jim: All right.

Dave: The only thing that leaves the US with you is the physical damage or loss to the bike.

Jim: We have a fair number of people who call our office who, in Florida, we have an issue with dogs. Dogs are typically not covered by a lot of home owners' policies or they're restricted on some policies, so it's not uncommon to have someone have a bike that gets destroyed in a crash with a dog and have no one to bring a claim against if someone has substantial medical bills along with it. So what kind of insurance does Velo offer that will help offset, I know that you can't offer an uninsured motorist package for a non-motorized crash, I know that you can't get an uninsured motorist package against a home owners' claim. But what kind of insurance you offer that will offset some of the expenses people run into when they can't bring a claim against the person who really caused the problem?

Dave: Medical payments and because, when the bike is damaged in that type of accident, it's covered.

Jim: Yeah. Well, that's a huge one.

Dave: Medical payments will fill the gap. When the hospital, doctors and whoever else was involved with your care, when everything gets settled six months down the road with your health insurance company, someone is going to send you a bill that is your responsibility only, and if you have medical payments on your policy, that's the bill that you hand to us and we send you a check and you pay that bill.

Jim: So we've talked a lot about what's covered. How do people get a quote from Velosurance, what's the process that you go through, what do they do?

Dave: It's very straightforward, velosurance.com. You can get a very good guess on the front page, but I have to tell you, it is just, it's a very simple algorithm, it's based on the value of the bike in the state that you're in, it's not based on the region within the state. And within another minute, you can complete the quote and get, once you've completed the quote, if it's acceptable, you can purchase a policy, the policy is then issued within the next 15 minutes.

Jim: One thing that I wanted to go into before we close. I had a case recently where someone was insured with Velosurance and they had the damage to the bike and you recommended that the bike actually be repaired, the frame damage, talk about your policy on frame damage and how you determine whether it can be repaired.

Dave: We rely on carbon fiber repair experts. People who have been repairing bikes for 20, 25, 30 years. And of the thousands of carbon frames that we have seen repaired, we haven't had one failure. So we have 100% success rate in thousands of repaired frames.

Jim: Yeah, I know you--

Dave: Our client--

Jim: Go ahead.

Dave: I was just gonna say, our client doesn't have to repair the frame, that's a personal decision. They can go out and buy a new frame and put the repair cost towards the cost of the new frame. That's their choice, we don't dictate that. But I can tell you, if you've sat on an airplane recently and looked out the window, you're looking at carbon fiber on that plane, and I very possibly, that carbon fiber has had a carbon fiber repair done on it. So carbon fiber used to be an exotic material. Today, it's just part of the world. And the new Boeing, I think it's the new Boeing plane, is something like 78% carbon fiber. It's strong. The only thing that we don't like about carbon fiber is there is no possibility to recycle it. It goes into a landfill somewhere, which we don't like.

Jim: Well, I had a, we just had a comment, I know that there are some strong feelings by cyclists about repairing carbon. I think there are people who, and I've been in this camp, that don't want a carbon bike repaired, I think that there's been, people have the opposition, rightly or wrongly that, if you've had a crash on a carbon bike, whether you see a crack or not, the bike should be replaced. So I know that not everyone is gonna be enthusiastic about the choice of having their carbon bike repaired. I don't know if you wanna offer comment about that.

Dave: Once again, carbon fiber is ultimately repairable, but it is up to the client as to what their personal feelings are about carbon fiber repair. A lot of people come to us because their mechanic, who is not a carbon fiber expert, gave his opinion that the frame needs to be replaced. He doesn't understand carbon fiber, he just understands that the bike is broken. If you want, and the carbon fiber repair experts who we deal with are more than happy to get on the phone and talk to you about their repairs. And if we've repaired, if we've had thousands of carbon frames repaired, these guys have had multiple thousands of frames that they've repaired. And there is absolutely, there should be absolutely no concern on a carbon repair. And we have, there are instances where the frame can't be repaired.

Jim: And I was gonna ask that too 'cause they don't repair, every frame that gets broken doesn't repair.

Dave: No, no, no, no. Cervelo has an integrated dropout that isn't a replaceable part, that's part of the frame. So if you wreck your Cervelo and rip that dropout off of the chain seat stay, that frame is, that frame is headed to the landfill.

Jim: So Mike has a question about what the process is for that, is the frame shipped somewhere for evaluation? How and where does that take place?

Dave: First thing we do is send detailed pictures of the damage to a repair facility. And they give us, at that point, they give us their evaluation as to where the damage is. You know, let's say it's in the head tube. There's a lot of stresses in the head tube, almost every frame that gets damaged, and it's a head tube damage, gets declined by the repair facility simply because of the stresses that are associated at that point of the bike. But you know, look, let's say the middle of the top tube has got a crack in it. The down tube has got a crack in it. All of that is absolutely repairable. You cannot see where it has been rebuilt. Even on a clear coat carbon frame where you can see the carbon weave through the clear coat, you can't see where it was rebuilt.

Jim: Yeah, well, that's, I don't personally have experience with carbon frames being repaired, I think you've been very helpful making me understand that. It's good to now that people have a choice as to what they do, that it's not being dictated by the policy. I appreciate you really bringing a lot of clarity to that. I wanna acknowledge Jenny, gave us a little thumbs up there, thank you, Jenny. Mike, you know, I think that this is really, excuse me, Dave, this has been a really good conversation, I appreciate it. We're gonna show on the screen the place to go to get your Velosurance quote. I can tell you, as a bicycle owner, as a person who's insured with Velosurance, it's a great peace of mind to know that your frame is covered wherever you are. We had somebody who had their frame destroyed at a rest stop on an organized ride. They propped the bike and another bike fell on it enough to destroy the frame. So things happen that we don't expect. I asked Dave the other day when we were having a conversation preparing for this, who's your biggest competitor? And what was your response, Dave?

Dave: Optimism. No one, we're all optimists. And none of us expect to be involved in an accident, whether it's on your bike, in your car or walking down the street. Accidents happen, and that's the definition of an accident is it's an event that you don't know is gonna happen. So we are optimists, but it's a lot easier to find $150 bucks than it is to find $3,000. So if you don't want, like you said before, if you don't wanna pay for your bike twice, insure it.

Jim: Hey, Dave, great words of wisdom. I wanna thank you for joining us here today, I wanna thank everyone who joined in. We're gonna start a weekly schedule in September. Our next livestream will be on the 20th of September with Phil from Pedelec, which is an e-bike shop in Port Charlotte. And by the way, you insure e-bikes as well, don't you?

Dave: Yes, up to $750 watts of power, which is actually one horsepower.

Jim: Right, which is the maximum you're supposed to have in Florida at this point, I mean, it's the maximum legal e-bike. Beyond that power, it's not gonna be considered a bicycle at all. So another shout out from Tracy about how great it was to get the roadside assistance that she had on her claim when she most needed it, when she was so far away from anybody.

Dave: Thank you, Tracy.

Jim: Yeah, thank you, Tracy. So again, thank you, this is the Florida bike guy and this is Dave Williams, we're signing off. Be safe out there, we'll look forward to the next time, goodbye.

Dave: Okay guys, thank you, bye bye.

Jim Dodson
A Florida injury lawyer, family man and avid cyclist who clients have trusted for over 25 years.