Insurance Costs? (egads!) Another Can Of Worms!

[Marshall]

The results of the testing will probably affect loss estimates and therefore rates. But a new policy category for Autocycles or a sub definition within existing policies will probably occur. I suspect different companies will approach it differently, at least initially.

 

[bunchathrees]

I just joined the forum here, having placed my deposit yesterday. I have worked for insurance companies (as in carriers, not agents) for over 30 years. I have literally held just about every job title over that time frame from mail clerk to President & CEO. Much of my time has been spent in the areas of auto product development and pricing.

Out of the gate, I can't envision how the Elio could be insured as an "auto" given the current definition of auto contained in all state insurance statutes (4 wheels, et al), which in turn dictates the definitions in approved policy language. Therefore, it will most likely be covered under a motorcycle policy. As has been stated in previous posts, there are MANY variables that effect the final cost of insurance (driver, territory, coverages, multi-policy discounts, etc.). The variable that is the "vehicle" will have a more significant impact in the determination of the physical damage coverage (comp & collision) than it will the liability (bodily injury & property damage). With respect to phys dam, it is obvious that repairing an Elio could be more expensive than a typical motorcycle; you've got body panels, windows & window motors, HVAC system, ABS/DSC systems, etc. If someone runs into the Elio driver door at 10 mph, how much damage would be done? It would probably be comparable to repairing the composite door on a Corvette. But at least the Elio driver should still be alive, and have all their limbs, which would probably not be the case if a motorcycle sustained a 10 mph side impact. Switching over to liability, the vehicle has some effect on premium. For a typical motorcycle policy, the main reason liability insurance is significantly less than auto insurance is because motorcycles tend to do significantly less damage to objects that they hit, compared to cars (obviously!). But with the Elio, there is the potential for it to do more damage than a typical motorcycle. It weighs a little more at 1200-1300 lbs, and with the dual front wheels, does present a larger frontal area than a bike, plus the engine is up front. All of those things are good for the Elio driver, but that will contribute to more damage to objects that are hit, compared with a motorcycle. Will it compare with a typical car? Absolutely not. Much less damage caused by an Elio than a Camry, or certainly a Suburban. The one coverage that should cost significantly less on the Elio than a motorcycle, is medical payments (first party). The occupants of the Elio may not be as safe as the Suburban occupants in this regard, but they are WAY safer than a motorcycle rider.

Having said all that, there still may be some insurers who are not comfortable insuring Elios at first. This is not an unreasonable reaction. I think most businesses might be uncomfortable selling a product where they didn't know what their cost was. Insurers are no different. But as AriLea put it above, in a vibrant, competitive marketplace, it will sort itself out pretty quickly. And when it does, I suspect that for any given driver, the cost to insure an Elio will be greater than a motorcycle, but less than an economy car. I'm not worried.

Yes, that is how I feel as well, i.e., more like a car than a motorcycle. However, since all current auto policies that I am aware of define an auto as a vehicle with four wheels, those same insurers (and myself) would not be able to issue an auto policy for the Elio. Again, I think this will all sort itself out in time, especially if the definition of "autocycle" becomes more universally adopted as well (IL adopted it in Jan 2015). Companies may be able to include autocycles in the definition of an auto, or it may stay as as a vehicle covered under a motorcycle policy. But right now, the Elio does not meet the definition of an auto as contained in personal auto policies.

From this perspective then, it would seem as if the Can-Am Spyder might be the worst of all worlds. Motorcycle-like risk to the rider, higher-than-motorcycle risk to the rest of the universe. There clearly are underwriters for policies for that class of vehicle. It seems as if there should be ample vehicle class and model data for insurance companies to craft reasonable policies and pricing - once the crash test data has been published. Wouldn't you agree?

 

[Ty]

I just joined the forum here, having placed my deposit yesterday. I have worked for insurance companies (as in carriers, not agents) for over 30 years. I have literally held just about every job title over that time frame from mail clerk to President & CEO. Much of my time has been spent in the areas of auto product development and pricing.

Out of the gate, I can't envision how the Elio could be insured as an "auto" given the current definition of auto contained in all state insurance statutes (4 wheels, et al), which in turn dictates the definitions in approved policy language. Therefore, it will most likely be covered under a motorcycle policy. As has been stated in previous posts, there are MANY variables that effect the final cost of insurance (driver, territory, coverages, multi-policy discounts, etc.). The variable that is the "vehicle" will have a more significant impact in the determination of the physical damage coverage (comp & collision) than it will the liability (bodily injury & property damage). With respect to phys dam, it is obvious that repairing an Elio could be more expensive than a typical motorcycle; you've got body panels, windows & window motors, HVAC system, ABS/DSC systems, etc. If someone runs into the Elio driver door at 10 mph, how much damage would be done? It would probably be comparable to repairing the composite door on a Corvette. But at least the Elio driver should still be alive, and have all their limbs, which would probably not be the case if a motorcycle sustained a 10 mph side impact. Switching over to liability, the vehicle has some effect on premium. For a typical motorcycle policy, the main reason liability insurance is significantly less than auto insurance is because motorcycles tend to do significantly less damage to objects that they hit, compared to cars (obviously!). But with the Elio, there is the potential for it to do more damage than a typical motorcycle. It weighs a little more at 1200-1300 lbs, and with the dual front wheels, does present a larger frontal area than a bike, plus the engine is up front. All of those things are good for the Elio driver, but that will contribute to more damage to objects that are hit, compared with a motorcycle. Will it compare with a typical car? Absolutely not. Much less damage caused by an Elio than a Camry, or certainly a Suburban. The one coverage that should cost significantly less on the Elio than a motorcycle, is medical payments (first party). The occupants of the Elio may not be as safe as the Suburban occupants in this regard, but they are WAY safer than a motorcycle rider.

Having said all that, there still may be some insurers who are not comfortable insuring Elios at first. This is not an unreasonable reaction. I think most businesses might be uncomfortable selling a product where they didn't know what their cost was. Insurers are no different. But as AriLea put it above, in a vibrant, competitive marketplace, it will sort itself out pretty quickly. And when it does, I suspect that for any given driver, the cost to insure an Elio will be greater than a motorcycle, but less than an economy car. I'm not worried.

Someone on the forum (I searched and can't find it) recently posted that Elio met with Insurance companies and they said something about how the Elio would be "Car minus" versus "Motorcycle plus" as far as insurance goes. I know the federal government either just has or is about to enact something calling the Elio an "Autocar" and eliminating the verbiage that automatically makes everything with fewer than 4 tires a motorcycle. I'm just stating this so you don't get hung up on the definition of auto too much. I agree with you that the Elio should be less to insure when it comes to damage it can cause, damage it can sustain, and replacement cost. We'll have to see how occupant safety affects premiums as well. I appreciate your inside take on the Elio insurance.

My wife bumped an F350 with her Explorer a couple years ago. It did $13,000 damage to her car while not even making a scratch to the F350. The Elio will cause even less damage (as if that were possible) while sustaining far less than $13,000 damage.

 

[AriLea]

Someone on the forum (I searched and can't find it) recently posted that Elio met with Insurance companies and they said something about how the Elio would be "Car minus" versus "Motorcycle plus" as far as insurance goes. .....

a reference to the Elio Motors Shareholder meeting - posted on EO by Truett Collins

http://www.elioowners.com/threads/the-e-series-build.6799/page-54#post-148450

 

[Sethodine]

My wife bumped an F350 with her Explorer a couple years ago. It did $13,000 damage to her car while not even making a scratch to the F350. The Elio will cause even less damage (as if that were possible) while sustaining far less than $13,000 damage.

*Elio gets in a minor fender bender*
Insurance company: "Welp, looks like your Elio is totaled, here's a new one."

 

[Car Goob]

Excellent insight from a pro, thank you. One more datum that the Elio can be viewed as "more than a motorcycle, less than a car".

Would it be any great challenge for the insurance industry to simply create a new insurance category for the autocycle rather than try to morph it into an existing policy type? Seems like EM should be interfacing with the major insurance providers to resolve this proactively now that the actual production vehicle is taking shape.

Creating a new policy type is more daunting than one might think. Insurance is one of the most highly regulated industries. All rates and forms must be filed with the applicable state Department Of Insurance (DOI). At present, a carrier must identify the policy type as Homeowners, Personal Auto, Motorcycle, RV, Boat, etc. Creating a new policy type really starts at the state regulatory level. Assuming you could get this done, then carriers need to modify their systems to accommodate an additional product/policy type. Given the potential size of the autocycle market, it might be hard to show any positive ROI on such an endeavor.

But I think we would need to take a step back first and make sure that this wouldn't be creating a solution for a problem that doesn't exist. I suspect most consumers (including Elio owners) don't really care what policy type is used to afford coverage for their vehicle. As long as the coverage provided meets their needs at a reasonable cost, it probably doesn't matter that it is a "motorcycle" policy versus an "auto" policy. If anything, carriers currently offering motorcycle policies could offer an "autocycle endorsement" to fill in any potential gaps that may exist in their standard motorcycle policy form. Just my "two cents".

 

[WA0SMG]

I had insurance concerns, but after doing a little research I found the Elio is titled and licensed as a motorcycle as required by federal definition (less then 4 wheels). Kansas changed definitions last year on several types of vehicles, but only for helmet, safety equipment, operator licensing requirements, etc. Still, with 3 wheels it will be titled as a motorcycle and insurance defined as a 3 wheel motorcycle.