Welcome to Netrider ... Connecting Riders!

Interested in talking motorbikes with a terrific community of riders?
Signup (it's quick and free) to join the discussions and access the full suite of tools and information that Netrider has to offer.

Insurance Premium higher when bike is financed?

Discussion in 'Businesses and Service Providers' started by gracebeey, Dec 11, 2007.

  1. Hi all,

    I'm just wondering, since this may be applicable to me, but why is it that insurance premiums (for comprehensive) are higher when your vehicle is on finance? Why does it matter to the insurers as to who has interest on the bike? In my mind, their job is to insure my bike. If the bike gets into an accident and needs to be fixed, they just need to pay up and get it fixed. At no point does the fact that it is finance make a difference.

    Can someone tell me?


  2. You are wrong...

    Insurers know that if you finance it, you don't really own it.

    This affects them because if you didn't pay for something with your own money, if and when you don't want it anymore, and can't sell it for what you owe to the financier, it is not an uncommon thing for people to dispose of cars/bikes in unconventional ways, like throwing them off a cliff, burning them, stripping them, etc etc
  3. I didn't even think of that. I suppose you do have a very valid point!


  4. Tweet is 100% spot on Graceberry.

    Insurers basically charge a loading because they have statistical data
    showing that vehicles under finance have a higher claim rate than
    vehicles not under finance.

    Commonsense tells me that you are more likely to look after a vehicle
    that you own 100% compared to a vehicle you do not financially own.

    Furthermore, I've found that the finance loading you pay is highest for
    finance companies (up to approx 25% loading). Obtaining finance thru
    a bank or credit union will bring that loading to the 5-10% range.

    Interestingly, I've recently been made aware by staff of one Victorian
    insurer, that they do not charge this finance loading for bikes :LOL:

    All of the above you may obtain confimation of by simply going to an
    insurers website & doing quotes for the same bike but changing finance
    details for the applicable finance question you are asked [​IMG]

    If you do obtain a Comp Policy with finance, remember to contact your
    insurer when you get the letter of loan finalisation your financier will send
    you as it will result in a pro-rata refund of money to you on your paid
    Policy [​IMG]
  5. Get a personal loan from a bank. Some are quite competitive with interest rates, even cheaper then finance co's. Then its an unsecured loan, so you tell the insurance no finance .. :grin:
  6. Thank you very much everyone! And MG, that was a lot of really good information, thank you. And great tip about letting them know at the end of the finance to get a refund!

  7. [​IMG] No probs at all darls

    [​IMG] Paul