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Insurance is a pivotal component of club membership in many sports. For cyclists there are a range of things that can go wrong. Is your cover appropriate for your kind of riding?
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Don’t get taken for a ride…
– By Daniel Corbett*
You’re having a great ride and feeling strong, when all of a sudden you hit a pothole and crash. You break a collarbone and a rib or two. This time it’s not too bad. You’ve got a few days in hospital ahead, a few weeks off work, and a lot of paperwork to go through to get your bike replaced. You feel lucky because one of the other riders in your club a little while ago had a dog run out in front of them and they weren’t as lucky as you. They’ve had two months off work and are only now getting ready to go back. But, there’s always the chance it could have been far worse – everyone knows about that one guy who will never walk again, let alone ride.
Your medical insurance will pay for most of the medical bills, and your bike is insured, so at least you can rest easy. So what about your income?
You took out income protection a couple of years ago because, in the end, you know your income is more important than your bike. Who really cares about the bike if you can’t pay for the mortgage or rent? The problem is: the insurer doesn’t want to pay the claim because you were training for an event later in the year, or because you did one a few months ago… or something like that. It doesn’t make any sense. That’s why you took out the insurance in the first place.
Being the principal financial adviser for King of the Mountain Financial Advice, and also a passionate cyclist, I understand the problems facing cyclists and insurance claims all too well.
Nine out of the 10 major ‘income protection’ and ‘total and permanent disability’ insurers I have researched will either deny any claim resulting from a bike crash or place considerable restrictions on the policy – irrespective of when, where or how the crash happens if the cyclist has participated in an organised event or is training for one.
Cyclists don’t need to be racing at the time – they may be training or just riding to work. It’s terrible that we’re punished and not rewarded, but not all insurers believe that cyclists are a risk. The problem is that cycling in an event where there is a time recorded, is done over a designated distance (or you are competing for places), is often considered a race to most insurers.
The rider who does a few masters races a year or chugs along in D-grade, the one who regularly participates in local races – or even the one who does some of the bigger community rides – may be at risk of denied claims.
If you need a licence for an event, chances are your insurer will consider it a race.
The insurance policy which Cycling Australia has as part of its membership benefits will cover your income up to a maximum of $500 per week for a period of no more than one year. You actually are not paid anything for the first 21 days. Cycling Australia may potentially pay a lump sum up to $100,000 if the cyclist is totally and permanently disabled, but their insurers have a strict policy of reducing the lump sum where the disability is not total, but still permanent. This amount is inadequate for most, yet it is advertised as “24/7 Personal Accident Insurance including income protection”.
Unfortunately most cyclists believe they are adequately covered by CA’s policy, or that they’re covered by their ‘income protection’ and ‘total and permanent disability cover’, but the chances are they will not be.
We invest in insurance to protect our income, and our long-term bills etc in case we have a really bad crash, because we know there are dangers in riding. There are, however, thousands of cyclists who will not have the cover they think they have. There are solutions though.
Some insurance brokers are working closely with insurers to alter their policies so that us mere mortals are covered for racing and training and riding for fun. I have had some great success with an insurer to get clients completely covered for all riding. It’s a matter of knowing all of the risks associated with cycling – and they are real – and having an experienced professional to present the case to the right insurer.
By demonstrating to an insurer exactly what type of riding we do and how often we participate in events that they may consider a race – be it regularly, once in a while, or seldom – the cyclist can often get the protection they need.
It’s important to be insured, but it’s equally important to know the insurer will pay the claim when you need it. At this stage there are only a handful that do. As an experienced professional and a cyclist myself, I care about making sure that cyclists can ride knowing they are not risking their future income and their family’s financial security each time they do.
– Daniel Corbett
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*Daniel Corbett is a member of Eastern Suburbs Cycling Club in Sydney. He is also an authorised representative of Full Financial Advice Pty Ltd (ABN 92 606 914 112), trading as King of the Mountain Financial Advice, is a corporate authorised representative of PATRON Financial Services Pty Ltd (ABN 32 307 788 137) AFSL No 307379. The above information is general advice and you should always check that it is right for you before you rely on this to make a decision regarding your circumstances.