Writer's Ramblings

When Does a Pile of Parts Become a Motorcycle?

Written by  December 1, 2013

On April 10, 2010 a car crossed the centerline and hit him nearly head on. It destroyed the 1953 Panhead chopper he was riding and broke his legs into so many pieces he now walks with a cane. The lost wages and the medical bills began to pile up and the driver who hit him only had $25,000.00 in liability coverage, not even a good start on replacing what he had lost.

He had another policy on a 1961 Panhead that he owned and he thought maybe that would provide some coverage that would help him and his family. Indeed that policy carried Underinsured Motorist coverage in the amount of $250,000.00. Underinsured motorist coverage is optional in some states, mandatory (like liability is) in others. Briefly speaking Underinsured Motorist coverage steps in to pay your medical bills, lost wages and pain and suffering if the at fault driver has insufficient policy limits to cover your losses. He presented the claim to the insurer and they denied it, not offering him one red cent. Then he came to my office and after some litigation the insurer paid the entire $250,000.00.

Why did the insurer deny the claim? The ’53 was purchased as a basket case, a pile of parts consisting of about 85% of the original motorcycle, in early January 2010. Within days, the title was obtained on the ’53. The insurance policy on the ’61 states that if you buy another motorcycle and advise the insurer of the purchase, then the purchased bike will have the same coverage as the bike you already own as long as you tell them within 30 days of the purchase, and both parties agree. This essentially gives the rider 30 days of free coverage (grace period) and the insurer doesn’t even have to know about the second bike.

In this case the insurer didn’t know that the rider had a second bike until after the crash. The insurer took the position that it was titled in January and they first heard of the bike in April, so it was greater than 30 days and thus no coverage. Pretty compelling position, unless you know bikes and read the policy. So why did the insurer pay?

The insurance policy uses the word “cycle” instead of “motorcycle.” The policy essentially says that if you acquire a “cycle” and let us know within 30 days. In her deposition I asked the claim adjuster “When does a pile of parts become a 'cycle’ within the meaning of the insurance policy”? The adjuster stated that a pile of parts becomes a “cycle” when it is capable of being ridden. I had her further clarify that to mean adequate braking, steering and acceleration. The ’53 was not capable of being ridden and thus a “cycle” under the policy until April 1, 2010, just 10 days before the accident. The date it was titled was irrelevant, even though this is the date the insurer used to wrongfully deny coverage. As such this accident happened within the grace period and the insurer paid its policy limits.

In the end we forced the insurer to live up to it’s obligation. The ’53 is back on the road and my client is living a little easier. Pictures of the two bikes are attached.