Do You Have the Right Motorcycle Insurance for a Customized Bike?

If you’ve put serious money into upgrading your motorcycle — custom paint, performance mods, engine upgrades — it’s natural to wonder if your insurance will actually cover what you’ve invested.

We recently reviewed a situation where a rider spent over $10,000 in upgrades but found that their current motorcycle policy only covered the actual cash value (ACV) of the stock bike, not the customized parts.

When they called their agent, they were told to “keep all receipts,” but no additional coverage was available.

It raised an important question:

Is ACV coverage enough for a customized bike — or do you need something more?

If you ride in California (or anywhere, really), here’s what you need to know before you end up underinsured.

What Does Actual Cash Value (ACV) Insurance Really Mean?

ACV means the insurer will pay what the bike was worth at the time of the loss — minus depreciation.

In plain terms:

If your 2019 motorcycle is now worth $7,500 according to market value, that's all you’ll be paid after a total loss — even if you spent $10,000 upgrading it.

Upgrades, modifications, and custom parts are often NOT automatically included under basic ACV coverage.

Most standard motorcycle policies only cover the original stock parts, unless you add custom parts and equipment (CPE) coverage or a similar endorsement.

Why ACV Coverage Can Be a Bad Idea for Customized Motorcycles

You spent real money improving your bike.
ACV doesn’t care about your upgrades unless you have proper documentation and the right coverage endorsements.
After a total loss, you’re stuck getting paid for a "stock" bike that’s worth far less than what you invested.

Bottom line:

ACV policies protect stock motorcycles, not your custom work.

If you've heavily customized your bike, you need more protection than a basic ACV policy offers.

What Coverage Should You Have for a Customized Motorcycle?

There are three main options riders should understand:

Custom Parts and Equipment (CPE) Coverage

CPE coverage insures your modifications, aftermarket parts, and accessories separately from the bike itself.

Most insurers offer CPE coverage as an add-on to ACV motorcycle policies.
Coverage amounts usually range from $1,000 to $30,000 depending on your insurer and needs.
You must keep receipts and document everything — photos, invoices, etc.

Example:

You spend $10,000 customizing your bike.

You purchase $10,000 in CPE coverage.

If your bike is totaled, you’re reimbursed for the bike's ACV plus up to $10,000 for the upgrades.

Stated Amount Policies

With a stated amount policy:

You and the insurance company agree on a "maximum" value you believe the bike is worth.
You pay premiums based on that stated value.

But:

If there’s a total loss, the insurer can still pay the stated amount OR the actual cash value, whichever is lower.

It’s not guaranteed.

Agreed Value Policies

With an agreed value policy:

You and the insurer agree on a specific dollar amount upfront (for example, $18,000 total value).
If your bike is totaled, you’re paid that agreed amount — no depreciation, no negotiations.

Agreed value is the safest and cleanest option for highly customized or vintage motorcycles.

However, not all insurers offer agreed value motorcycle policies, and premiums are usually higher than standard ACV coverage.

Real Tips for Riders With Custom Motorcycles

Document Every Upgrade

Save all receipts
Take clear, dated photos
Keep a running list of modifications

Talk to an Experienced Motorcycle Insurance Agent

Not every agent understands motorcycle customization.

Work with someone who knows how CPE, stated amount, and agreed value policies actually work.

Understand the Limits of Your Policy

CPE coverage often caps at $1K–$3K automatically unless you request more.
Don’t assume your upgrades are covered — ask and verify.

Ask About Appraisals

If your bike is heavily customized, an appraisal might help you establish a more realistic value for agreed or stated amount coverage.

So, Was the Original Situation Handled Correctly?

No — if the agent couldn't offer CPE or accessory coverage, that policy isn’t right for a customized motorcycle.

Relying only on ACV without endorsements leaves the rider vulnerable to major financial loss.

A proper setup would involve:

CPE coverage equal to the cost of upgrades
An agreed value policy that factors in the full value of the bike plus modifications.

Why This Matters in California

Motorcycles are stolen more frequently here than in most other states.

Custom bikes? Even bigger targets.

According to the National Insurance Crime Bureau (NICB), California leads the nation in motorcycle thefts year after year.

And motorcycles with unique paint, performance mods, or custom parts are even harder to recover — or replace.

You don’t want a situation where you lose a $20,000 bike and get a $7,500 check.

Protect your investment the right way.

If you’ve invested in your motorcycle, protect it like you would any other major asset.

Actual Cash Value policies are fine for stock bikes.
Customized bikes need CPE coverage or Agreed Value policies.
Not all insurance agents will tell you that upfront.

If you’re not sure what coverage you have — or what you actually need — we can help.

At Farmers – Young Douglas, we don’t just sell policies. We help California riders protect their investments, their passion, and their future on the road.

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