Good morning,
I have a slightly different perspective on bike insurance.
Even high volume insurance policies needs to cost around about £20 to cover administration, and design of the scheme, low sales volumes policies could easily see this rise a bit. Then you need to add a profit element for those selling direct or commission for a broker.
When included as a specified item (SI) on household insurance, nearly all of this cost can be absorbed into the cost of the core household policy, so your premium should rise only by the premium associated with the value of the SI.
Like motor, household insurance is subject to excesses and no claims discounts, so someone with a good claims history will be getting an NCD on the premium for the SI.
Although pretty pointless, you can get £500 of cycle cover for around about £30, which seem to me to be fair considering the above, but terrible value as £500 is around the limit for an unspecified item in a contents policy.
You then have to ask why someone wants standalone bike insurance, the two obvious answers are
That they want to separate their bike insurance from their household contents insurance so that bike claims don't affect the contents premium. Given that many/most people have a combined buildings and contents policy, it becomes almost impossible to know the effect on the premium for the buildings cover portion of that policy if you make a contents claim. For example is there a separate NCD for building and contents or just one for both.
Doing this is fine, but it does imply that the policy holder thinks that a claim is likely.
Or, they have no contents cover, this would suggest that they have nothing much else worth insuring so are likely to be living in shared accommodation, probably young and carefree. A gross generalisation of course, but you just have to accept that with a commodity product.
A third possible answer is that the bike value is so high that it is outside the limits for a bike as a SI, 10 years that was unlikely, but now with £5k-£10k bikes being quite common it is quite possible. I don't think that that many people would really object to insurers saying that covering a £7.5k bicycle away from home is not really in the spirit of home contents insurance.
There is also the very real possibility that the SI premium is slightly low, as £2K plus bikes are relatively new as a normal item, the risk may not yet be being assessed correctly . Were a lot of these bikes actually being bought, by older, well of people, never used and locked securely in garages? Quite possibly a fair assessment a few years ago, whereas now £2k is now almost entry level if you go to a specialist bike shop.
Of course it would be wrong to deny the fact that cycle insurance is not a very competitive market place.
I went to one online site and they seemed to be calculating premium as something like
£25 + (Sum insured * (0.05 + ((Sum insured / 500) / 100) ) * postcode area factor).
or
£25 + (500 * (0.05 + (0.01)) * postcode area factor).
£25 + (1000 * (0.05 + (0.02)) * postcode area factor).
£25 + (1500 * (0.05 + (0.03)) * postcode area factor).
So as the sum insured rises not only does the premium increase but also the % of the sum insured increases, in the region of 5%-10% of the sum insured.
Bye
Ian