Your Money: Cyclists in for a bumpy ride

Whether or not the roads are getting safer, Britain's 6 million regular cyclists still have another serious danger to contend with - theft. It is estimated that one-third of the 2 million cycles sold each year in Britain are direct replacements for stolen ones. The culprits range from one-off opportunists to highly organised gangs making shipments to export markets.

Insurance is not always a cost-effective solution, however. In extreme cases annual premiums can amount to a quarter of a bike's value. The cheapest options are normally extensions to household contents policies. But even premium levels of 5 to 10 per cent of bike value, pounds 10 to pounds 20 a year for a pounds 200 bike, may not represent a bargain, given the exclusions and restrictions.

Virtually all policies, household and specialist, insist bikes are kept safely at home and are locked to an immovable object when left in a public place. Policyholders are also required to pay the first proportion of any claim themselves. This "excess", is commonly in the region of pounds 50, making insurance of limited value when cycles are accidentally damaged, for example. The replacement cost of a wheel that buckles in a drain, for example, is likely to be pounds 40 to pounds 50.

Not all policies will cover you "new for old" - with some it may it may be a pre-agreed replacement value, or even the insurer's view of current market value. Many policies exclude accessories as well as theft or damage if you are using your bike working as a courier, and some exclude commuting.

A standard house contents premium is likely to cover your bike automatically against fire or theft while in or within the boundaries of your home, but not when in use. Third-party liability cover (against damage you do to cars, for example) outside the home may be available at no extra charge. But to get full cover for loss or damage while away from home, you need to look for a policy option - often entitled "all risks". The extra charged for this varies enormously. Independent Insurance, for example, charges pounds l to pounds 5 per pounds 100 of bike value (depending on area), while Commercial Union has a flat rate of pounds 5 per pounds 100 and Direct Line a flat rate of pounds 9 per pounds 100.

The conditions of such options also vary. Some insurers impose limits on bike values (which can be as low as pounds 200).

Those not satisfied with the cover provided by a contents policy may wish to consider specialist policies. But they can be more expensive and restrictive. Allied Underwriting Agencies (AUA), for example, charges between pounds 61.50 and pounds 92.25 for a pounds 500 bike. It will not insure students or bikes in the central areas of Oxford, Cambridge, Bristol, Manchester or London.

Third-party or public liability insurance can, by comparison, provide valuable peace of mind at little cost. It can be obtained separately from the theft/damage insurance. It insures cyclists, typically for up to pounds 1m, against causing damage to others or their property. The Cyclist Touring Club (CTC) and the British Cycling Federation (BCF) both provide liability insurance free as a membership benefit (membership costs pounds 12.50 and pounds 19, respectively).

Datatag Protected Cycle Insurance is competitive for the very highest value bikes. The flat rate for a pounds 4,000 bike is pounds 258.81. Policyholders must also pay around pounds 20 to have a Datatag placed inside their bike - details are then placed on a database.

The value of insurance against theft at the lower end of the scale, however, is much more questionable. Experts say bikes worth less than pounds 200 may not be worth paying extra to insure. They see investing in a good quality lock as more sensible.

Anne Killick, of the Association of Cycle Traders (ATC), recommends a D lock (a solid bar in the shape of a D) with a combination lock. The Kryptonite New York also offers compensation if the lock is broken and your bike stolen, assuming you can produce the lock.

q AUA 01603 628034; Harrison Beaumont Insurance Schemes 01993 700200; Datatag Protected Cycle Insurance 01482 328120; CTC 01483 417217; BCF 0500 525676.