If you purchase a motorcycle out of pocket, you only pay the minimum requirements for insurance as per your state. However, if you have financed or leased your motorcycle, then different rules apply in terms of the motorcycle insurance that is needed.
Don't Pay More for Motorcycle Insurance!
What follows is important information that will help you understand the insurance requirements, average cost, and what happens if you stop paying for insurance on your motorcycle.
What Type of Insurance Do I Need for a Financed or Leased Motorcycle?
For motorcycles that are financed, the lender will most likely require that you obtain comprehensive and collision coverage. This is because it is the lender who owns the motorcycle until you pay off the loan. The same is true for leasing motorcycles. This type of insurance means that whether you cause the accident or not, the insurance will cover the amount needed for repair or if the bike is totaled.
Depending on the state’s requirements, you may also be required to purchase personal injury or uninsured motorist coverage. Although, both options may be found under comprehensive coverage. Check with your lender and then with your insurance company to ensure that you have the proper coverage for your motorcycle.
Is Full Coverage Needed on a Financed Motorcycle?
Not necessarily. It will depend on the lender’s specific requirements or the entity that is leasing the motorcycle to you. In some cases, liability and uninsured motorist coverage, which is the most common of the state minimum insurance available, will be enough. But do not assume that as many lenders will require comprehensive and collision coverage or some combination of the two.
How Much is the Average Cost for Motorcycle Insurance?
The average cost varies considerably depending on several factors, which include the following.
- Type of Motorcycle
- Driving Record
- Type of Insurance
For example, if you live in California, the average resident pays $1360 per year, while a resident of North Dakota pays just $382.
The rest of the states fall somewhere in-between. In addition, comprehensive and collision coverage is considerably more compared to just liability and uninsured motorist. Check the rates with different insurance companies to find the one that works best for you.
What Happens if I Stop Paying Insurance on a Financed Motorcycle?
If you stop paying for the insurance altogether, you stand in violation of state law and cannot license the motorcycle. The only exceptions are the states that do not require motorcycle insurance.
In addition, the lender or leaser may reclaim the motorcycle if you decide not to provide the recommended coverage. Keep in mind that the insurance is designed to protect the money they have lent to you. Without the guarantee of getting paid to repair or replace the motorcycle, they may repossess it.
If you are leasing a motorcycle or have received a loan, you will need to get the recommended insurance coverage. Regardless of the state laws, the purchased insurance must fulfill the contract you have signed with the lender or leaser.