Insurance for a loaned or leased motorcycle works similar to a bike you own outright. Unlike an owned bike, though, your loan or lease contract may require you to keep certain coverage, such as comprehensive or collision.
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What kind of coverage do I need for a loaned or leased motorcycle?
Your loan or lease may require specific types of insurance on your motorcycle. These requirements are meant to protect the lender’s investment in your bike during an accident. The required coverage is stated in your contract, making it legally binding.
Common coverage types you may need:
Liability. Pays for bodily injuries and vehicle damage to other drivers involved in an accident where you’re at fault. This coverage is often required by the state.
Collision. Covers damage to the bike if you cause an accident.
Comprehensive. Protects your motorcycle from noncollision accidents, such as theft, vandalism and weather damage.
Uninsured/underinsured motorist. Gives you coverage, even when the at-fault driver can’t pay for the damage.
What extra coverage should I consider?
When financing or leasing a motorcycle, consider optional coverage for wider protection on the bike. These add-ons can make sure you’re not held personally responsible for unexpected damage, leaving you with out-of-pocket expenses.
Coverage to consider:
Loan or lease gap. Get help paying the remainder of your loan or lease if your motorcycle gets totaled in an accident. This coverage kicks in after you have settled the accident claim for your totaled bike. If the claim pays less than the full amount of your loan or lease, gap insurance will pay off the remainder.
Replacement cost. Some companies cover the total MSRP value of your bike without accounting for depreciation. This coverage usually applies to bikes less than two years old. So, if you bought a new bike for $20,000 and it’s totaled, you’ll get $20,000 to buy a brand new bike.
Customized or optional equipment. If you’ve added customizations like extra chrome, you can get protection against accident damage.
Maintenance service plan. Prevent breakdowns on your bike by getting regular maintenance or mechanical service plan. These work well if the warranty is expired, or if you purchase a used bike.
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Is insurance the same for motorcycle leases vs loans?
In most cases, you’ll have similar insurance requirements for a loaned or leased motorcycle, but some leasing companies have additional requirements. Those may include:
Liability limit. You may be required to get a higher liability limit than the state’s requirements for a leased motorcycle. This requirement is based on the leasing company’s greater role of responsibility during an accident.
Maximum deductible. Your contract may also state a maximum deductible you’re allowed to choose on your policy.
Loan or lease gap insurance. Some companies want to ensure a full payment on your loan or lease, even during a total loss accident.
Additional insured and loss payee. You’ll need to add your loan or leasing company to your policy as an additional insured party so that it can receive payment for accident claims, if necessary.
How can I get cheap insurance for a loaned or leased motorcycle?
Factors that determine your rates are the same as an owned motorcycle. However, your premium may be higher than average if you’re required to purchase multiple coverage add-ons.
On average, motorcycle insurance costs $519 per year, or $43 per month. You can save money on your premium in several ways:
Lower limits. Opt for the lowest policy limits you’re comfortable with or that your contract allows.
Higher deductibles. Take on more financial responsibility up front.
Required coverage. Stick to the add-on coverage your contract requires.
Discounts. Look for simple discounts such as taking a safety course, paying in full, or insuring multiple vehicles or bundling multiples policies.
Clean driving history. As with any motorcycle policy, staying safe on the road keeps your rates low.
Loan payoff. Pay off your motorcycle loan quickly to give yourself the freedom to choose the best coverage for you. Look for a motorcycle loan without prepayment penalties.
How do I get insurance for a loaned or leased motorcycle?
It’s easy to get insurance for your loaned or leased ride.
Discuss coverage requirements with your loan or leasing company.
Shop around to find the best provider for you, apply and finalize coverage.
If necessary, request proof of insurance to show the loan or leasing company. Leasing companies typically require coverage before you drive off the lot with a motorcycle.
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What should I watch out for?
Insuring a loaned or leased motorcycle is fairly straightforward. However, you may want to watch for a few situations:
Lapsed coverage. If you cancel or forget to renew motorcycle insurance, you could put your loan or lease in jeopardy.
Violating loan or lease terms. Without the required insurance, the company loaning or leasing to you has the right to add insurance to your loan or to reclaim the bike.
Total loss damage. If you don’t have gap insurance, a total loss accident may leave you paying for your loan or lease out of pocket.
What happens if I don’t have the required coverage on a loaned or leased motorcycle?
Without the required insurance, you’re violating the terms of your agreement. The loan or leasing company has the right to reclaim your motorcycle in this situation.
Sometimes, a lending company purchases a forced-placed insurance policy and adds the premium to your loan. This policy is usually more expensive than traditional insurance and only protect the company during an accident, such as with liability coverage.
Will my insurance company tell the lender about lapsed or canceled coverage?
Yes, it’s likely your insurer would notify the lender about your lack of coverage. This happens because you may be required to add the company to your policy as an additional insured or loss payee. Your insurance company would then send notice anytime a policy change is made. The lender may then decide to act. The penalties for being caught riding without insurance could include a fine, suspended license or SR-22 bond.
Insurance for a loaned or leased motorcycle works similar to a bike you own outright. However, your loan or lease contract may require additional coverage, such as comprehensive and uninsured or underinsured motorist. It may also have other coverage requirements, such as an increased limit or maximum deductible. These requirements may contribute to a higher insurance rate.
Whether your bike is leased or loaned doesn’t increase your rate directly. However, you may pay more for insurance if you’re required to get add-on coverage that you would normally leave out.
The insurance required for your loaned or leased motorcycle is listed under the contract you signed. To find the requirements, read your contract carefully. You can also contact the company with any additional questions.
Filing an accident claim is the same whether you own your motorcycle or have a lease or loan. However, the leasing company receives any payments for claims involving damage to the motorcycle. Your loan company may also receive payments for claims if the motorcycle was totaled. You may still be responsible for fulfilling your loan or lease agreement, despite any accident situations.
Sarah George is a writer at Finder who unravels complicated topics about insurance, business and finance. She's been wordsmithing for nearly five years, after earning an English education degree. Her insurance know-how has been featured on CarInsurance.com. You can usually find Sarah sipping hot tea and talking through movie plots in her downtime.
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