Buying a motorcycle? When you get a loan for a new or used motorcycle, everyone seems to know the bank requires you to have collision and comprehensive insurance in the event your motorcycle is damaged or totaled.
Does The Law Require Collision Insurance on a Motorcycle?
Did you know there is no law requiring you to have collision and comprehensive (fire and theft) insurance coverage? Not even if you get a loan to finance the purchase of your motorcycle or car.
So why do you need collision and comprehensive insurance coverage when you get a loan? It’s just the requirement of the bank to protect the money that they loaned you.
Is it Possible to Get a Loan Without Collision and Comprehensive Insurance Coverage?
It can happen. Sometimes people screw up and sometimes, three people screw up (the bank, the motorcycle dealer & the buyer).
What Happens When You Don’t Have Collision Coverage?
When everyone makes a mistake, you lose. In almost every accident, the motorcycle is a total loss. We recently had two clients who found themselves owing a lot of money for motorcycles they no longer had.
One of our clients relied on the motorcycle dealer to get his insurance coverage but the dealer only got him liability coverage. The bank apparently didn’t check and neither did our client. Our client’s motorcycle was totaled in an accident and he now owes the bank a lot of money.
Another client was told by a motorcycle salesperson he had to get insurance before taking the motorcycle. In front of the salesperson, he downloaded the Progressive app. Because he didn’t see the checkbox for collision and comprehensive, he only purchased the NYS minimum liability coverage. The loan was processed without the bank ever checking. After his motorcycle was totaled in an accident, he now owes $14,000 to the bank.
Types of Coverage in a Motorcycle Insurance Policy
- Liability (pays someone you injured because of your negligence)
- Collision (covers damage to your motorcycle from an accident)
- Comprehensive (covers fire & theft)
- Underinsured/Uninsured (pays you for your injuries when the car has less insurance then you)
- Medical Payments (pays you for medical expenses)
- Personal Injury Protection (PIP which is no-fault for pedestrians you injure)
What Insurance to Get
It’s always good to have collision and comprehensive coverage but if you borrowed money from a commercial lender to buy your motorcycle, the lender requires it.
But don’t rely on the motorcycle dealer or the bank! Look at the list of coverages you purchased and verify you have collision coverage.
See more reasons in Should You Buy Collision Damage Coverage?
Buy as much Underinsured/Uninsured coverage as the insurance company will sell you (see CagerProtection.com).
Get a free motorcycle insurance coverage consultation from New York’s Motorcycle Accident Lawyers
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Motorcycle Attorney Phil Franckel talks about how motorcycle accidents are different
Philip L. Franckel, Esq. is the author of all articles and content on this website, one of the Personal Injury Dream Team™ Founding Partners at 1-800-HURT-911® New York, well-known for representing motorcyclists. He has a 10 Avvo rating; Avvo Client’s Choice with all 5-star reviews; Avvo Top Contributor; and is a former Member of the Board of Directors of the New York State Trial Lawyers Association. Mr. Franckel created the motorcycle awareness campaign BE AWARE MOTORCYCLES ARE EVERYWHERE®.
Founding Partner Rob Plevy, Esq.
Robert Plevy, Esq. is a motorcycle accident lawyer and one of the Personal Injury Dream Team™ Founding Partners at 1-800-HURT-911® New York. Robert began his legal career in 1993 as an Assistant Corporation Counsel defending The City of New York against personal injury lawsuits.