An agent is responsible to ask you all the proper questions to make sure you have been given the choice to select the proper coverage. In some states, the insurance company must offer and include physical damage if there is a lien holder. The owner of the bike is the one responsible to make sure there is correct insurance coverage on a motorcycle (or car) when they have financed the vehicle and there is a lien holder. There are 2 contracts, one with the lien holder and the other one is the insurance company.

When a motorcycle is bought using a loan or lease the lien holder in the financing paperwork normally spells out what insurance is required of the owner. This will be not only state minimum insurance usually but also physical damages of Collision and Comprehensive. These coverages help protect the financier's asset, the vehicle.

When you have a lien holder on a vehicle they will typically require that you add them to your insurance policy as an additional insured and lien holder so they will be informed if you drop coverages, have an insurance lapse, a loss, etc.

For your own knowledge, an Additional Insured is a person or an organization, other than the named insured or covered person, who is protected under the named insured's auto policy. If an auto is leased, the leasing company may want to be listed as an Additional Insured as well as a lien holder or loss payee. This protects the leasing company if it's named in a lawsuit for an accident caused by a policyholder.

This means your insurance company should be aware of what coverages you place on a motorcycle that you are paying off. If you do not get the required coverages than they may take notice and notify you that you need to get the right coverages on it or they may "force place" insurance on the vehicle so that they have some protection on the vehicle. This type of insurance can also be called collateral protection insurance (CPI) or force-placed insurance.

Force placed insurance is put on by a lien holder to cover their asset when they learn that you do not have the required auto insurance on the vehicle. It is expensive and does not really give you any type of coverage or protection, just protection to the financing company by covering its asset, the vehicle.

To not pay outrageous amounts for the forced placed insurance you need to get your own auto insurance policy with the coverages that the lien holder requires and show them this proof of insurance so that they will take off their forced insurance. While the lien holder may take action if they realize you do not have the right coverages on the motorcycle they are not the ones responsible to make sure you have the right coverages, that is your responsibility which likely your paperwork states somewhere.

On your motorcycle insurance application insurance companies will normally ask whether you outright own the vehicle or if you have a lien holder on the vehicle. The question of if a vehicle is owned fully or financed is asked because some insurance providers have filed with the state that Physical Damage coverage is required on a financed or leased car. Typically, it is the lien holder that requires physical damage, but some carriers have filed rates with the state that required physical damage on financed or leased vehicles. Esurance is one example of an insurance company that has this requirement.

Though an insurance company asks this question it is your responsibility to note that you do have a lien holder, add them to the policy as such and make sure you get the insurance coverages that the lien holder requires. Even after asking the insurer for the specific coverages, or choosing them yourself if doing your policy online, once you get your policy it is your responsibility to double check it to make sure it is correct. Make sure the VIN is right and make sure all the coverages you requested are on it. If you see anything that is incorrect or any coverages you are required to have and are missing from the policy it is your responsibility to contact your insurance provider and get the situation corrected.

While an insurance company and lien holder should also be checking to make sure you have the correct coverages on a financed motorcycle, ultimately as the owner (and the one financing the vehicle) it is your responsibility to make sure you have the required insurance coverages and limits the lien holder mandates you carry.

When you get a quote at CarInsurance.com, you will see a coverage page that will outline all the required state coverages, all the required coverages if you have a loan or a lease, and all the optional coverage options. In addition, our coverage packages help you pick the best coverage to protect you or you can customize to compare to your current policy or current insurance recommendations.