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Is motorcycle insurance required in most states?

Is Motorcycle Insurance Required In Most StateMotorcycles are treated the same as any other motor vehicle by all states. This means that motorcycle insurance is required in most states the same as car insurance is required. All states require insurance or some form of proof of financial responsibility.

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Most people choose to have insurance over one of the other proof of financial responsibility methods. The type of insurance that is required by all states only pertains to liability.

Liability relates to both bodily injury and property damage insurance. Liability only protects third parties and does not actually pay any benefits directly to the insured.

Each state sets the minimum amount of liability insurance coverage that is required, so the cost varies from state to state. Usually the minimum coverage is not sufficient to cover damages in the event of an accident, so most people will purchase more than the minimum that is required by the state.

All other motorcycle insurance is optional. This includes:

  • Comprehensive coverage
  • Collision coverage
  • Uninsured and underinsured coverage
  • Accessories coverage
  • Medical coverage

If you live in a no fault state then you will be required to carry Personal Injury Protection (PIP) insurance and in that case you may not need the medical coverage option.

Proof of Financial Responsibility Instead of Motorcycle Insurance

Since all states require a form of proof of financial responsibility in order to operate a motorcycle, then on a technicality, motorcycle insurance is not required in most states. However, motorcycle insurance is usually a much more cost effective means of providing proof of financial responsibility and therefore that is the most common method chosen.

Proof of financial responsibility is usually accepted in one of three forms:

  • You may buy insurance for the minimum amount of coverage required by state law
  • You may deposit cash to the state that is equivalent to the minimum coverage
  • You may purchase a surety bond for the minimum amount

Since all of the methods other than insurance require paying a large sum of money upfront and out of pocket, insurance is the cheapest way to provide proof of financial responsibility.

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Motorcycle Insurance Satisfies Proof of Financial Responsibility

Unlike the previously discussed methods for providing proof of financial responsibility, paying for motorcycle insurance does not cost any large sum of money upfront. Instead, you buy motorcycle insurance for a set premium for a set length of time and in exchange for that premium you are guaranteed a certain amount of coverage paid in the form of benefits.

Here is a simplified example of the difference between cash proof of financial responsibility and insurance proof of responsibility. If your state requires $20,000 in liability then you are required by law to be able to pay up to $20,000 for liability damages. In order to prove you have the money to make good on your obligation, you need to pay $20,000 cash to the state treasurer, or purchase a $20,000 surety bond. This is a lot of money to be out of pocket up front.

Instead, you have the option of buying a $20,000 motorcycle insurance policy. For the $20,000 in coverage, you will pay a set premium, such as $600 every six months. The premium is non refundable whether you ever use the insurance or not. If you need to use the insurance, then you will also have a deductible, such as $500, that you have to pay out of pocket before the insurance company starts to pay its benefits.

Some people don’t like to pay for insurance because, if they never use the benefits, they feel the money spent on the premiums are wasted dollars. However, it is much easier to pay for insurance premiums than to come up with a lump sum of money to give to the state, so choosing the method of financial responsibility will depend largely on your cash flow and your beliefs.

State Liability Requirements for Motorcycle Insurance

State liability requirements for motorcycle insurance are the same as for any other motor vehicle. As a motorcycle rider you must be able to prove financial responsibility for at least the minimum amount specified for the state in which you reside.

Each state has different coverage amounts so you should check with your state department of motor vehicles to confirm the amount you need. Also, the minimum coverage amounts are subject to change, so you may want to periodically check the statues, especially at renewal time.

Liability is broken down into three components:

  • Bodily injury liability for a single victim
  • Bodily injury liability combined for multiple victims
  • Property damage as it relates to the victim

The three components are usually written together as numbers with slashes in-between, such as 10/20/15. The numbers represent the amount of the minimum coverage required to the thousands, such as $10,000 and $20,000 and $15000.

Since proof of financial responsibility is required for motorcycle riders, it is safe to say that motorcycle insurance is required in most states. If you can afford upfront proof, then you do not need the insurance, but if you cannot pay cash or purchase a surety bond, then you will need motorcycle insurance.

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