Selling any vehicle, such as a motorcycle, is certainly no task for the weak if you plan on getting a decent amount of money out of the deal. There should be a lot to be considered and a lot of questions asked when doing something like this.
One of the biggest questions about selling a motorcycle is related to insurance. Some people may not have insurance but wonder if it’s required if they are planning on selling their bike.
So, can I sell a motorcycle without insurance? If you are planning on selling your motorcycle and letting potential buyers take it for a test ride, it is advised to have motorcycle insurance. Most states require at least some basic form of motorcycle insurance anyway. If your motorcycle is not running, having insurance is not needed to sell it.
When I was going to college, I had a small motorcycle flipping business. Within my motorcycle flipping, that meant I sold a lot of motorcycles so I’ve been able to get a good idea about the importance of insurance and when do you and do not need it. Keep reading for additional information you may need to know when selling your motorcycle.
Why You Need Insurance
Insurance can always be a little difficult to understand, especially when the rules and regulations of it vary from place to place. As annoying as insurance can be, it’s also important to have because it can really save you in sticky situations.
Most states in the United States require that motorcyclists have some sort of insurance. Usually states require motorcyclists have at least minimum liability coverage, meaning if you cause an accident that involves another party, the other party will be covered through your insurance instead of out of your pocket.
Selling a motorcycle can be an exhausting task; you may get people who set up appointments and never show up or you may get a few joy riders that were only interested in taking the motorcycle for a ride rather than actually buying it.
Whether you have a serious buyer or a joy rider taking your motorcycle for a test run, it’s a good idea to have insurance during this process. Even if you didn’t have insurance before, I suggest you get insurance during the weeks you are trying to sell your motorcycle.
The first reason you need motorcycle insurance is because any time a motorcycle is taken out on the road, policemen can run your plates and search a data base that indicates whether or not you have insurance. If they happen to run the plates while you or a potential buyers are taking the bike out for a ride, you or they can get pulled over and get a big fat ticket. It is illegal to ride on public roads with no insurance in most states.
The second biggest reason you need insurance when selling a motorcycle is because of any liability that may be held against you if the test rider gets into any sort of accident. Motorcycle insurance goes with the motorcycle, not the rider. This is especially important if the potential buyer causes an accident that involves other people.
Click here to see my article if you’re not sure whether or not to let potential buyers take your motorcycle for a test ride while you’re selling it.
The take home message is that not only is a running, uninsured motorcycle illegal, it’s also not frugal. You are risking having to pay thousands of dollars out of pocket if an accident happens.
What Happens If An Accident Happens During A Test Ride
Now that we’ve covered the importance of having motorcycle insurance when selling a running bike, we’ll discuss in more detail as to why it’s important to have it.
I understand that insurance can be costly. There are several factors that weigh in as to why insurance is so high for some but not as much for others (see my article here about reasons motorcycle insurance can be so high). And sometimes it can feel like insurance is just straight up trying to scam us. But if you are doing everything right and keeping all the laws, insurance can actually save you a lot of money down the road.
If you plan on letting potential buyers test ride your motorcycle when you’re selling it, there are a few hazardous situations that could arise if you don’t have insurance. The main possibility is that the potential buyer wrecks while they’re out for a test run. So what does that mean for you? Well that still means you’re still held liable for it, not the buyer. Seems a little backwards, but that’s simply how it is.
Like I stated before, insurance goes with the motorcycle and not the rider. If the buyer ends up hurting someone else, that other party can come after you for compensation for their injuries. It’s really nice to have insurance in this situation because your insurance will cover the injuries of all parties involved up to the limits of your liability plan.
If the cost of someone’s injuries exceeds your liability amounts, they can come after you personally but most people don’t actually end up doing that. If you don’t have insurance in an instance like this, you are personally held liable for those injuries involved.
The potential buyer could even come after you for money for their injuries. This means they can go after your assets such as your house or cars. That’s a huge world of mess for you and though your premiums will likely go up after it all, having insurance while selling a motorcycle can really save you a lot of money.
Exceptions For Not Having Insurance
While insurance is an important thing to have when selling a motorcycle, there are a few exceptions that may excuse you from requiring insurance during this time.
The first exception would be if your motorcycle is not running when you’re selling it. There’s really no point in having insurance because your motorcycle isn’t out on the road and risking any harm to others. And the potential buyer isn’t able to take it for a test run anyway. Really the only reason someone has insurance on a non-running motorcycle is in case it gets stolen or ruined in some disaster.
Making sure the potential buyer only rides on non-public roads is also another exception. Such places may include large parking lots, dirt roads, or your own private property. In this case, the chances of them getting caught by the police with no insurance or causing some sort of accident for other people are slim to none.
Please note that if you let a potential buyer test ride on private roads, you are still held liable for any damages they do to your motorcycle. You cannot put a claim on their insurance if they wreck your bike. So it’s always a good idea to have some sort of collateral against them whether or not you have insurance.
This could mean holding on to their driver’s license, taking a picture of it or having them give you at least a cash down payment on the motorcycle before the test run. Be sure to inform them that if they wreck it, you plan on keeping the cash.
How To Handle Insurance Once You’ve Sold Your Motorcycle
There are still a few steps you need to take with your insurance once you get your motorcycle official sold and the buyer and driven off with it. These are important steps you should take so you won’t have to deal with potential problems down the road.
As soon as the new owner rides off your drive way and you have a copy of the bill of sale in your hand, notify your local DMV that you have sold it. This is called a Notice of Transfer and Release of Liability.
You can either go to the DMV and sign the form with information of the motorcycle such as the license plate number, motorcycle VIN, and the new owner’s name and address. Most states will also let you do this online (which is nice because who has time to “quickly run to the DMV?”). This will inform the state that you no longer own the vehicle and are no longer liable for any damages done by it.
Once that form is filled out, immediately cancel your motorcycle insurance. Most bigger insurance companies have a 24 hour number you can call and simply cancel your insurance that way. Some smaller insurance companies are only available by phone during business hours. If you’ve sold your bike outside of business hours, call your insurance agent anyway and leave a message stating you want your insurance cancelled as of the this time (state the date and time you called).
It’s important you cancel your insurance as soon as you sell your motorcycle because you can still be held liable for damages done by it by the new owner if they don’t have insurance and yours is still legitimate. You may be able to fight it with your bill of sale, but just avoid that situation completely and cancel insurance when you are no longer the owner.
Can I cancel motorcycle insurance in the winter? It is not advised to cancel your motorcycle insurance during the winter, even if you don’t use it and store it for the season. You can get “lay-up” insurance which is a policy that lowers your premiums during the winter months and still covers your motorcycle if it’s stolen or damaged by fire, floods, etc.
Can you sell your motorcycle to a dealership? You can sell a motorcycle to a dealership either through a trade-in, consignment, or a clean sale. Trade-ins usually offer less money while consignment sales will bring in more money for you though it will take longer to get paid.