Legal Question in Insurance Law in South Dakota

Re: co sign a loan

If the insurance covers the damage to the motorcycle and if the insurance is noted that there is a secured lender with an interest in that motorcycle, the check from the insurance company should be made out jointly to the owner of the motorcycle and to the lending institution and typically the lending institution would require that the insurance proceeds be applied against the loan on the motorcycle or be applied to repair the collateral. If the insurance company doesn't know about the lender and if the check for the property damage comes made out only to the owner of the bike and if the owner if the bike absconds with the funds, leaving the bank high and dry, then the bank can turn to you. If the insurance proceeds do make it to the bank but aren't enough to cover the debt, you could be held accountable for the difference. If there is a delay in receiving the insurance proceeds and the bank is unwilling to wait for the insurance money, if there is a dispute over insurance coverage for instance, the bank could come after you as a quicker source of repayment, leaving it up to you to deal with the owner and the insurance company to get you reimbursed rather than the bank.

In the typical situation, the insurance will cover the bike, the bank will get paid, and you will be off the hook, but then so many things can go wrong in this world.

Re: co sign a loan

If you are just a co-signer and are not on the title or on the registration, and you have no other connection with the ownership, maintenance or use of the motorcycle, then you should not have any responsibility. But you need to make sure that co-signing does not automatically put you on the title/registration.

If it does, ask the lender to just make you a guarantor under a separate guaranty agreement, so that you are not any kind of a borrower, as a co-signer is a joint borrower.

And if none of that is possible, make sure you are also a named insured under the policy.

Re: co sign a loan

If you are just a co-signer and are not on the title or on the registration, and you have no other connection with the ownership, maintenance or use of the motorcycle, then you should not have any responsibility. But you need to make sure that co-signing does not automatically put you on the title/registration. If it does, ask the lender to just make you a guarantor under a separate guaranty agreement, so that you are not any kind of a borrower, as a co-signer is a joint borrower.

If none of that works, make sure you are also a named insured under the insurance policy.

And if you are a guarantor or co-signer, you need to be an insured under the policy and named the same way as the actual lender is named, i.e. a "loss payee." This will protect you against property damages to the motorcyle.