I rented a bike before I purchased mine, and paid a $20/day insurance to the owner of the bike, but not sure if it actually covered me or if this was legally done. Nothing happened thankfully but you never know.
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When legitimately renting a car, the rental company will have a policy to protect their interests. The extra coverage the renter buys is to eliminate any deductable. I don't see a M/C being any different other than the rates being steeper.
If you rent a personal bike from a friend / back lane etc, a $20 per day insurance charge is just padding the bill and has no legal status. It doesn't get passed onto the insurance company. How long would the policy stay in effect if the insurance company got a $20 along with a note saying "I rented my bike to someone yesterday, Here's a little something for your troubles."?
Take a look at any insurance policy. The policies are specific contracts between the insurance company and the specific owner for a specific use and subject to specific conditions. You can't re-write an insurance policy on the back of a cigarette package with a crayon whether you are renting or setting up a test ride.