Cosignor's Auto Insurance Policy

[ajibbs]

What is the name of your state? NJ

I cosigned for my sister's new car loan and my name
is included in the car's title. She registered the car
only in her name and in a different address from mine.
I added the car into my existing auto policy since I
thought that since I cosigned for her loan, I had insurable
interest in the car. Everything was fine for some months.
Then, the insurance company questioned my insurable
interest in the car added to my policy. Inspite of the
fact that I cosigned for the car, they asked that the
car be dropped from my policy. When I wasn't able to
show them a declaration page for my sister's new auto
policy (takes some time to be issued one) before my
current policy expired, they also cancelled my policy
and left me without an auto policy.

My question: Was I at fault when I added my sister's car
to my policy even if I co-signed for it? Does the car's
registration also need my name on it (before I can add it
to my policy)? Does the fact that she resides in a different
address from mine affect the validity of her car being added
to my policy?

Thanks for everybody's help in advance.