Yes it is illegal. When you sell a car, and the next person takes out insurance. Their insurance company can tell that theres already insurance on that car. And your insurance company will then know that someone else is insuring that car, so therefor your insurance is void. This kinda situation happened to me with my first car. Half way through the year I swapped for something else, but my insurers wouldn't insure it so I lost 6 months no claims and had to start a whole new year. Unfortunatly, looks like the only way you can do it is to let your sister have it. But still, she would need to insure it to drive it. (Unless your 21 and have been driving for 3 years?)