You’ve bought your bike. The excitement is high. You’re ready to get out on the open road and ride. But before this can happen, you’ve got to get motorcycle insurance.
But what kind of coverages do you get? There are so many different ones to choose from like uninsured motorist or underinsured motorist, MedPay , collision, and gap insurance to name a few. While it can be tempting to go with the lowest price, gap insurance is definitely a type of coverage to consider for your bike.
A common misconception is that when full coverage is purchased is that if your bike is stolen or totaled in an accident that it will be covered. But if you’re in a loan, what happens in the situation where the value of the motorcycle depreciates quicker than the loan is paid off? If there is a total loss (the bike is totaled), the insurance company will likely only reimburse for the value at the time of the loss. This could result in more being owed on the loan than the bike is worth and there still being a balance on the loan.
Motorcycle gap insurance will pay for this difference. Gap insurance covers the difference between what is owed on the motorcycle and what it’s worth if it’s stolen or totaled in an accident.
How does motorcycle gap insurance work?
For example, let’s say you just bought a new bike for $12,000 with no money down on the loan. Several months later, and after the bike has quickly depreciated like most new vehicles, your bike is stolen. The bike itself is now worth $10,500 but you still owe $12,000 on the loan.
Your insurer is willing to pay $10,500 for the bike because that is its current value. If you have gap insurance coverage, the insurer will cover the difference in what is owed.
Who should I get gap insurance coverage from?
It’s possible to buy gap insurance from the lender or the dealer, but your best bet is probably going through whoever you get your insurance policy with. It will likely be cheaper and it will also make the claims process easier.
If you took out a loan for your bike, your lender will probably require you to have comprehensive and collision coverage. And most insurers will require you to have both of these before you can purchase gap insurance. Motorcycle gap insurance may only cover certain types of losses and will probably only apply if the bike is a total loss because of an accident or theft.
Should I get motorcycle gap insurance?
This quick little quiz will help determine if gap insurance is right for you. Compare what you owe on your motorcycle loan to its worth if it were totaled. Then ask yourself:
- Does the amount owed exceed the value of the motorcycle?
- Would you be able to pay the difference if the bike is stolen or totaled?
If you’re not in a position to be able to make up the difference, gap insurance is definitely something to consider. Here are a few other tips related to gap insurance:
- If you put down little or no money on a new bike, gap insurance may be the way to go. The first few years the bike will depreciate quickly and this would be the time to be covered. If you put down a significant amount of money, you can probably leave out the gap insurance.
- Look at the type of bike you have and how it depreciates on the market. If you see your model depreciates quickly, get gap insurance.
- Gap insurance is not available for used bikes—only new ones.
- Make sure to read your policy to see if gap insurance is necessary. Some policies will cover this amount if the bike is totaled.
If you’ve been in a motorcycle accident or your bike was stolen, you may be entitled to compensation. We can help review your policy to determine your rights. Our number is (916) 619-5452 or you can fill out our form online.
