| Imagine you just purchased a brand new Suzuki | | | | insurance company only paid you $7500 for your |
| GSX-R1000 motorcycle two months ago, and it was | | | | stolen or totaled Suzuki GSX-R1000. |
| stolen right before your eyes as you were eating in | | | | Is gap insurance for everyone? Not exactly, it really |
| your favorite restaurant. Not to worry, you are fully | | | | depends on your financing arrangement. Here are |
| protected by the full coverage motorcycle insurance | | | | some tips in deciding if gap insurance is right for you. |
| policy your motorcycle lender required you to get. | | | | 1. If you entered a zero down payment motorcycle |
| Right? | | | | loan especially for an extended term like 48-84 |
| In most cases, not exactly, if you look into the | | | | months gap insurance is probably a good idea for |
| details of the motorcycle insurance policy you | | | | you. On the other hand, if you put a large down |
| purchased. The reason is that most full coverage | | | | payment down with your motorcycle loan your |
| motorcycle insurance policies will cover for total loss | | | | probably better withoutgap insurance. |
| such as theft, accident or natural disaster, but these | | | | 2. If you are getting a motorcycle loan on a |
| policies typically only cover the depreciated market | | | | motorcycle model that has a history of depreciating |
| value of the motorcycle not the outstanding value of | | | | very fast, gap insurance is likely a good alternative |
| your motorcycle loan. | | | | for you. To determine this, compare the depreciation |
| Therefore, if you opted for a zero down payment | | | | rate of your motorcycle with the pay down of the |
| motorcycle loan or perhaps a low payment credit | | | | principal on your motorcycle loan. This will give you an |
| card motorcycle loan, your Suzuki GSX-R1000 may | | | | indication if you would be upside down if your |
| have depreciated faster than you have paid down | | | | motorcycle was stolen or totaled. |
| the value on your motorcycle loan. Since your | | | | 3. Check all of the details of your full coverage |
| motorcycle insurance policy will most likely only cover | | | | motorcycle insurance policy to make sure that it |
| the depreciated market value of your Suzuki | | | | does not cover the gap between the market value |
| GSX-R1000, you are responsible for the difference in | | | | of your motorcycle and the value of your |
| the value the insurance company pays you for your | | | | motorcycle loan. A very small percentage of |
| stolen or totaled motorcycle and what you actually | | | | motorcycle insurance policies cover the value of your |
| owe on your motorcycle loan. | | | | motorcycle for the first year without considering |
| In the event a motorcycle is stolen or totaled, | | | | depreciation. If you are lucky and your full coverage |
| motorcycle buyers in the first two years of a | | | | insurance policy covers 100% of the motorcycle |
| motorcycle loan are the most susceptible to not | | | | without considering depreciation there is little need |
| being reimbursed enough from their motorcycle | | | | for gap insurance. |
| insurance policy to cover the value of their | | | | 4. Are you purchasing a used motorcycle? If so there |
| motorcycle loan. So what is a motorcycle buyer to | | | | is probably not an option for you to purchase gap |
| do to protect against the outstanding value of their | | | | insurance because most gap insurance policies are |
| motorcycle loan? | | | | only good on brand new motorcycles. As a result, |
| The answer for some motorcycle buyers lies in a | | | | used motorcycle buyers are advised to place down a |
| little known policy called gap insurance. Gap insurance | | | | decent size down payment and opt to pay of the |
| is a total loss insurance policy that will pay the | | | | loans in the shortest possible time. |
| difference of the amount your motorcycle insurance | | | | 5. What is the cost of the gap insurance policy? Does |
| company pay's you for a total loss on your | | | | this cost justify the benefit? |
| motorcycle and the value of your motorcycle loan. | | | | Overall, depending on the financing situation gap |
| Here is a quick example. Let's say your Suzuki | | | | insurance can provide some excellent financial security |
| GSX-R1000 has a going depreciated market value of | | | | to motorcycle buyers purchasing their motorcycle |
| $7500, yet you owe $9,500 on your motorcycle loan | | | | with a motorcycle loan. However, each motorcycle |
| for it. In the event of total loss such as theft or an | | | | buyer's situation is different and the above five |
| accident, your motorcycle insurance policy will likely | | | | factors can be helpful in determining if gap insurance |
| only pay you the used market value of $7500. | | | | is the right decision. |
| However, you still owe your motorcycle lender $9500 | | | | Copyright (c) 2006, by Jay Fran. This article may be |
| so you have a gap of $2,000 ($9500-$7500=$2000). | | | | freely distributed as long as the copyright, author's |
| Gap insurance covers the $2000 gap that you still | | | | information and the below active live links are |
| owe to the motorcycle lender since the motorcycle | | | | published with the article. |