What is ‘Gap Insurance’?
Gap insurance is a sort of motor insurance that car owners can opt to protect themselves against the loss arising from any damage or accident when the compensation amount received from the insurer fails to cover the total amount on the vehicle’s financing agreement or lease agreement. Gap insurance is designed in a way to cover the loan amount which is the difference between the car value and compensation received from another insurance provider.
Benefits of Gap Insurance
Gap insurance helps the car owners money-wise by reducing the down payments. This kind of insurance is mostly suitable for customers who owe more on the vehicle than what an insurance company pays in occasion of any damage or major accident. This additional insurance is not subject to any deduction. Gap insurance is particularly beneficial for luxury cars which costs big but attracts less compensation from insurer. This special two wheeler insurance offers great benefit to customers who are buying vehicle with long loan term.
Disadvantages of Gap Insurance
1. Cost of Insurance: Gap insurance does not come free-of-cost. When you are opting for an additional insurance, it will certainly add more to your expense related to the two-wheeler. Gap insurance is beneficial for costly two-wheelers only. Unless you own something really luxurious and costly, avoid buying Gap Insurance.
2. Time Restriction: Almost every Gap Insurance comes with time restrictions. Usually you can’t take a Gap Insurance for your two-wheeler or car if you have bought it one year back. Therefore it is better to buy Gap insurance right at the time of vehicle purchase or within one year.
3. Non-Transferable: Unlike vehicle warranties, Gap Insurance can’t be transferred from one owner to another. In case you decide to sell your two-wheeler, you are losing your chance to avail any benefit from Gap Insurance. If you are planning to upgrade your machine with some latest model then don’t go for Gap Insurance.
Who Should Buy Gap Insurance?
Gap insurance can offer comfort to those owners who have paid little amount as down payment while buying the two-wheeler. It is also perfect for those who are buying vehicle with long term loan. Gap insurance is suitable for luxury cars with higher depreciation rates.
Is Gap Insurance a Must For two-Wheeler?
Most two-wheelers come with lesser price-tag than the cars. So, you can easily save your money by choosing some good vehicle insurance policy. This will save your money over Gap Insurance. Unless you are having a costly vehicle or you owe more on your vehicle, there is no point of buying Gap Insurance. Gap Insurance increases the overall expense on vehicle without attracting any huge benefit.
From the above write up, it is evident that Gap Insurance has greater limitations over other general two-wheeler insurance plans. It is not appropriate for everyone to opt for. Only a small group of customers need Gap insurance for their cars or two-wheelers. If you don’t fall into that category, there is no such need to take Gap insurance.