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Protecting bikers with motorcycle GAP insurance
GAP insurance is not exclusively for car owners; motorcycle owners can benefit from the additional cover as well. After all, if a motorcycle is written off through an accident, fire or theft, they will end up in the same position as other motorists – out of pocket and not necessarily able to afford a replacement vehicle.
This is where GAP insurance can help. It covers the difference between current market value and the original purchase price. For example, if a motorcycle costing £8,000 was written off after 12 months, an insurance company could only pay out £5,000 because that is what the vehicle might be worth on the current market. GAP insurance would cover the rest, ensuring the owner isn’t left out of pocket and can replace their motorcycle with one of similar value without having to find the difference.
The benefits of selling GAP insurance
As a motorcycle dealer, it pays to offer your customers additional services and products. GAP insurance provides the opportunity for a continued relationship – Car Care Plan now offers 12, 24 and 36-month policies – which leads to greater retention and satisfaction ratings. It also provides customers with great peace of mind and added reassurance should their bike suffer a total loss insurance claim.
Dealers must know and understand why their customers may want to purchase GAP insurance, so the benefits and potential drawbacks can be communicated clearly.
Why might a customer need GAP insurance?
- Most motorcycles will depreciate in value
- The down payment on the finance deal might have been small
- There could be high interest on the motorcycle
- They might be paying the debt off relatively slowly
- The finance agreement leaves them with a large balloon payment
- With around 26,000 motorcycles & scooters stolen each year, customers might be worried about the financial impact if their vehicle was stolen (source: Motorcycle Crime Reduction Group, 2014).
Why might a customer not want GAP insurance?
- Their insurance policy may offer ‘new vehicle replacement’ in the first 12 months
- They might be covered for any shortfall by a specific clause in their finance
- They could afford to make up for any shortfall in the insurance pay out
To learn more about GAP insurance and other financial aftercare products, download our FREE eBook: A guide to motoring financial aftercare.
Are you prepared for FCA regulation changes?
From 1st September 2015, the Financial Conduct Authority requires all dealers to provide prescribed information on GAP insurance to customers. Dealers will also need to give customers several days before the sale can be concluded. The changes are designed to better protect consumers from purchasing a product that might not be right for them as well as promoting greater competition within the marketplace.
If you would like further information on the FCA regulation changes or advice on how to prepare, download our FREE eBook: Get ready for FCA Regulation changes in September 2015.