Everything You Need to Know About Motorcycle Gap Insurance

If you owe more on your loan than your motorcycle is worth, you’ll want to look into getting motorcycle gap insurance to protect your wallet.
Written by Macy Fouse
Reviewed by Amy Bobinger
Your motorcycle might just be your extra set of wheels for fun, but you’ll still need to insure it like any other type of vehicle—and that includes having gap insurance to protect you from unncessary costs. 
Motorcycles may represent the pinnacle of freedom for some peole—but due to their low visibility and size, motorcycles are much more vulnerable during a crash, leading to more damage if you’re in an accident. On top of that, they’re at a much higher risk of theft. If you’re financing your bike, these situations could lead to some financial trouble in a split second. 
That’s why it’s handy to have the added protection of
gap insurance
. We’ve got all the answers to your questions about motorcycle gap insurance right here—including how it works and when you should add it to your
car insurance

What is motorcycle gap insurance?

You probably know that new cars lose their value as soon as you drive them off the lot, but that applies to motorcycles, too. In fact, motorcycles lose about 5% of their value when you leave the dealership—and they can lose almost 30% of their value by the end of year two! This is a bummer for everyone, but it’s especially pertinent if you financed your motorcycle.
Unless you made a significant down payment, that rate of depreciation could leave you
upside down
on your auto loan, also called negative equity. This means you owe more on your loan than your motorcycle is worth. If this happens and you total your bike, you’ll have to pay the difference between the
actual cash value
(ACV) and how much you owe. 
That’s where it’s helpful to have gap insurance. Gap insurance—which stands for Guaranteed Asset Protection—pays for that “gap” between the motorcycle’s value and what you still owe on your loan or lease in the event of a total loss accident or theft.
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How does motorcycle gap insurance work?

Let’s say you have an accident and your beloved motorcycle is deemed a total loss. If you have
collision coverage
comprehensive car insurance
, you’d file an insurance claim so your provider can reimburse you for the value of the bike (after you pay your deductible). 
However, if you still owe more than the ACV on your car loan, motorcycle gap insurance covers that difference so you don’t have to pay it out of pocket
Let’s look at an example. Suppose you buy a Harley for $21,000 and you put $500 down. A year later, you total your motorcycle, which is now worth just $18,000—but you still owe $19,000 on your loan. Your full coverage auto insurance policy will pay for the depreciated value of the vehicle, but you have to pay the remaining loan amount...unless you have gap insurance. In this case, gap coverage will take care of that $1,000 difference. In some cases it may even cover your insurance deductible!

Where can I get motorcycle gap insurance?

For the most part, you can get gap coverage for your motorcycle through your insurance company, the dealership, your lender, or the manufacturer. 
Motorcycle gap insurance is generally affordable. You just add it onto your full coverage auto insurance policy, and it could end up saving you thousands if something major happens to your motorcycle. Having gap insurance directly through your insurance provider will also make the claims process smoother after an accident. 
Depending on the brand of your bike, the manufacturer may also offer gap protection on their vehicles, which also includes snowmobiles, ATVs, scooters, or other new vehicles. Your dealership or lender will probably offer gap coverage, too, but it’s generally much cheaper to purchase it through your primary insurance provider. 
Before you sign up for a motorcycle gap insurance policy anywhere, make sure you read the fine print. Most insurers require you to have comprehensive and collision coverage before you can add gap protection, and some already include it as part of your full coverage motorcycle policy! Additionally, many gap policies have exclusions and restrictions for what they cover. In most cases, motorcycle gap insurance will only apply if the motorcycle is a total loss due to an accident or theft.

When should you buy gap insurance coverage for your motorcycle?

Just like regular gap insurance, you should only buy motorcycle gap insurance if you owe more on your loan than the bike is worth. This often only applies in the first few years of your loan term. Here’s when it would be most beneficial for you to have gap insurance on your motorcycle:
  • If you made a small down payment. Larger down payments generally guard against the quick rate of depreciation, but if you didn’t put much money down on your loan, the rate of deprecation could leave you upside down in your loan within the first few years. 
  • If you couldn’t cover the difference. If the difference between your bike’s worth and your loan amount is relatively small, you may be able to just cover that difference out of pocket if you total your motorcycle. Gap coverage from an insurance provider is usually cheaper than taking this route—but if your insurer doesn’t offer it or you have to get gap protection elsewhere, paying the difference yourself might be a cheaper option.
  • If your motorcycle brand depreciates quicker than average. Gap insurance basically protects you from being victimized by depreciation rates, so it’s extra important to have if you’re driving a bike that depreciates faster. In general,
    , Triumph,
    , Victory, Yamaha, and Hyosung motorcycles lose their value quicker than other brands.  
Motorcycle gap insurance is typically only available when you’re financing a brand new bike; it’s usually not an option for used ones. If you’re financing a new motorcycle and you’re within the first few years of your loan, having motorcycle gap coverage can go a long way in protecting your finances and providing some peace of mind
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The downside with any insurance is the cost, so make sure you keep up with how much your bike is worth to decide if you still need gap coverage. Once the a value of the bike is more than what you owe, motorcycle gap insurance is more of an unnecessary cost than added protection.
As with most types of insurance, the cost of motorcycle gap insurance will depend on where you buy it. In general, adding gap insurance to your existing car insurance policy costs an average of $20 to $40 per year. Buying gap coverage from a dealership could cost anywhere from $400 to $700 a year.
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