Gap Insurance?

[Bob Denman]

Let me stir the pot a bit. Clark Howard recommends switching insurance companies every two to three years. Competition.

Chris

Short term gain, versus long-term problem solving...
I can't tell you how many times I've been able to make something magical happen for a client, ONLY because they were a loyal customer for the Company...

Changing a billing plan beyond when the clock struck midnight...
Getting a policy re-instated after the ONE time that a payment was late...
Having a company re-open a claim to consider a bit better offer on a total loss
Finding a way to get coverage for a MAJOR accident on the one day of lapse in coverage...

Loyalty DOES have value!

[idahospyder1]

Also of note, frequent changes in companies are also now taken into account in different company rating models. Not saying we don't move people around from time to time but every 2 or 3 years will likely catch up to you. [emoji24]

[JIM EVANS]

Gap is for the diff of the acv of the bike vs the loan amount. The cost is for the life if the loan..normally a dealer will make 100% their cost on the product would be about 400. Try to negotiate the fee. As depreciation starts the minute you ride. Acv will vary by state guide lines used to own a dealership and 30 yes in the ins bus appraiser etc. Have seen many people very upset that they didn't buy it. Figure without any depreciation on the bike you are already underwater on taxes acc. Warranties etc finance charges dealer fees etc

[CanAmChris]

http://www.rider.com/

You get full NADA value for your machine minus the $500 deductible. They only insure motorcycles. Cages need not apply. They also offer farkle and gear coverage.

I just looked and they can issue insurance in VA. ( I live in PA and they are based out of NJ. I was not sure they went that far south or not.)

[Xyzzy]

I'm getting a 2015 RT Limited soon. The dealer I am going through has gap insurance for a fee of $780?

I don't know if I ever buy gap insurance for my cars.

Maybe have a higher rate of getting stolen....so is gap insurance worth it?

I've purchased quite a few new motorcycles in the last few years. Almost all of them with GAP insurance. Even the most expensive ($30,000) I paid less than $300 for the GAP insurance. New motorcycles take a huge depreciation hit as soon as you buy them. If you happen to be upside-down the GAP will even cover part of that. (Try not to be upside-down!) I've only made one GAP claim but it easily paid for all of GAP insurance policies I have purchased. The dealer has a lot of flexability regarding GAP insurance fees. You do not have to have GAP insurance to be financed although some (shady) dealers will say that you do. If you do have a GAP insurance claim, be prepared for a long battle of documentation. Keep a copy of everything! It took me almost three months to settle my claim. Since I have a good relationship with my dealer I never worry about documentation fees, freight, assembly fees or any weird fees. And I get GAP insurance for a decent fee. In fact, they gave me a great deal from the very first bike I bought from them. The GAP insurance company I eventually dealt with was SafeGuard. They are a horrible company to deal with but in the end I got the money I was supposed to get. I'm an extremely patient person but I almost lost it with them. That said, I will continue to buy GAP insurance. BTW, if you finance through State Farm you get free GAP insurance. I have my wife's SUV through them. Sorry this is so long!

[jaherbst]

Not really true. If I am earning around 8.5% average on my investment account and Sheffield is offering 5 year financing at 1.9% why should I take funds from my account to pay for the bike up front?

Maybe he doe not have the investment account. Or-has a great interest rate. (probably not) At my age I buy nothing that involves payments. Wife #2 says pay for it or don't buy it. She is a lot younger than I and does not want to make my post mortem payments!

Jack

[IWN2RYD]

Let me stir the pot a bit. Clark Howard recommends switching insurance companies every two to three years. Competition.

Chris

And allow me to offer a different point of view...

I work the Washington States "Largest" independent insurance agency. I have built/am building my own book of business inside the agency (We all do as agents for this agency). This allows me to have the financial power/strength of a large company, while being able to service my clients on a one to one basis...

Every one of my clients, whether they like it or not, get's a call from me to either review their current life situation (Risk analysis) over the phone or to schedule an appointment to come in.

And if they put it off, in year five I run a fresh quote for them as if they are a new client, based of the communications we have had over the years.

50% of the time I can re-write them with the same carrier for a significant rate reduction, and 50% of the time I am proposing we switch them to another carrier. I call, email and mail the quote. The mass majority stay with me because we do this.

Now, a lot more goes into this.. But here we go...

In one sense Clark Howard is dead wrong, ion another he can be correct.

"Can be correct" when comparing one policy to another without asking the "Current" insurance company or agent to do an apples to apples fresh quote themselves. Creating an apples to an orange situation.

"Dead wrong" because of a few reasons.

1. Many insurance companies provide additional discounts for how long a person was with a previous insurance company. Those with 36 month get less of a discount than those with 48 or 60 and so on. By jumping every three years, your robbing yourself of a better rate.
2. Assuming one does not ask their current agent to "Check around"... By not being honest with "Yourself" and work with your current agent to see if your current carrier or any other carrier in the agency can provide a better product or rate. Insurance companies are rottenly meeting with the insurance commissioner in each State asking for new discounts, rate increases and even entirely new policies.
3. Each insurance company has created little "Bonus" coverage's that may be worth the extra cost, and if you do not eat and drink insurance, most forget what they have (Examples... Disappearing deductibles, accident forgiveness they earned, GAP, OEM parts and so on).

And sadly... Some folks forget what each coverage does for them, are to embarrassed to ask, and do not realize the Lizard and online sites reduce coverage to get you excited about the price... Instead of helping you make sure your policy fits your needs and risk tolerance...

[IWN2RYD]

They aren't much better..........


You do realize that insurance agents will sell (and tell) you anything to line their own pockets right ??????? Agent is their own made up word for being a salesman. Salesmen try to sell you things, and upselling a policy makes them more money.

Buyer beware...........The only person that looks out for you, is you........
No offence to any insurance salesmen out there.

There is truth to your statement. It is also true in every consumers buying experience.

That said, there are also just as many "Advisers" that can frankly gave a darn about a sale, and care about giving information to their client so that in return, that client can make an "Educated" decision about their insurance needs. After all, they are the ones that will be in your face at claim time =]

In the end, those of us that educated earn FAR more from referrals than we ever will slamming out one sale at a time like a crappy car salesmaker does...

*Drops Mic*

[bobgeorge]

Thank you for all the good feedback. I decided to pass on the gap insurance at the cost of $780. It only raised the month payment about $15 a month, but after weighing the pros/cons it is not worth $780.

I did call Rider insurance and there payout method is excellent in the case of a total loss. For the first year it is cost of bike to include taxes. After the first year it is avg NADA. I checked and the avg NADA for a 2014 limited is currently $23,600....which is almost what I am paying for the 2015 now. Based on that info if there was a total loss the "gap" would be small.

As to getting a loan for the unit. My thinking is why pull $25k out of the bank to put in a bike.....while I can keep my money and just make the monthly payments. In the case of an emergency I can get to the money in my bank.....but it is harder to sell your bike and get the money.

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[MRH]

(All my opinion about how I would look at this if it were me and this was my decision to make about my finances.)

I am glad that you have the funds to buy the bike, but if the cost would largely wipe you out then you have to ask yourself if it is really affordable to you. If you needed that 25K in an emergency, then you would be left with a bike and payment and the potential of an additional loss if the bike were sold. I don't know, and it isn't my business to know, how much is in your account in addition to that 25K, but I do think that number is a key factor in your decision.

The answer to your question is "interest".

The bank, who is very good at managing money and assessing risk and return, thinks that it's better to loan you money with interest and receive that interest rather than investing it elsewhere. I would personally think that it would be to my advantage to avoid the risk that my money in the bank will either grow at a slower rate than the interest I am paying, or loose money in the process. I'm assuming, of course, that my money is in something that has a reasonable rate of return, which means that it is also at risk.

I would probably do the numbers on the total amount of interest you will be paying, as it will likely add thousands of dollars to the cost of the Spyder over a four or five year loan, and given the life of these machines I can't see taking a loan that would go on beyond the number of years the manufacturer feels that it can safely sell you a warranty for.

I completely get that you may see this differently, and I appreciate you considering this from a different point of view.

[bobgeorge]

(All my opinion about how I would look at this if it were me and this was my decision to make about my finances.)

I am glad that you have the funds to buy the bike, but if the cost would largely wipe you out then you have to ask yourself if it is really affordable to you. If you needed that 25K in an emergency, then you would be left with a bike and payment and the potential of an additional loss if the bike were sold. I don't know, and it isn't my business to know, how much is in your account in addition to that 25K, but I do think that number is a key factor in your decision.

The answer to your question is "interest".

The bank, who is very good at managing money and assessing risk and return, thinks that it's better to loan you money with interest and receive that interest rather than investing it elsewhere. I would personally think that it would be to my advantage to avoid the risk that my money in the bank will either grow at a slower rate than the interest I am paying, or loose money in the process. I'm assuming, of course, that my money is in something that has a reasonable rate of return, which means that it is also at risk.

I would probably do the numbers on the total amount of interest you will be paying, as it will likely add thousands of dollars to the cost of the Spyder over a four or five year loan, and given the life of these machines I can't see taking a loan that would go on beyond the number of years the manufacturer feels that it can safely sell you a warranty for.

I completely get that you may see this differently, and I appreciate you considering this from a different point of view.

I respect all opinions. I have more than 25k in the bank.....but just don't feel like tying up that much $$$$ in a bike.

My guess would be that most people that have boats, cars, etc over the $25k range have a loan. Maybe people you know have that type of money laying around.

Also, people put things that cost a lot less on credit. Look at all the people who use credit in Best Buy for TVs, etc.

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[MRH]

I respect all opinions. I have more than 25k in the bank.....but just don't feel like tying up that much $$$$ in a bike.

My guess would be that most people that have boats, cars, etc over the $25k range have a loan. Maybe people you know have that type of money laying around.

Also, people put things that cost a lot less on credit. Look at all the people who use credit in Best Buy for TVs, etc.

Sent from my iPad using Tapatalk HD

This would be a fun and probably beneficial conversation to have, and I do have responses to what you have written, but before I get into a back and forth with you about your decisions about your money, I'd like to ask if that's something you want to do and would enjoy, or if you would prefer that I leave my thoughts where they are. This doesn't have a personal component for me, but it does for you. I'll happily respect your decision either way.

[bobgeorge]

I do OK with my money so I don't really need the additional financial management info. Are you a financial management expert?

oj my 6y6

RE: Insurance agents

I still believe is having my own insurance agent. I have been with State Farm since my first vehicle in 1965. Lived all over the country, but always found a local agent to take care of my needs.

These days, everything is done by online/computer. It is nice when I have an addition, subtraction, claim, etc., that I can call a person that I know and who knows me and my needs.

I have had accidents and claims over the 50 years I have done business with State Farm. They always took care of me quickly, and my claims were answered fairly.

The statement about letting your local agent handle stuff instead of the Can Am dealer finance guy is a good one. The finance guy is probably working on commission and does not have your personal finances in mind.

I have said in other threads--try to arrange your own financing with a bank instead of letting the dealer do it. Heard of dealers reserve? The dealer tells you the interest rate is 10%. The bank would have given you 7% had you went to them first. The dealer pockets the 3% equivalent of the interest as a commission. You pay the bank 10%. You just got tagged for another 3%.

A 100% finance is putting a lot of money in a dealers pocket on a $30K machine. Ask to see the financing disclosure statement which must be part of the contract. I think you are not going to like the number.

This would be a fun and probably beneficial conversation to have, and I do have responses to what you have written, but before I get into a back and forth with you about your decisions about your money, I'd like to ask if that's something you want to do and would enjoy, or if you would prefer that I leave my thoughts where they are. This doesn't have a personal component for me, but it does for you. I'll happily respect your decision either way.

[MRH]

I do OK with my money so I don't really need the additional financial management info. Are you a financial management expert?

oj my 6y6

I simply believe in staying out of debt and saving money as a first priority. Despite many places where I no doubt have could have grown my money more effectively, I have managed to put myself in a secure financial position. I am not an expert by any stretch of the imagination.

At this point, I think I'm best off saying that I honestly respect whatever decisions you make, and letting this particular conversation go.

[ARtraveler]

I do OK with my money so I don't really need the additional financial management info. Are you a financial management expert?

oj my 6y6

CPA, Accounting Professor, Finance Director. You could say I have dabbled a bit in finance.

[Deanna777]

When I want insurance, I talk to my insurance agent not my Can-Am dealer.

with you 100%. Deanna

[sjcpanther]

I would have to say that there would not be too many Spyders sold if the only means were to pay cash. Not many people just have $25K sitting around ready to spend. For those that do, that's awesome. But you are definitely in the minority.

[ARtraveler]

The original question was "should I buy GAP insurance?" The thread kind of took a turn from there.

[robmorg]

Not my business, but...

I would say that if you have to finance a toy, you can't afford it.

And, at the very least, you really can't afford it if you can't put down enough so that you don't end up owing more than the Spyder is worth.

That's at least six months worth of full coverage just to pay a much smaller amount in the event it is totaled or stolen - not a good deal by any measure I can see.

That COULD be true, but many times it's not. It often depends simply on where you want to put your money and your financial liabilities.

When I bought my Spyder I financed 100% of it, including sales tax and a few farkles, through Scheffield Financial - BRP's loan service. Rate was 2.9% for 24 months. I could afford to pay cash, but I had other expenses going on at the time, and at that rate I chose not to. With a term of just 24 months, you don't stay underwater for long on that loan.

As for down payments, I've often financed cars at very low rates with no down payments. Usually you are "upside down" for the first couple of years, but why would you make a down payment, if you can invest the same money for a higher yield, or simply use it to pay down higher interest obligations.

I agree with you about the "Gap Insurance" in this particular case. As others have said, it's a rip-off, and many regular insurance carriers will offer you the same sort of deal at a much lower cost.

[robmorg]

The original question was "should I buy GAP insurance?" The thread kind of took a turn from there.

That questions was answered early on. He SHOULD, but not THAT gap insurance. There are less expensive ways to accomplish the same thing.

[MRH]

As for down payments, I've often financed cars at very low rates with no down payments. Usually you are "upside down" for the first couple of years, but why would you make a down payment, if you can invest the same money for a higher yield, or simply use it to pay down higher interest obligations.

Briefly, my answer to your question is "risk". If I wouldn't borrow money to directly invest it, then why would I borrow money to keep money invested? I feels differently, I would agree, but the net effect is the same. When you factor in the possibility of loosing money (the risk), the equation changes.

As to paying down higher interest obligations, it virtually always makes sense to reduce interest rates when possible. The question is if the loan should be taken in the first place, not if the interest on existing debt can be reduced.

These are, of course, my opinions based on my values, experiences and perspectives. As others have pointed out, my perspective on money is very different than the majority of Americans, and I am unusually adverse to being in debt. I also don't personally feel like something is mine until I've completely paid for it. It isn't my place to make decisions for others, and as a business owner I am more than willing to offer whatever methods of payment are in line with the values of my clients, rather than what I choose to do in my personal life. So, please consider what I've written to simply be another perspective to consider. If we all stopped utilizing debt at the same time, the economy would likely collapse. Ironically, I do believe that individually we benefit from that course of action, and that if we as a country slowly stopped accruing debt over a generation or two that we would have a much stronger economy.

[ARtraveler]

The whole thread is now moot. The OP has posted a picture of his new RT.