What is gap insurance in SAP FS-PM - Policy Management?

SAP Term: gap insurance

• Component: FS-PM

• Component Name: Policy Management

• Description: Gap insurance is a new type of insurance, offered in the vehicle leasing area, which closes any amortization gaps that may occur. More specifically, this would be the difference between the replacement value and the recovery value of the leasing object underinsurance for total loss or theft. The benefit from the gap insurance is valid for leasing contracts, based on normal market interest and durations, and is normally contractually agreed as supplementary coverage for comprehensive or partially comprehensive auto insurance.

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• Key Concepts: 
  Gap insurance is a type of insurance that covers the difference between the amount of money owed on a loan and the actual value of the asset purchased with the loan. It is typically used when purchasing a car, but can also be used for other types of assets. In SAP FS-PM Policy Management, gap insurance is used to protect the lender from losses due to depreciation of the asset. 
  
  How to use it: 
  In SAP FS-PM Policy Management, gap insurance can be used to protect lenders from losses due to depreciation of the asset. The policyholder pays a premium for the coverage, which is then used to cover any losses that may occur due to depreciation. The policyholder can also choose to add additional coverage for specific types of risks, such as theft or natural disasters. 
  
  Tips & Tricks: 
  When setting up gap insurance in SAP FS-PM Policy Management, it is important to consider the type of asset being purchased and the potential risks associated with it. This will help ensure that the policyholder is adequately covered in case of any losses due to depreciation. Additionally, it is important to review the terms and conditions of the policy carefully before signing up for coverage. 
  
  Related Information: 
  For more information on gap insurance in SAP FS-PM Policy Management, please refer to the official SAP documentation here: https://help.sap.com/viewer/product/FS-PM/2020/en-US