If you are buying Gap Insurance from your local dealership you will of most likely been quoted in the region of £395.00. Traditionally this is for a standard form of return to invoice gap insurance for just three years.
That said the cost of gap insurance can rise if you are paying for it on finance as don’t forget there may be interest charges as well.
Today however we spoke to a customer would had been quoted a staggering £975.00.
The gentleman was some what concerned as to why there should be such a price difference. Understandable when you consider that he searched for gap insurance online and found the same if not better levels of cover for less than £100. No his car was not a Lamborghini or Maserati, not even a Bentley or a very expensive vehicle. Just a standard nearly new car for £15,000.
Naturally he was apprehensive.
After all price has to be important but it should never be the only criteria that you buy gap insurance on. The gentleman was concerned that with such a marked difference in premium prices that there must be some tangible reason. There must be policy features that where missing, a dilution or cover or back up.
This is simply not the case.
Instead when you buy gap insurance directly from the dealership that you are buying you vehicle from they are obliged to charge you any premium inclusive of 20% insurance premium tax. When you buy independently this is just 6 %.
Economics of scale also pay a massive part in gap insurance premiums as well. After all if you buying not just one vehicle but a fleet of 25,000 you would expect to be able to use your buying power to be able to negotiate the price down. This is exactly the same rule that applies to gap insurance. There are perhaps two or three of the top gap insurance brokers who provide this many policies and they use their buying power to reduce costs.
They also use there buying power to negotiate terms and conditions as well.