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Gap Insurance
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Upto 75% cheaper than competitors

Upto 75% cheaper than competitors

Based on 10,911 Genuine Testimonials

Based on 10,911 Genuine Testimonials

Gap Insurance cost

Have you ever looked at the cost of Gap Insurance? If you have, then you may have compared the premium cost of a motor dealer and a specialist insurance broker like GapInsurance123. What may have immediately struck you is that you can make a huge saving on the cost of a gap insurance policy at the broker, when compared to the vehicle dealer.

In fact, the difference in price can be huge!!

Why is this? Sometimes the difference can be up to 80%, but how can this be?

Motor Dealer vs Insurance broker

There are 3 main reasons why the cost of gap insurance is so much higher from your motor dealer in the UK.

1 - Tax - when you buy a vehicle from a motor dealer in the UK, and they offer you an insurance product (which gap cover is) then they must charge Insurance Premium Tax at 20%. This is the same rate of interest as VAT.

If you buy gap insurance from an independent source, like an insurance broker, the IPT rate is traditionally a lot lower. As of May 2018, the rate currently stands at 12%, however, this may be subject to change having increased from 6% to 12% in just a few years.

Why? Well as the vehicle sold to you is subject to VAT at 20%, the law states the insurance sold by the motor dealer must be at the same rate of tax. This is a fact that is often not known by car salesmen but is a major reason for the cost being much higher.

2 - Economies of scale - Your car dealer can only sell a gap insurance policy to someone they sell a vehicle to. Therefore, if the vehicle dealer sells only 500 motors a year, then they may sell 200 gap insurance policies. A specialist insurance broker will sell that many in a few days, and therefore represents much higher business to the insurer. This higher level of business will attract wholesale discounts on the supply of the insurance product. This discount can be passed on to the purchaser, ie you!

3 - Profit expectations - Both the motor dealer and the insurance broker will make a profit from selling you the gap insurance product. As motor dealers do not make as high a profit margin on vehicle registration these days, they look to additional products like extended warranty and Gap Insurance, to increase their margins. Motor vehicles can be expensive items, but can be sold at very small profit margins if finance and insurance products are sold alongside them.

Couple these three reasons together and you have a perfect explanation as to why the cost of gap insurance can be so much higher in a motor dealer than from an independent insurance broker like GapInsurance123. 
Absolutely amazing. Simple, straightforward and easy to get a quote. I wish I used this provider for my last car, I would have saved over £200.
5 out of 5
Mr Stephen Mackay
Excellent - good choice of cover - great price - clear English and documents sent straight to my email address. I tried 3 quote engines or at least what I thought were quote engines and was told I'd get a call back with the quote -- it never happened. Very pleased.
5 out of 5
Mrs Tracey Collen
After researching various different outlets I chose GAP Insurance 123 as it appears to give the best value for money, just hope I never have to claim on the cover I have taken out.
5 out of 5
Mr Frank Wilson
I was nervous about finding GAP insurance for my self but when the dealer I bought my used car from wanted over £350 for GAP I looked around and got cover from gapinsurance123 for less than half the price. Great website with explanations of what the different types of GAP cover helying you to decide which is the most suitable product for you.
5 out of 5
Mr Nicholas Joel Hancock
Very simple process, terms and conditions clear and easy to understand. Saved 60% of the premium Dealer was offering. Well Recommended
5 out of 5
Mr david shuttleworth
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