Gap Insurance, generally speaking, you can find almost any product online at cheaper prices than you can from a dealer. Be it a computer, a TV, a car, life insurance, the list is endless, but online discounts are always to be found. Gap Insurance is certainly available online at prices that your car dealer cannot compete with.
Why is Gap Insurance expensive at dealers?
Well the main reason is simple economics. Dealers have showrooms to pay for, more staff, will sell less policies and as a result may not be supplied by insurance administrators at the same ‘volume’ prices an online Gap retailer is. The profit expectations of a car dealer is therefore much higher than online retailers who aim for higher volume.
There is another reason, a dealer will have to charge the higher rate of Insurance Premium Tax (20%), whereas Gap Insurance sourced on the internet is only subject to the lower rate at 6%.
So knowing that the Gap Insurance policies are generally cheaper online, does that mean car dealers struggle to sell the product? Actually no, policies bought from dealers are still sold in reasonable numbers, people buy from people.
Often, customers are told that policies bought online are somehow ‘just not the same’ and ‘who would you claim off’ . Actually, there is a degree of irony in those statements, as often the policies offered in dealers are exactly the same as those offered online, same underwriters, same administrators. Indeed the administrators are the people who you would contact should you claim, regardless of who you bought it off.
In effect, the car dealers and the online Gap Insurance providers are simply ‘retailers’ of the gap insurance, the same gap insurance policy. The only difference is the price. I have never come across a dealer yet who actually handles your claim themselves.
How to save on your Gap Insurance
Remember, to any retailer, the gap policy represents a profit, so by shopping around you can source the same gap insurance at vastly different prices. Do your homework on the policy, read the wording, ‘Google’ the underwriters, compare it with others you have found.
Bottom line as always, is do your homework and you can save a plenty on Gap Insurance!