What Factors Affect the Price of GAP Insurance?

 

The cost of GAP Insurance depends on several factors, including your car’s value, age, mileage, the type of cover, claim limit, and the length of the policy. Dealer-sold GAP policies are often more expensive than those sold online.

 

Car-related factors · Policy-related factors · Dealer vs online pricing · Related links

 

Car-related factors

• Vehicle value: Higher-value cars cost more to insure with GAP as the potential shortfall is larger.
• Car model and manufacturer: Some makes and models are more prone to a claim. Some insurers, just like with motor insurance, can reflect this in your premium. 
• Vehicle use: Certain vehicle uses, such as taxi, courier, delivery, or driving school services, are considered higher risk. This means you may be charged more for your GAP, or the insurer may exclude these uses entirely. 

 

Policy-related factors

• Policy type: Vehicle Replacement GAP is usually more expensive than Return to Invoice or Lease & Contract Hire GAP, as it offers broader cover.
• Policy length: Longer policies (e.g. 4-5 years) generally cost more than 2-3 year terms for the same value vehicle.
• Claim limits: Higher claim limits increase the cost, as payouts could be larger.

 

Dealer vs online pricing

• Dealer-sold policies: Often bundled into finance, capped at 3 years, and priced significantly higher.
• Higher rate of Insurance Premium Tax (IPT) - dealer rates are 20% whereas you only pay 12% online. 
• Online providers: Usually cheaper, more flexible (up to 5 years), and allow you to pick cover type and claim limits.
• Example: Dealer GAP can cost £300-£500, while online cover may be £100-£200 for the same term.

 

Related links

• How much does GAP Insurance cost?
• Standalone GAP Insurance
• Return to Invoice GAP
• Vehicle Replacement GAP
• GAP Insurance Hub
• GAP Insurance 101

For more information, visit our GAP Insurance Guides Centre or explore GAP Insurance 101 quick-fire answers.

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