Why Is GAP Insurance from a Dealer Usually More Expensive?

GAP Insurance bought from a motor dealer is often more expensive than cover purchased online. Dealers typically add more commission, and you pay more Insurance Premium Tax.

Their products may also have shorter terms, such as 3 years, compared to up to 5 years online.

Why dealer GAP costs more · Differences in cover terms · Why online can be cheaper · Related links

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Main reasons dealer GAP costs more

Commission: Dealers often build a higher commission into the price.
Overheads: Dealerships have higher running costs than online brokers.
Higher Tax: You pay 20% Insurance Premium Tax on dealer prices, it is only the standard 12% with online providers
Convenience pricing: Policies are sold alongside the car, so many buyers pay for ease rather than shopping around.

Differences in cover terms

Dealer GAP is often capped at 36 months.
Online policies may run up to 5 years.
Cover types can also be more limited at dealers. (Only standard Return to Invoice GAP rather than the more comprehensive Vehicle Replacement GAP)

Why online can be cheaper

Lower overheads and direct distribution mean lower premiums.
Online providers often give you a wider choice of cover types and claim limits, allowing you to tailor your purchase to your needs.
Online providers work within a competitive marketplace, keeping prices down.

Tip: The FCA requires dealers to give a deferral period before selling GAP. Use this time to check online alternatives.