Should the worst happen, and your vehicle is written off, you can use Guaranteed Asset Protection insurance to protect your investment. Comprehensive motor insurance will only pay the current market value of your car after a total loss, not the original amount you paid for your vehicle. Also, your car insurance payout may not cover your outstanding finance on your vehicle.
GAP insurance can be helpful for brand new cars that experience a sharp fall in value the day they leave the dealership. However, people don’t always realise GAP policy is still beneficial to cover used cars, particularly if they’re fast-depreciating models or if you have vehicle finance. This article discusses dealership GAP insurance, when it’s useful and the benefits of using independent providers for GAP coverage.
Did you first hear about total loss GAP insurance from a car dealer? Many people are encouraged to purchase additional products when buying a new or used car from a dealership. However, GAP insurance is available elsewhere. We recommend that you shop around for the best GAP insurance policy before buying the first option presented to you.
You can shop for GAP insurance well before purchasing a vehicle, this allows you to find the best deal without pressure from the dealership. With ALA Insurance brokers, you can even buy a GAP insurance policy in advance to start on the day you collect your car. If your collection date changes we’ll amend this free of charge for stress-free driving from day one.
Is buying GAP insurance from a dealer or an independent provider better?
Buying a GAP insurance policy from an independent provider is almost always more cost-effective. Finding an alternative provider can save you up to 75% on GAP insurance. However, some customers might find it convenient to use the same provider for vehicle finance and GAP insurance – even if it’s more costly. It takes less than ten minutes to buy GAP insurance online or with one of our friendly team and you could save hundreds of pounds in doing so.
Because customers often learn about GAP insurance for the first time from their car dealership, they may not spot an unfavourable deal straight away. Whilst you’re nort obliged to buy GAP insurance, the dealership is not your only option; they have to allow you time to think about your decision and get the best deal.
Which GAP insurance is best?
Why is dealership GAP insurance so expensive?
Dealership GAP insurance usually offers similar protection to independent providers, so it can be difficult to explain the added cost. Dealerships can often get away with hiking their prices because they hope customers new to this type of coverage won’t do their research or shop around for the best deal. It’s not uncommon that customers agree to dealership GAP cover when it’s presented as a small additional monthly cost compared to the finance repayments.
Why do you have to wait to buy dealership GAP insurance?
The Financial Conduct Authority introduced regulations for vehicle dealerships selling GAP insurance to prevent them from misinforming their customers. When GAP insurance was new, there was little competition between providers. Therefore, it was easy for dealerships to sell overpriced GAP insurance policies, conceal the costs within other products, pressure sell and mislead customers about what GAP insurance covers.
The latest (2015) rules make dealerships wait two clear days between mentioning/quoting GAP insurance to a customer and concluding the sale. This day gives the customer time to read the information provided and shop around. This also reduces pressure on the customer to make a decision straight away.
Dealerships must also:
Inform customers about independent GAP insurance providers
Provide relevant information to educate the consumer about GAP cover
Provide a clear cost breakdown of GAP insurance coverage separate from any other costs
Car dealerships have been known to pressure sell and even mislead their customers to secure an upsell. However, the latest rules make it easier for you to find the best GAP insurance deal. On the other hand, independent providers, more heavily regulated by market forces, are much more likely to offer a fair price for GAP cover.
For example, the average ALA policy costs as little as a standard gym membership per month. You can pay it in one lump sum or split the payments over ten months (paid over direct debit) and the policy will last for up to five years. You can buy a GAP insurance policy for various vehicle types, including new and used cars, commercial vehicles, vans and motorhomes.