UK car dealers charge 278% more for GAP insurance than insurers
Topics: CAR INSURANCE INSURERS UK
"We looked at the cost of Guaranteed Asset Protection (GAP) insurance at four car dealerships and seven insurers.
"Gap insurance is designed to cover the difference between the amount your insurer pays out if your car is stolen or written off, and the price you paid for it.
"It’s particularly useful if you’ve bought the car on finance.
"Many people purchase Gap insurance along with their new car, but we found dealerships charging almost four times more than insurers.
"We also found inflated prices being charged for cosmetic scratch and dent insurance and alloy wheel and tyre insurance.
"When buying a new car, negotiation is essential.
"But when it comes to extras such as Gap and cosmetic insurance, you’re buying a financial product.
"It’s essentially the same insurance, wherever you buy it.
"It may be convenient to buy insurance at the dealership, but is that convenience worth £367? That’s the mark-up on Gap insurance we were offered for a Ford Fiesta by a Ford dealership.
"We also contacted Toyota, Lexus and Honda dealerships and, in all cases, you could save at least 50% by going direct to an insurer.
"These quotes may not be representative of all dealerships connected to these brands, but it’s always worth comparing a dealership quote with quotes from insurers.
"When buying a new car, you may also be offered cosmetic scratch and dent insurance and alloy wheel and tyre insurance.
"While dents and dings are covered by traditional comprehensive insurance, the excess you’d have to pay –and the risk of losing your no-claims discount – can make it uneconomical to claim.
"That’s where these extra insurance products step in.
"Unfortunately, the mark-up charged by dealerships means cosmetic and wheel and tyre insurance isn’t cheap.
"We compared the quotes from a Ford dealership with the average price charged by seven insurers.
"For a Ford Fiesta the dealership quoted us £599 for cosmetic scratch and dent insurance.
"But the average cost from an insurer was £265g." ■