Gap Insurance cost is cheaper with EasyGap
Have you ever looked at the cost of Gap Insurance?
If you have, then you may have compared the premium cost of a motor dealer and a specialist insurance broker like Easy Gap. What may have immediately struck you is that you can make a huge saving on the cost of a gap insurance policy at the broker, when compared to the vehicle dealer.
In fact the difference in price can be huge!!
Why is this? Sometimes the difference can be up to 80%, but how can this be?
Motor Dealer vs Insurance broker
There are 3 main reasons why the cost of gap insurance is so much higher from your motor dealer in the UK.
Tax - when you buy a vehicle from a motor dealer in the UK, and they offer you an insurance product (which gap cover is) then they must charge Insurance Premium Tax at 20%. This is the same rate of interest as VAT.
If you buy gap insurance from an independent source, like an insurance broker, the IPT rate is only 6%.
Why? Well as the vehicle sold to you is subject to VAT at 20%, the law states the insurance sold by the motor dealer must be at the same rate of tax. This is a fact that is often not known by car salesmen, but is a major reason for the cost being much higher.
Economies of scale - Your car dealer can only sell a gap insurance policy to someone they sell a vehicle to. So if the vehicle dealer sells only 500 motors a year, then they may sell 200 gap insurance policies. A specialist insurance broker, like EasyGap.co.uk, will sell that many in a few days, and therefore represents much higher business to the insurer.
This higher level of business will attract wholesale discounts on the supply of the insurance product. This discount can be passed on to the purchaser, ie you!
Profit expectations - Both the motor dealer and the insurance broker will make a profit from selling you the gap insurance product. As motor dealers do not make as high a profit margin on vehicle registration these days, they look to additional products like extended warranty and Gap Insurance, to increase their margins.
Motor vehicles can be expensive items, but can be sold at very small profit margins if finance and insurance products are sold alongside them.
2 - Volume of Sales - Your motor dealer can only sell a Gap Insurance policy to a customer it sells a vehicle to. Easy Gap can sell a policy to any of the 30,000,000 vehicle owners in the UK who qualify for cover. The volume of business produced by Easy Gap means we can drive competitive wholesale premium prices with insurers. We pass this saving on to you.
3 - Cut out the middle man - All business' exist by making a profit, and Easy Gap is not different. However, car dealerships are expensive places to run, and often commissions are earned by the salesperson, the business manager and other dealership staff when additional products such as Gap Insurance are sold. Simply calling Easy Gap can help eliminate these 'middle men'.