Why such a price difference?

Independently Rated 5-Star Invoice & Replacement GAP insurance at prices up to 85% LESS than from a Motor Dealer.
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Shrek
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Why such a price difference?

Post by Shrek » Tue May 24, 2016 8:14 am

Hi all, my first post :D

So I bought my 2012 F20 from BMW and they offered me Gap insurance for £355 over 3 years.(I didn't take)
I've just done a quote with GAP and it's less than a third of the price.
Is this simply a case of BMW being total rip offs, or does it sound to cheap to you guys?

Also I'm assuming the amount of cover is only for the gap, not the whole price of the car, so £7,500 of cover should more than cover me right?
Cheers.

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marco_polo
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Re: Why such a price difference?

Post by marco_polo » Tue May 24, 2016 8:18 am

Yup, it's just BMW's cut, they're just acting as middlemen.

If £7,500 will cover your depreciation for the next 3 years, that's all you need. :)
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GapInsurance.co.uk
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Re: Why such a price difference?

Post by GapInsurance.co.uk » Tue May 24, 2016 9:49 am

Shrek wrote: Hi all, my first post :D

So I bought my 2012 F20 from BMW and they offered me Gap insurance for £355 over 3 years.(I didn't take)
I've just done a quote with GAP and it's less than a third of the price.
Is this simply a case of BMW being total rip offs, or does it sound to cheap to you guys?
There's a number reasons why GAP insurance from a Motor Dealer will almost always be more expensive than an independant provider:
  • Their operating costs/overheads are considerably greater than the likes of an independant company such as ours.
  • Their policies are subject to 20% Insurance Premium Tax (IPT) whereas policies from an Insurance Broker are subject to 9.5% IPT
  • They have an almost captive market - according to the FCA ~98% of all UK GAP insurance policies are sold via Motor Dealers.
  • They have the convenience of being able to "hide" the cost in with the purchase of the vehicle and/or finance agreement (what's another few £'s per month?).
  • They've a reputation to maintain (according to the FCA Market Study, UK Motor Dealers were overcharging the UK consumer for GAP insurance by ~£76million per year!)
  • Consequently, a lot of why they charge more is... just because they can
Shrek wrote: Also I'm assuming the amount of cover is only for the gap, not the whole price of the car, so £7,500 of cover should more than cover me right?
Cheers.
The Claim Limit (E.g. £7,500) refers to the amount that the GAP insurance policy would be prepared to pay in addition to that which you receive from your Motor Insurer towards either the original invoice price (Invoice GAP insurance) or the equivalent vehicle replacement price (Replacement GAP insurance).

Without knowing the purchase price of your vehicle, a mileage reading, how many miles you expect to drive, how you funded the purchase and if it's financed, on what type of finance agreement over how long, I can't advise whether £7,500 is a sufficient Claim Limit. As a general rule though, assuming a 3-year duration, 50% of your invoice price should be the minimum consideration and anything in excess of 70% would usually by overkill.

If you want any advice and/or assistance in terms of GAP insurance and choosing a Claim Limit, please feel free to ask either here on the forum or give us a call on 01943 850999.

David
Invoice, Replacement & Contract Hire GAP Insurance quotes at up to 85% less than your Motor Dealer
T: 01484 490095 E: support@gapinsurance.co.uk W: gapinsurance.co.uk F: facebook.com/gapinsurance

Shrek
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Re: Why such a price difference?

Post by Shrek » Tue May 24, 2016 6:25 pm

Thank you for the quick replies.

That's sorted then, I'll take this out when I take out my policy tomorrow (7 day free runs out Friday)

I think I'll get my mom one as well as she has just bought a brand new Grand C-Max.

Cheers

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