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Why are On-Line Shortfall Gap insurance Prices so cheap?

Saturday 2nd February 2013 11:57:33

If your local dealership has just offered you a version of Shortfall Gap Cover you may be surprised to know that the national average is £395.00 for just a  three-year policy. So if like thousands of other members of the public each day you decide to start shopping online for your Shortfall Gap Cover you may be shocked to find that prices vary so much. In today's society we are used to the fact that quality normally cost more. For example a solid oak table will cost a lot more than an oak veneer.

So this must mean that the types of Shortfall Gap Cover you can buy online are poor imitations.


The customer service can not be as good, perhaps the way in which the claims are handled? Afer all there has to be a tangible reason as to why the prices can up be to 85% less. There has to be some justification? Well there is and before we start we need to let you know that it has absolutely nothing to do with customer services, backup, support, claims handling or legal grounding. Instead if you buy Shortfall Gap insurance directly from the business or company that is supplying your vehicle they are legally bound to charge you 20% insurance premium tax.


This means that if your policy is £395.00 a total of 20% is being paid directly to her majesties Taxation departments. Conversely when you buy Shortfall Gap insurance online this is just 6%. That is a massive difference we hope you will agree. Also the fact that some online gap insurance suppliers can provide such a volume of business in comparison to main dealerships means that their supplier price is lower.


After all instead of buying just one vehicle if you where buying a fleet of 30,000 you would naturally expect a better price per vehicle. This volume counts mentality is just the same when it comes to shortfall gap insurance. When you combine these two reasons together it is very easy to see just why Shortfall Gap Insurance prices can vary so much without any dilution of cover.


So when it comes to Shortfall Gap Insurance cover the price you pay is not a reflection of the quality just a barometer of where and who you are buying it from.


Please note: since the date of the original post, the rate of Insurance premium tax has increased from 6%. Traditionally, the rate of insurance premium tax is lower than the rate of VAT.

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