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Why will a Driving School Gap insurance policy cost more than a standard policy?
Surely if they are both protecting any financial shortfall then the cost should be the same shouldn't it?
Unfortunately the simple answer is that driving school gap insurance will always cost a lot more than other levels of cover. Please remember that at Shortfall our primary goal is to make sure that when ever you need to make a claim that your policy does exactly what you expect it to and that you know who does what and when.
Your own insurance company are ultimately the only people who can decide to write your vehicle off and they will already be aware that you are using your vehicle as a driving school. This means, we hope that you have be using your vehicle a lot and providing lots of lesson and therefore making lots of money.
This increased mileage will mean that your vehicle will be worth considerable less than an average mileage vehicle. This in turn means that your own insurance company will be offering you a lot less therefore meaning that your gap insurance policy will be paying a lot more.
The risk of a higher gap insurance settlement cost is a higher risk to the underwriters. As is the way of the world of insurance a higher risk comes means a higher premium.
Lets have a look at an example and compare what happens to a driving school vehicle in comparison to a privately owned vehicle.
You buy a pre registered Ford Fiesta 1.0 eco boost and pay £12895.00 Mr and Mrs James also buy exactly the same car and for illustration purposes pay exactly the same amount.
Two and half years later your vehicle is stolen you have been busy and business is brisk. Your car therefore now has 72,000 miles on the clock. As a vehicle with 72,000 miles on the clock your insurance company offer you the market value on the day.
Again for illustration purposes Mr & Mrs James car is surprise surprise also written off on exactly the same day. Their insurance company also offer them the market value and with slightly below average mileage the car has 23,000 miles on the clock.
According to Glass's Guide ( 15/08/2017 ) your vehicle with 72,000 miles of the clock would be valued in the region of £3868.50.
Mr and Mrs James vehicle again approximate would be valued in the region of £6747.50.
This means that if Mr and Mrs James and you had both protected themselves with a form of return to invoice gap insurance your gap insurance policy would have to pay £9026.50 and Mr and Mrs James's policy would have to pay £6147.50.
That means that your driving school gap insurance is paying an additional £2879.00.
When you combined that fact that your driving school policy will have to pay more when and if you ever need to make a claim and that because of the time you are on the roads as well and the fact that learner drivers will be in the vehicle again increasing the likely hood of having to make a claim it is easy to see why prices are different.