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How Much will Gap Insurance Cost?

Gap Insurance prices can vary dramatically even for what appears to be the same level of cover. This is because, just like any other insurance, the price you pay reflects the risk the underwriters are taking.

What Effects the Price of Gap Insurance Policies?

Number of years of Cover

The longer you have your policy, the higher the risk. Your car will lose value over the years. The more your car depreciates, the less your motor insurance company will offer as a market value for the vehicle. Conversely, this means the higher your gap insurance policy will have to settle.

Type of Cover

What level of cover you choose makes a big difference as this dictates how much your claim could potentially be.

Do you want to protect a financial shortfall, the invoice price you paid or even the future replacement cost, as each will have a cost implication? 

Purchase Price

The cost of your car has a direct correlation to the premium. Your gap insurance maximum liability is directly affected.

For example, the potential settlement of a claim for a vehicle with a purchase price of £38000 could cost considerably more than a car of £7800. 

Usage

What you use your car for also has an impact.

Do you use your vehicle as a driving school car or taxi?

If so, you will have a much higher risk of making a claim, and when you do, the settlement will statistically be much higher.

Manufacturers

Some vehicles are more prone to higher depreciation levels; some are more of a target for theft.

This means that you are more likely to make a claim.

When it happens, the amount your gap insurance policy has to pay will be proportionally higher.

Where you buy also has an impact the cost of your gap insurance?

Buying direct from your dealership can also cost significantly more.

This is because when you buy independently from a provider such as ourselves, as we can not affect how much your car cost and thus how much VAT HMRC are paid, we are legally allowed to charge a lower rate of Insurance Premium Tax. (IPT ) This difference in taxation as of today, June 2022, is 8%, as we pay 12%. It may not sound much, but on a policy of just £199 at 20% IPT ( current IPT rate ), that means £33.17 goes directly to HMRC. Buying from us it is just £21.33. That is a difference of £11.84 that you could potentially save. On a policy premium of £395, there is a £23.51 saving.