Should you buy gap insurance from a car dealer?

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Buying Gap Insurance direct from your car dealer could cost you £100’s. Worse still, you might end up with the wrong type of policy, or the wrong level of cover.

Car dealerships often have exclusive deals with specific insurers. The dealer will often earn a commission of up to 70% every time a policy is sold. Usually this commission is split between the dealership and the car sales representative who sold the policy. The cost of the commission is then added to the policy.

In other words, if you buy a policy for £300, the car dealer could be making anything up to £210 in commission, meaning the policy itself is worth just £90!

Mis-sold gap insurance

It is an unfortunate fact that many gap insurance policies are not only bad value, but not fit for purpose. When a dealer sells a policy their primary concern is the commission, not the quality or suitability of the policy itself. 

A recent BBC feature told the story Neil and Denise who purchased a policy recommended by their car dealer. They purchased the car on finance and were told that the policy would pay off any existing finance in the event of a loss. A few months later their car was written off in an unprovoked arson attack. Rather than finding themselves covered, the couple were left out of pocket by £700+

Are all policies sold by dealers bad?

Not necessarily. Some gap insurance policies sold be dealers offer adequate levels of cover. However it’s very unlikely that your car dealer will not earn some kind of commission from selling the policy, so by going direct you are almost guaranteed to save money.

What’s the alternative?

As you’d expect, a better deal can be found online. If you have a price from your dealer then you can use this as a benchmark when getting quotes from other insurers. Make sure you get quotes from as many providers as possible, and don’t just rely on the best-known brands. There are lots of new entrants to the market offering great policies at very competitive prices. See our guide to the Gap Insurance providers below, or compare them all in one place now!