If your local auto dealership has just spoken to you about gap insurance they will have most likely just quoted you somewhere from three hundred and ninety five pounds to eight and even nine hundred pounds. Normally this is for a basic return to invoice style of cover for a total of a three-year period.
This means that you would be forgiven for being somewhat skeptical at some on-line gap protection prices you will be offered as they could be as up to eighty five percent less than main dealership quotations.
So why is there such a price differenceall
The problem is that unlike most other industries where genuine quality costs more, when it comes to gap cover for your new car or vehicle the amount you pay may bear no resemblance to the quality of cover you are in fact buying.
Providing that you are buying from a reputable shortfall insurance provider the price difference will have nothing to do with levels of cover, longevity, customer support, backup or efficiency of claims handling.
Instead variances in rates of insurance premium tax, supplier price, and economies of scale play a huge part in the total premium price you are quoted and can make a huge impact.
This is because when you buy gap insurance from the business or organisation that you are buying your vehicle from they are legally bound to quote you insurance premium tax at twenty percent. ( Insurance Premium Tax is almost like value added tax) In contrast when you buy independently this is just six percent.
Also please remember that your local dealership's primary business is not to offer gap insurance instead they are principally concerned in promoting, selling and servicing motor vehicles. This means that the sheer volume of business that they can give to an insurance company is somewhat limited in comparison to some online gap insurance providers.
As such they will be charged a higher supplier rate which means that they will have to quote higher premiums.
When you combine these factors it is very easy to understand just how on-line gap insurance suppliers can quote a fraction of the cost with no dilution of cover and most importantly policy features.
In summary it pays to shop around when you are buying gap insurance. It is also important to remember that if the policy price is higher it may not mean that you are gaining any more features or benefits.
Instead you may simply be paying a higher rate of insurance premium tax based on a higher supplier price.
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