Money

Drivers are being charged up to £367 more by car dealers for insurance add-ons


DRIVERS are being charged up to £367 more by car dealers for add-on products on their insurance, new research warns.

Which? found car dealers are adding up to 278 per cent onto the cost of Guaranteed Asset Protection (Gap) compared to buying the same cover directly from an insurer.

 Drivers are being charged more for certain insurance add-ons at dealerships

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Drivers are being charged more for certain insurance add-ons at dealershipsCredit: Getty – Contributor

Gap car insurance covers the difference between what you paid for your car and the amount you’d get from your insurance company if it was written off or stolen.

Four car dealerships were found to be charging customers hundreds of pounds more for this add-on, with the bulk of the price being swallowed up by hefty commission rates.

In one case, Gap insurance purchased from a dealer was a staggering £367 more expensive than getting it from an insurer.

While the cost of this premium for a Ford Fiesta from a car shop was £499 but only £132 when purchased elsewhere.

How to compare car insurance

PAYING your car insurance can be a stressful time for drivers.

It’s a legal requirement and going without it could land you with a £300 fine, six penalty points on your licence and even a criminal conviction.

But before you automatically renew with your current provider, make sure you compare prices to ensure you’re on the best deal.

There are dozens of reputable websites where you can check prices, including Compare the Market and Go Compare.

They’ll want to know all about your car, including the registration and when you bought it.

Don’t panic if you haven’t purchased it yet, you can still compare prices if you’re undecided on buying a vehicle.

You’ll also need to give some personal details about yourself and your driving history.

Once you’re done, the websites will then show you the quotes you can get some different providers.

If you find a better price, go back to your insurer and tell them what’s being offered elsewhere.

While no means a guarantee way to lower the price they’re offering you, haggling doesn’t cost a penny and can prove successful.

If they can’t lower their price, then you can leave them and go with the cheaper deal.

Even the smallest difference was 102 per cent, for Gap insurance on a Honda CR-V SUV that cost £415 from a dealership but just £205 from an insurer directly.

Which? also found cosmetic and dent insurance was almost 60 per cent cheaper elsewhere, while alloy wheel and tyre insurance was up to 26 per cent cheaper when not bought from a dealership.

Gap insurance was investigated by the Financial Conduct Authority (FCA) earlier this year after the regulator found dealerships pocketing high levels of commission.

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Since publishing its findings, the FCA has warned insurers not to allow dealerships to receive commission “‘which bears no reasonable relationship to the costs or workload to distribute the product”.

Jenny Ross, Editor of Which? Money, said: “We’re really concerned that car dealers are continuing to pocket huge commission fees from selling insurance products at rip-off prices, despite recent scrutiny from the financial regulator.

“The FCA needs to keep a close eye on these practices and be ready to step in with strong action if consumers face mis-selling or unreasonable charges for these products.”

The Sun recently revealed how car insurers are charging drivers £365 a year extra if they pay monthly, rather than in one lump.

While Brits are losing out on saving £500 on their car insurance each year by not installing affordable black box.

Another recent investigation revealed millions of Brits overpay £110 in car insurance each year by not shopping around.


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