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Dealer vs. Online: Where to buy GAP insurance

If you're planning to take out GAP insurance, should you buy it from a car dealer or an online insurance provider?

GAP insurance advice at The Car Expert, brought to you by

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GAP insurance is arguably one of the most misunderstood types of insurance. A lot of that is down to the infrequency in which we come across it; usually, at the dealership, while we’re trying to negotiate a great price on a new car.

What most people don’t realise, or take the time to investigate, is that GAP insurance is available from a number of insurance companies. So taking GAP from the dealership is one option, rather than your only option, if you decide that GAP is something you’d like to have.

It’s also worth noting that the Financial Conduct Authority (FCA) introduced new laws back in 2015 to prevent dealers from selling you GAP insurance on the same day that you buy their car. There is now a mandatory two-day waiting period so that car buyers can look into the options available for GAP insurance, although many consumers don’t take advantage of this.

What’s GAP insurance again?

GAP insurance stands for Guaranteed Asset Protection and covers the initial years of new car ownership, in the event theft or a serious collision occurs, leaving your new vehicle a ‘total loss’.

If your car becomes a write-off in the first couple of years of ownership, depreciation plays an important part in how significant your losses could be. Your regular insurance policy might cover the value of the car in today’s market. GAP insurance, however, can help mitigate the difference between that and what you paid – particularly if the car was bought on finance. Who wants a whopping great debt and no car to show for it? 

Read more: What is GAP insurance and should you have it?

Since dealers capitalise on the fact most buyers haven’t got a clue what it would cost elsewhere, they tend to offer the most expensively priced GAP insurance policies. Therefore, it’s worth doing your homework before going to purchase your next motor. 

Online providers, like many other insurance products, offer a range of prices based on the type of policy you take out. As we’ve mentioned previously, there are different types of GAP insurance. The two most popular for consumers are:

  1. Return to Invoice: The difference (or the ‘gap’) between what your car insurance has paid you and the original Invoice Price* of the car
  2. Finance GAP: The difference between what your car insurance has paid you and what you owe the finance company to settle your finance agreement

* Invoice Price is the price of the car, not including registration, road tax or any other extras

Buying GAP insurance from a car dealer

GAP insurance is one of the most common extras that dealers try to sell car buyers on either a new or a used car, and you’ll usually get a long-winded description of how it works under the pretence that this information is essential or required by law (it’s not).

Often, it’s bundled in with other finance or insurance extras like scratch & dent insurance, or tyre insurance, or an impressive-sounding ‘comprehensive paint protection system’ (ie – a car cleaning kit) so you don’t really see how much you’re actually paying for GAP itself.

Most car salespeople will have targets for the number of GAP policies they’re expected to sell each month, which explains why they’re always really keen to explain it all to you and get your agreement. Plus, they get a nice commission on every policy they sell.

The main advantage of buying GAP from a dealership is convenience. All you have to do is say ‘yes’, and the dealer will arrange a standard GAP policy based on the value of the car you’re buying. The dealer doesn’t actually provide the GAP cover itself and is acting as a broker for the insurance company – you’ll generally only find out who this is once you’re collecting your car.

The other thing a dealer can do is bundle up your GAP payments (and any other extras) into the overall purchase price of the car, so it effectively becomes part of your monthly payment. There is usually a level of financial shuffling going on in the background to achieve this, but that tends to be invisible to the customer.

The main disadvantage of buying GAP from a dealer is that you pay a high price for that convenience – often it’s more than twice as expensive as buying a specialist GAP policy online.


  • Convenience
  • GAP payments can be bundled into overall monthly payment


  • Much more expensive
  • Less clarity on how much you are actually paying for GAP
  • Limited flexibility in type of cover offered

Buying GAP insurance online

If you’re prepared to do a small amount of your own research (and it’s literally only a few minutes), you’ll discover that there are a number of specialist insurance providers that offer equivalent GAP policies to dealerships. And, usually, the price will be much lower – in many cases, hundreds of pounds lower.

Here at The Car Expert, we are partnered with ALA Insurance who have a special offer of 10% off any GAP policy for our readers. However, there are also other providers available so it’s always in your best interest to find the best deal for you and your car.

With an online policy, you can specify exactly what you’d like your policy to cover rather than taking the dealership’s standard offer. This may mean an increased or decreased level of coverage depending on the value of your car, or maybe a longer or shorter term, or maybe a certain level of Finance GAP coverage to make sure you definitely won’t be left owing the finance compay money in the event of a total loss. However, even comparing like-for-like with the dealer’s offer, you’ll probably find an online policy is a lot cheaper.

There is inevitably more work required to sort this out yourself rather than letting the dealer do it for you, but it’s a small price to pay to potentially save hundreds of pounds.


  • Substantial cost saving
  • Clear information about how much you are paying for GAP
  • Greater choice of providers and type of cover available


  • You have to arrange it yourself
  • Separate payment (although can usually be spread monthly)

More GAP insurance information

The UK’s best GAP insurance providers

The UK’s best GAP insurance providers

Can you buy GAP insurance in 2024?

Can you buy GAP insurance in 2024?

Are you paying too much for GAP insurance?

Are you paying too much for GAP insurance?

What is GAP insurance and should you have it?

What is GAP insurance and should you have it?

Why you should consider car lease GAP insurance

Why you should consider car lease GAP insurance

Cat Dow
Cat Dow
Cat is a former contributor to The Car Expert and The Van Expert. She now writes for Top Gear.