If you’ve just bought a new car, there’s a good chance the salesperson offered you GAP insurance before handing over the keys. But here’s the catch: dealer-sold GAP insurance can often cost two to three times more than buying it online. So, what’s the difference — and which option is better in 2025? Let’s find out.

What is GAP Insurance?

GAP (Guaranteed Asset Protection) insurance covers the shortfall between your car insurer’s payout and either:

• What you originally paid for the car,
• The outstanding finance you still owe, or
• The cost of a brand-new replacement.

This means if your car is written off or stolen, you won’t be left out of pocket.

Dealer GAP Insurance

When buying from a car dealership, GAP insurance is often pitched as an add-on. The salesperson might frame it as a convenient, one-stop solution.

PROS:

• Easy to arrange at the point of purchase.
• Bundled into your car finance deal.

CONS:

• Usually far more expensive than online policies.
• Limited cover options (not tailored to your needs).
• Pressure selling — you may feel rushed into a decision.

Did you know? Since 2015, UK law requires dealers to give you a two-day cooling-off period before selling GAP insurance, so you have time to compare prices.

Price Comparison Example

• Dealer GAP Insurance: £400 for 3 years.
• Online GAP Insurance: £150 for 3 years.

Both policies cover the same thing — but one costs almost three times as much.