In the world of tyre insurance do you really get what you pay for?

Is a lower priced policy simply half the cover?

Do lower costs really mean poor claims handling and lots of small print?

In todays society more than ever we are taught from a very early age that there is no such thing as a "free lunch" and that normally you only get what you pay for. This means that when you are comparing tyre insurance prices the natural, normal human reaction would be that garage supplied policies are better. A higher price in most cases means better quality.

Tyre insurance is unfortunately just like gap insurance and other supplementary insurance policies that are offered by your dealership are an exception.

Price variations are not connected to the policy performance or how claims are handled instead they are simply because of factual, tangible legal reasons.

You local dealership is duty bound to charge you tyre insurance and gap insurance at a price which will include 20% insurance premium tax. This is because as the have the autonomy to be able to alter or change the amount that you are charged for your vehicle and therefore the amount of VAT that HMRC are paid they have to pay the higher of the two tier insurance premium tax rate.

In comparison when you buy tyre insurance independently the price you are quoted is inlcusive of IPT charged at the standard rate, this is traditionally a lot lower than the rate of VAT.

Does this mean that your dealership is unfairly disadvantaged?

No. A long long time ago the rate of insurance premium tax was the same no matter where you bought your policy from. This unfortunately encouraged creative accounting practises where by dealerships were able to inflate the cost of gap and tyre insurance in order to be able to avoid paying the correct amount of VAT.

HMRC is not a force to be underestimated and naturally wanted to ensure that these practises were discouraged and yet ensure that polices where not overtly over priced. Hence the two tier system.

Your local garage we are sure is a successful busy place and provide lots and lots of vehicles to your local community. What you may not know is that we would provide the average dealerships yearly tyre insurance target in a matter of days. This means that when we negotiate with insurance companies to agree rates and terms we can use our buying power to get the best prices possible.

The whole sale approach is nothing new and in fact dealerships and garages have been using it for years. For example instead of you buying perhaps one or two vehicles let imagine that you were instead buying 100,000. Naturally buying that amount of vehicles you would expect to pay a fraction of the cost that you would pay for one. Same car just much lower price. That is exactly what we do. We use our buying power to keep the prices low and to ensure that policies have lots of nice to have extras.

So when it comes to tyre insurance do you really only get what you pay for?

No not always instead the price you pay is simply more of a bench mark as to who supplied the policy.