From This is Money:
The value of new and used cars has taken a battering over the past year, as sales collapse, and sellers are forced to slash prices.
While this has spelt good news for car buyers hoping to save on their purchase, it has caused headaches for those unlucky enough to have their car written off or stolen. These will find insurers only pay out the current market value of the car, which may fall far short of what they paid for their vehicle.
Increasing numbers of those who have borrowed to fund their car purchase are turning to Guaranteed Asset Protection (Gap) insurance to ‘calm their fears over falling car prices’, according to the Finance and Leasing Organisation (FLO).
This insurance covers the difference or ‘Gap’ between the value of a car before it was written off or stolen and the amount of money originally borrowed to buy it.
It is available on both new and used cars.
For example, if a person borrowed £12,000 to buy a car and it was written off a year later, thei…