Little-known auto insurance firm may prevent hundreds from an accident this winter – Scottish Every day File

Buying a new car is always an exciting event, but you could owe thousands of pounds if it is written off before you pay for it.

Every year around half a million vehicles remain unfit to drive and beyond the economically viable repairs, but since the insurance companies only pay the “market price” for a depreciation, this can leave a huge sum of what you still owe.

Leading automotive association MotorEasy has revealed how Guaranteed Property Protection Insurance (GAP) removes that risk and effectively buys you out of your contract, potentially preventing you from being left out of your pocket – especially at this time of year due to road conditions change due to seasonal weather changes.

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Founder and CEO Duncan McClure Fisher said, “Your insurance company's depreciation of a vehicle can be a traumatic event. In addition to being involved in a serious incident, you could be facing serious financial bottleneck as you will only be reimbursed for the market value.

"Even if you can afford to replace it with a new vehicle, it will almost certainly be well below the specifications of the lost vehicle, but proper GAP insurance is critical to avoiding this."

“Given the popularity of leasing and financing offers like PCP (a form of hire-purchase vehicle finance), you could owe thousands of pounds when your vehicle is being written off.

"GAP insurance takes this risk away and effectively releases you from your contract."

GAP insurance is divided into three main categories depending on the age of your vehicle.

Vehicle Replacement Insurance (VRI) applies to cars that are less than three months old and have less than 500 miles on the clock. It covers the difference between the payout from your insurer and the balance needed to buy a replacement or similar vehicle.

GAP Return to Invoice (RTI) insurance, also known as "Back to Invoice" GAP insurance, applies to cars up to 10 years of age and with fewer than 100,000 miles on the odometer, depending on the provider.

You must have bought your car from a dealer within the last three to six months and the vehicle must be full or financed.

This type of policy covers the difference between the insurer's payout and either the price originally paid or the amount required to settle your outstanding financial balance, whichever is greater.

GAP insurance is divided into three main categories depending on the age of your vehicle.

The last category is Return to Value (RTV), which in turn applies to cars up to a decade old and less than 100,000 miles.

These can be bought privately or from a dealer, and coverage is the difference between the payout from your insurer, based on the current value, and the original value calculated from the start of the policy.

Financing options like hire purchase, PCP, and leasing remain the most popular methods of getting a car without having to prepay the cash.

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About 90 percent of cars and vans in the UK have some kind of finance contract, but many people just consider monthly costs without thinking what would happen in the event of a write-off.

“This is why GAP insurance is so important because the last thing you want is to have a large sum of cash on a vehicle you no longer own. With the right policy, you are covered to wind up a previous contract and then look for your next finance deal, ”added Duncan.

However, he also cautioned caution when reading the fine print of any GAP insurance policy, as some will only cover you if a car is stolen or a write-off is declared.

Others offer more comprehensive protection, including traffic accidents, and fire and theft.

He said, "When looking for vendors, it is also worth checking the maximum damage limitation available as this can vary from company to company."

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