Martin Lewis warns viewers about drastic car insurance changes
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Leading motoring association Motoreasy has warned drivers could owe money if their vehicle is written off before drivers have fully paid off the total cost. They warn around half a million vehicles every year are left unroadworthy and beyond the point where repairs make any financial sense.
However, drivers with a Guaranteed Asset Protection (GAP) car insurance cover will not need to worry.
Founder and CEO of Motoreasy, Duncan McClure Fisher said GAP policies “takes that risk away” and means drivers can effectively “buy out of their agreement”.
He said: “Having a vehicle written-off by your insurance company can be a traumatic event.
“Not only have you likely been involved in a serious incident, but you could also be staring down the barrel of a serious financial shortfall due to only getting the market value reimbursed.
“Even if you can afford to replace it with a new vehicle, it will almost certainly be well below the spec of the one you’ve lost.
“But having a suitable GAP insurance policy in place is crucial to avoiding this.
“With the popularity of leasing and finance deals, such as PCP, you could be left owing thousands of pounds if your vehicle is written-off.
“GAP insurance takes that risk away and effectively buys you out of your agreement.”
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GAP policies fall into three main categories which can determine what cost savings drivers make.
Vehicle Replacement Insurance is for cars less than three months old with less than 500 miles on the clock.
It covers the difference between your insurers payout and the balance needed to buy a similar vehicle.
Return to Invoice cover is for vehicles up to 10 years old with fewer than 100,000 miles on the clock.
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