More motorists are taking out Guaranteed Asset Protection (Gap) insurance, which bridges the gap between a car's market value and the amount an insurer pays out if the car is stolen or written off.
The "little-known product" is used to clear debts still owed for a car purchased with a loan or on credit and will supplement an insurer's payout which would be based on the current market value of the car.
Gap insurance fixes the value of a car at the date of purchase and so motorists can be compensated for any depreciation in value when they make a claim.
Marketing director of click4gap.co.uk Andy Bendell said: "Gap insurance is for almost anybody, at any point during the car's life or ownership. You can buy Gap insurance for any car up to seven years old, locking in the value of the car today."
"Most people are educated about it at the dealership and realise the value in these policies, but comparing cover and premiums online is always a smart thing todo," he added.
Gap insurance could be good news for car loan customers wanting to safeguard the value of their new vehicle.
Sainsbury's Finance predicted £2 billion pounds will be knocked off the second-hand car market between February and April, causing used-car prices to plummet.
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