People looking into car insurance policies have been advised to take out Guaranteed Asset Protection (GAP) insurance.

The policy means that drivers are covered for the shortfall that can often occur between the market value of their car and its invoice price and any outstanding finance on the occasion that the vehicle is stolen or written-off.

Research by independent insurance broker ALA has found, however, that 77 per cent of UK drivers fail to insure themselves in this way. The company polled 2,055 British adults and found that ten per cent had bought their current vehicle using a bank loan, while 11 per cent had used a hire-purchase scheme, suggesting that a number of people are at risk.

Simon England, managing director at ALA, commented: “We found that British 25 to 34-year-olds were the group most at risk, as 16 per cent of them chose to buy their current vehicle with a personal loan and 14 per cent on finance, leaving them open to costly repayments.

“What’s more, it seems the majority (74 per cent) of those that have purchased GAP insurance at the same time as their car through a dealership instead of shopping around.”

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