In the event of your vehicle being declared a Total Loss (aka “written off”) as a result of an accident, fire or theft, your comprehensive Motor Insurance policy would normally only pay out the market value of the vehicle at the time of loss.
Now, imagine that you’d bought the vehicle, two years ago for £22k and imagine that the current Market Value of the vehicle is only £10k.
If your Motor Insurance policy only pays you £10k, you’re going to be able to only buy a vehicle of the same age, mileage and condition as the one that was written off at the time it was written off.
Invoice GAP Insurance however, would in this example, pay the £12k difference between the Motor Insurance payout and the £22k you originally bought the vehicle for, or (if higher) the difference between your Motor Insurance payout and the amount outstanding on finance at the time of loss.